<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL , 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
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GROVE INVESTORS LLC GROVE INVESTORS CAPITAL, INC.
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
DELAWARE DELAWARE
(State or other jurisdiction of incorporation or organization) (State or other jurisdiction of incorporation or organization)
6719 6799
(Primary Standard Industrial Classification Code Number) (Primary Standard Industrial Classification Code Number)
52-2089466 52-2097817
(I.R.S. Employer (I.R.S. Employer
Identification Number) Identification Number)
1565 BUCHANAN TRAIL EAST 1565 BUCHANAN TRAIL EAST
SHADY GROVE, PENNSYLVANIA 17256 SHADY GROVE, PENNSYLVANIA 17256
(717) 597-8121 (717) 597-8121
(Address, including zip code, and telephone number, (Address, including zip code, and telephone number,
including area code, of registrant's principal executive including area code, of registrant's principal executive
offices) offices)
</TABLE>
SALVATORE J. BONANNO
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
GROVE INVESTORS LLC
1565 BUCHANAN TRAIL EAST
SHADY GROVE, PENNSYLVANIA 17256
(717) 597-8121
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
WITH A COPY TO:
MARK S. BERGMAN, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 373-3000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If the Securities registered on this Form are to be offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
14 1/2% Senior Debentures due 2010(2)............. $56,652,000(2) 100% $56,652,000 $15,750
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f).
(2) Plus an indeterminate principal amount of additional debentures which may be
issued as interest payments on the registered debentures in lieu of paying
interest in cash.
------------------------------
THE REGISTRANTS HEREBY AMEND 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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE>
SUBJECT TO COMPLETION, DATED APRIL , 1999
PROSPECTUS [GROVE LOGO]
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
$56,652,000
GROVE INVESTORS LLC
AND
GROVE INVESTORS CAPITAL, INC.
OFFER TO EXCHANGE $56,652,000 OF OUR 14 1/2% SENIOR DEBENTURES DUE 2010
TERMS OF THE EXCHANGE OFFER
- It expires 5:00 p.m., New York City time, , 1999, unless we
extend it.
- All debentures that are validly tendered and not withdrawn will be
exchanged.
- Tenders of debentures may be withdrawn at any time prior to the expiration
of the exchange offer.
- The terms of the registered debentures we will issue in the exchange offer
will be substantially identical to the outstanding debentures, except that
transfer restrictions and registration rights relating to the outstanding
debentures will not apply to the registered debentures.
- There is no public market for the registered debentures.
BEFORE PARTICIPATING IN THIS EXCHANGE OFFER, PLEASE REFER TO THE SECTION IN THIS
PROSPECTUS ENTITLED "RISK FACTORS" BEGINNING ON PAGE 10.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE COMMISSION HAS
APPROVED THE DEBENTURES TO BE DISTRIBUTED IN THE EXCHANGE OFFER, NOR HAVE ANY OF
THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1999.
<PAGE>
TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUMMARY......................................................................................... 1
SUMMARY HISTORICAL FINANCIAL DATA.......................................................................... 8
RISK FACTORS............................................................................................... 10
FORWARD-LOOKING STATEMENTS................................................................................. 15
THE TRANSACTIONS........................................................................................... 17
USE OF PROCEEDS............................................................................................ 19
CAPITALIZATION............................................................................................. 20
SELECTED HISTORICAL COMBINED AND CONSOLIDATED FINANCIAL DATA............................................... 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................... 23
THE EXCHANGE OFFER......................................................................................... 35
BUSINESS................................................................................................... 46
AVAILABLE INFORMATION...................................................................................... 59
MANAGEMENT................................................................................................. 60
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................................. 64
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................................................. 66
DESCRIPTION OF CREDIT FACILITY............................................................................. 68
DESCRIPTION OF DEBENTURES.................................................................................. 70
FEDERAL INCOME TAX CONSIDERATIONS.......................................................................... 112
ERISA CONSIDERATIONS....................................................................................... 116
PLAN OF DISTRIBUTION....................................................................................... 117
LEGAL MATTERS.............................................................................................. 118
EXPERTS.................................................................................................... 118
CHANGE IN ACCOUNTANTS...................................................................................... 118
INDEX TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS.................................................... F-1
</TABLE>
ii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY CONTAINS BASIC INFORMATION FROM THIS PROSPECTUS. IT
LIKELY DOES NOT CONTAIN ALL THE INFORMATION THAT IS IMPORTANT TO YOU. FOR A MORE
COMPLETE UNDERSTANDING OF THIS OFFERING, WE ENCOURAGE YOU TO READ THE ENTIRE
PROSPECTUS CAREFULLY, INCLUDING THE SECTION ENTITLED "RISK FACTORS" BEGINNING ON
PAGE 10 AND THE FINANCIAL STATEMENTS, INCLUDING THE NOTES TO THOSE STATEMENTS,
INCLUDED ELSEWHERE IN THIS PROSPECTUS.
THE WORDS "WE," "OUR," "OURS" AND "US" REFER TO GROVE INVESTORS LLC AND ITS
SUBSIDIARIES.
UNLESS OTHERWISE NOTED, "GROVE WORLDWIDE" REFERS TO GROVE WORLDWIDE LLC AND
ITS SUBSIDIARIES AND INCLUDES THE MOBILE HYDRAULIC CRANE, AERIAL WORK PLATFORM
AND TRUCK-MOUNTED CRANE BUSINESSES OF HANSON FUNDING (G) PLC WHICH WERE ACQUIRED
ON APRIL 29, 1998.
OUR BUSINESS
Through Grove Worldwide, our wholly-owned subsidiary, we are a leading
international designer, manufacturer and marketer of a comprehensive line of
mobile hydraulic cranes, aerial work platforms and truck-mounted cranes.
Commercial and residential building contractors, as well as industrial,
municipal and military end-users, use our products in a wide variety of
applications.
Grove Worldwide markets its products through three operating
divisions--Grove Crane, Grove Manlift and National Crane.
- GROVE CRANE designs and manufactures over 40 models of mobile hydraulic
cranes.
- GROVE MANLIFT designs and manufactures over 50 models of aerial work
platforms.
- NATIONAL CRANE designs and manufactures over 10 models of telescoping and
14 models of articulating truck-mounted cranes.
OUR COMPETITIVE STRENGTHS
We believe that we benefit from the following competitive strengths:
- MARKET POSITIONS. We believe that our three operating divisions have
established a leading position in most of their principal markets.
- STRONG BRAND NAME AND REPUTATION FOR QUALITY PRODUCTS. We have created
significant brand awareness as a result of our innovative designs, quality
products and product reliability.
- SUPERIOR CUSTOMER SERVICE. We are committed to providing superior
training, sales and service support to our distributors and end-users as a
standard part of our sales and marketing effort.
- ESTABLISHED NETWORK OF DISTRIBUTORS. We benefit from an established base
of approximately 240 independent distributors located in 50 countries
around the world.
- BROAD PRODUCT LINE. We believe we have the broadest product line in the
industry, with 10 product categories and over 120 models offered by our
three operating divisions.
OUR BUSINESS STRATEGY
The key elements of our business strategy involve:
- PROVIDING SUPERIOR PRODUCTS. We believe that we have the most extensive
engineering capability in the crane industry. Our engineering group
focuses on developing innovative, high performance and low maintenance
products that satisfy the demands of our customers.
1
<PAGE>
- EXPANDING EXISTING INTERNATIONAL BUSINESS. We intend to continue to use
our significant brand awareness and strong distribution network to
selectively expand our existing international business.
- CAPITALIZING ON THE GROWTH OF THE WORLDWIDE AERIAL WORK PLATFORM MARKET.
We seek to capitalize on the increasing recognition that aerial work
platforms are an economical and safe alternative to scaffolding and
ladders.
OUR OPERATIONS IMPROVEMENT PROGRAM
We have developed a comprehensive program which we believe will enable us to
reduce costs. The key components of this program are:
- reducing operating costs through a product line rationalization program;
- reducing costs of goods sold by improving our manufacturing process;
- reducing selling, general and administrative expenses by eliminating
redundant manufacturing functions, using our new management information
system and streamlining existing business processes; and
- reducing working capital requirements by lowering inventory levels.
OUR HISTORY
Grove Investors was formed in the State of Delaware in December 1997. Grove
Investors Capital, Inc., our wholly-owned subsidiary, was formed in the State of
Delaware in April 1998. We conduct all of our business through Grove Worldwide.
2
<PAGE>
SUMMARY OF THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer.................. We are offering to exchange up to $56,652,000
aggregate principal amount of our 14 1/2% Senior
Debentures due 2010 for $56,652,000 of our
outstanding 14 1/2% Senior Debentures due 2010. We
issued and sold $47,375,000 in principal amount of
the outstanding debentures on April 29, 1998 in
reliance on an exemption from registration under the
Securities Act. We have issued $9,277,000 of
additional debentures as interest payments in lieu of
paying interest in cash.
We believe that the registered debentures may be
offered for resale, resold and otherwise transferred
by you without compliance with the registration and
prospectus delivery provisions of the Securities Act
if:
- you are acquiring the registered debentures in the
ordinary course of your business;
- you are not participating, do not intend to
participate, and have no arrangement or understanding
with any person to participate, in the distribution
of the registered debentures issued to you; and
- you are not an affiliate, under Rule 405 of the
Securities Act, of ours.
Expiration Date..................... The exchange offer will expire at 5:00 p.m., New York
City time, , 1999, unless we decide to
extend the expiration date.
Conditions to the Exchange Offer.... We may end or amend the exchange offer if:
- any legal proceeding, government action or other
adverse development materially impairs our ability to
complete the exchange offer;
- any SEC rule, regulation or interpretation
materially impairs the exchange offer; or
- we have not obtained all necessary governmental
approvals with respect to the exchange offer.
See "The Exchange Offer--Conditions to the Exchange
Offer." We may waive any or all of these conditions.
At this time, there are no adverse proceedings,
actions or developments pending or, to our knowledge,
threatened and no governmental approvals are
necessary to complete the exchange offer.
Withdrawal Rights................... You may withdraw the tender of your outstanding
debentures at any time before 5:00 p.m., New York
City time, on , 1999.
</TABLE>
3
<PAGE>
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Procedures for Tendering Outstanding
Debentures........................ To participate in the exchange offer you must:
- complete, sign and date the accompanying letter of
transmittal, or a facsimile copy of the letter of
transmittal; or
- tender outstanding debentures following the
procedures for book-entry transfer described on page
37.
You must mail or otherwise deliver the documentation
and your outstanding debentures to the United States
Trust Company of New York, as exchange agent, at one
of the addresses listed on the letter of transmittal.
Special Procedures for Beneficial
Owners............................ If you hold outstanding debentures registered in the
name of a broker, dealer, commercial bank, trust
company or other nominee you should contact such
person promptly if you wish to tender outstanding
debentures. See "The Exchange Offer--Procedures for
Tendering Outstanding Debentures."
Guaranteed Delivery Procedures...... If you wish to tender your outstanding debentures and
you cannot get required documents to the exchange
agent on time, or you cannot complete the procedure
for book-entry transfer on time, you may tender your
outstanding debentures according to the procedures
described in this prospectus under the heading "The
Exchange Offer-- Procedures for Tendering Outstanding
Debentures."
Federal Income Tax Consequences..... The exchange of debentures will not be a taxable
event to you for United States federal income tax
purposes. See "The Exchange Offer--Federal Income Tax
Considerations."
Exchange Agent...................... The United States Trust Company of New York is
serving as exchange agent in the exchange offer. See
"The Exchange Offer--Exchange Agent."
</TABLE>
SUMMARY OF THE REGISTERED DEBENTURES
We use the term "debentures" when describing provisions that apply to both
the outstanding debentures and the registered debentures. The registered
debentures will evidence the same debt as the outstanding debentures. The same
indenture will govern both the outstanding debentures and the registered
debentures. See "Description of Debentures."
<TABLE>
<S> <C>
Issuers............................. The registered debentures will be joint and several
obligations of Grove Investors and Grove Investors
Capital.
The Registered Debentures........... $56,652,000 aggregate principal amount of 14 1/2%
Senior Debentures due 2010. The form and terms of the
registered debentures are identical to the form and
terms of the outstanding debentures except that the
registered
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
debentures will be registered under the Securities
Act. Therefore, the registered debentures will not
bear legends restricting their transfer. In addition,
the registered debentures will not be entitled to
registration under the Securities Act.
Maturity Date....................... May 1, 2010.
Interest............................ The registered debentures will bear interest at the
rate of 14 1/2% per annum, payable quarterly on:
- February 1,
- May 1,
- August 1 and
- November 1 of each year.
We have the option of paying interest in cash or by
issuing additional debentures in an aggregate
principal amount equal to the amount of the interest
that would be payable at a rate per annum equal to
14 1/2%. Additional debentures will have the same
terms as the debentures and all references to
debentures in the prospectus include the additional
debentures.
Sinking Fund........................ None.
Ranking............................. The registered debentures:
- will be general unsecured obligations of ours;
- will rank equal in right of payment with all
existing and future senior indebtedness of ours; and
- will rank senior in right of payment to all
subordinated indebtedness of ours.
We conduct all operations through our subsidiaries.
Our subsidiaries are not guarantors of the
debentures. The registered debentures will rank
junior to all liabilities of Grove Holdings LLC, our
direct wholly-owned subsidiary, and its subsidiaries.
As of January 2, 1999, Grove Holdings and its
subsidiaries had liabilities of approximately $737.4
million.
Optional Redemption................. We may redeem the registered debentures at our
option, in whole or in part, at any time after May 1,
2003 in cash at the prices described in this
prospectus under the heading "Description of
Debentures--Repurchase at the Option of
Holders--Change of Control," plus accrued and unpaid
interest and liquidated damages, if any, thereon to
the date of redemption.
In addition, at any time before May 1, 2003, we may
redeem all, but not less than all, of the aggregate
principal amount of debentures originally issued at a
redemption
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
price equal to 114.5% of their principal amount, plus
accrued and unpaid interest and liquidated damages,
if any, on the debentures to the date of redemption.
See "Description of Debentures--Optional Redemption."
Change of Control................... Upon change of control, you will have the right to
require us to repurchase all or any part of your
debentures at a price equal to 101% of the aggregate
principal amount of the registered debentures, plus
accrued and unpaid interest and liquidated damages,
if any, to the date of purchase. See "Description of
Debentures--Repurchase at the Option of
Holders--Change of Control."
We cannot assure you that, if a change of control
occurs, we will have sufficient funds to purchase all
registered debentures tendered. See "Risk
Factors--Upon a change of control, we may not have
sufficient funds available to repurchase the
debentures."
Certain Covenants................... The indenture contains covenants that limit our
ability to:
- pay dividends, redeem capital stock or make other
payments or investments;
- incur additional indebtedness or issue preferred
equity interests;
- merge, consolidate or sell all or substantially all
of our assets;
- create liens on assets; and
- enter into certain transactions with affiliates or
related persons.
See "Description of Debentures--Certain Covenants."
Absence of Public Market............ There is no public market for the registered
debentures. The registered debentures will not be
listed on any securities exchange or quotation
system. Donaldson, Lufkin & Jenrette Securities
Corporation has advised us that following the
exchange offer, it intends to make a market in the
registered debentures. However, any market-making may
be discontinued at any time without notice. If an
active public market does not develop, the market
price and liquidity of the registered debentures may
be adversely affected. See "Risk Factors--You may not
be able to sell your debentures easily."
The outstanding debentures currently trade in the
PORTAL Market. Following completion of the exchange
offer, the registered debentures will not be eligible
for PORTAL Market trading.
</TABLE>
6
<PAGE>
RISK FACTORS
You should carefully consider all of the information contained in this
prospectus and, in particular, you should evaluate the specific factors listed
under "Risk Factors" on page 10 for risks associated with the exchange offer and
an investment in the registered debentures.
You should also read the "Description of Debentures" beginning on page 70
and "Federal Income Tax Considerations" beginning on page 112 for additional
information regarding the registered debentures.
------------------------
Our principal executive offices are located at 1565 Buchanan Trail East,
Shady Grove, Pennsylvania 17256. Our telephone number is (717) 597-8121.
7
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS)
Our fiscal year ends on the Saturday closest to the last day of September of
each year. References to: (1) fiscal 1996 are to the fiscal year ended September
28, 1996, (2) fiscal 1997 are to the fiscal year ended September 27, 1997 and
(3) fiscal 1998 are to the fiscal year ended October 3, 1998. Reference to the
seven months ended April 29, 1998 means the period from September 27, 1997 to
April 29, 1998. Reference to the five months ended October 3, 1998 means the
period from April 29, 1998 to October 3, 1998. Reference to the three months
ended December 27, 1997 means the period from September 27, 1997 to December 27,
1997. Reference to the three months ended January 2, 1999 means the period from
October 3, 1998 to January 2, 1999. References to historical financial
information include the historical combined and consolidated financial results
of the mobile hydraulic crane, aerial work platform and truck-mounted crane
businesses which we acquired from Hanson Funding on April 29, 1998. Because of
the acquisition, which was accounted for using the purchase method, results of
operations for periods prior to April 29, 1998 are not comparable with those for
the periods after April 29, 1998.
We have not included separate financial statements of Grove Investors
Capital in this prospectus because we believe that separate financial statements
would not be material to you.
You should read the following data with the more detailed information
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Selected Historical Combined and Consolidated Financial
Data" and our historical financial statements and the notes to those financial
statements included in this prospectus. You should also read the following
information with the data in the table below:
- Our gross profit for the five months ended October 3, 1998 was adversely
impacted by the write-off of $27.7 million of purchase accounting
adjustments with respect to the amount assigned to inventory in excess of
historical cost.
- Our net income (loss) includes losses by our Sunderland, United Kingdom
facility of $14,085 for the seven months ended April 28, 1998 and $5,999
for the five months ended October 3, 1998. In November 1998, we ceased
manufacturing operations at the Sunderland facility due to recurring
operating losses. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
- Depreciation and amortization excludes depreciation on equipment held for
rent.
- Capital expenditures includes expenditures on our management information
system of approximately $4,300 in fiscal 1996, approximately $14,000 in
fiscal 1997, approximately $9,322 for the seven months ended April 28,
1998, approximately $5,377 for the five months ended October 3, 1998 and
approximately $950 for the three months ended January 2, 1999.
8
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GROVE
PREDECESSOR INVESTORS
---------------------------------------------------------------------- -----------
SEVEN
MONTHS THREE MONTHS FIVE MONTHS
FISCAL YEAR ENDED ENDED ENDED
------------------------------------------ APRIL 28, DECEMBER 27, OCTOBER 3,
1994 1995 1996 1997 1998 1997 1998
--------- --------- --------- --------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................ $ 393,526 $ 503,815 $ 794,209 $ 856,812 $ 476,200 $ 204,958 $ 393,779
Gross profit..................... 87,991 126,589 185,079 203,273 98,863 43,572 58,015
Operating expenses............... 80,752 88,216 134,459 135,382 79,041 34,249 61,209
Operating profit (loss).......... 7,239 38,373 50,620 67,891 19,822 9,323 (3,194)
Net income (loss)................ (4,942) 16,769 25,448 42,220 (395) 5,407 (29,664)
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents........ $ 7,135 $ 18,685 $ 8,184 $ 5,024 $ 34,289
Total assets..................... 509,189 652,000 730,158 881,496 915,243
Total debt....................... -- -- 7,443 7,265 531,692
Total invested capital........... 399,762 467,306 502,554 628,492 47,835
OTHER DATA:
Depreciation and amortization.... $ 13,258 $ 13,765 $ 17,313 $ 17,985 $ 11,399 $ 4,694 $ 8,233
Capital expenditures............. 6,042 7,385 19,443 32,491 19,521 9,629 7,230
Sales backlog at end of period... 109,350 208,152 185,237 229,513 268,682 236,649 163,314
<CAPTION>
THREE
MONTHS
ENDED
JANUARY 2,
1999
-----------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................ $ 164,325
Gross profit..................... 27,083
Operating expenses............... 31,530
Operating profit (loss).......... (4,447)
Net income (loss)................ (17,755)
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents........ $ 21,155
Total assets..................... 874,720
Total debt....................... 527,458
Total invested capital........... 26,471
OTHER DATA:
Depreciation and amortization.... $ 5,192
Capital expenditures............. 950
Sales backlog at end of period... 171,700
</TABLE>
9
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RISK FACTORS
You should consider carefully the information below, as well as the other
information in this prospectus, before tendering your outstanding debentures in
the exchange offer.
OUR SUBSTANTIAL DEBT COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH BECAUSE WE WILL
REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR DEBT.
We incurred substantial debt in connection with the acquisition. We have,
and will continue to have, substantial debt. Our substantial debt could have
important consequences. For example, it could:
- make it more difficult for us to satisfy our obligations under the
debentures;
- impair our ability to obtain additional financing for working capital,
capital expenditures, acquisitions or general corporate purposes;
- require the dedication of a substantial portion of our cash flow from
operations to the payment of our debt, which reduces the availability of
cash to be used for our growth strategy, working capital, capital
expenditures or other general corporate purposes;
- cause us to be vulnerable to increases in interest rates because
indebtedness under Grove Worldwide's credit facility is at variable rates
of interest;
- place us at a competitive disadvantage compared to less leveraged
competitors; and
- increase our vulnerability to general adverse economic and industry
conditions.
See "The Transactions--The Acquisition," "Description of Credit Facility" and
"Description of Debentures--Repurchase at the Option of Holders--Change of
Control."
As of January 2, 1999, we had total indebtedness of approximately $527.5
million. Our interest expense for the seven months ended April 28 was
approximately $2.4 million and for the five months ended October 3 was
approximately $23.9 million. We may incur additional indebtedness in the future.
See "The Transactions--The Acquisition," "Capitalization," "Description of
Debentures" and "Combined and Consolidated Financial Statements."
OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.
Our ability to make scheduled payments of principal of, or pay interest on,
or to refinance our debt, including the debt of our subsidiaries, depends on our
future performance. Our performance depends, in part, on:
- general economic,
- financial,
- competitive,
- regulatory, and
- other factors beyond our control.
Furthermore, all or a portion of the principal payments at maturity on the
debentures may require refinancing. There can be no assurance that any
refinancing would be available on commercially reasonable terms or at all.
See "--Limitation on the Payment of Funds to Grove Investors by its
Subsidiaries" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
10
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THE DEBENTURES ARE SUBORDINATED TO ALL LIABILITIES OF OUR SUBSIDIARIES.
We are a holding company that conducts all of our business operations
through Grove Worldwide and its subsidiaries. As a result, the debentures will
be effectively subordinated to all existing and future liabilities of our
subsidiaries including indebtedness under:
- Grove Worldwide's credit facility;
- Grove Worldwide's senior subordinated notes; and
- Grove Holdings' senior discount debentures.
As of January 2, 1999, the aggregate amount of liabilities of our subsidiaries
to which holders of the debentures were subordinated was approximately $737.4
million. We and our subsidiaries may incur additional indebtedness in the
future. However, there are limitations on the amount additional indebtedness we
and our subsidiaries may incur in the instruments governing our indebtedness.
Our subsidiaries' creditors will have the right to participate in any
distribution of the assets of our subsidiaries in the event of the liquidation,
reorganization or insolvency of those subsidiaries before holders of the
debentures. In addition, the obligations of Grove Worldwide under its credit
facility are secured by substantially all of its assets. Furthermore, Grove
Holdings has guaranteed Grove Worldwide's obligations under the credit facility.
That guarantee is secured by a pledge of all the membership interests of Grove
Worldwide owned by Grove Holdings. See "Description of Credit Facility."
BECAUSE WE ARE DEPENDENT UPON THE CASH FLOWS OF OUR SUBSIDIARIES WE MAY NOT
RECEIVE ENOUGH CASH TO
MAKE PAYMENTS ON THE DEBENTURES.
Our cash flow, and consequently our ability to service debt, including our
obligations under the debentures, is dependent upon the cash flows of our
subsidiaries and the payment of funds by our subsidiaries to us in the form of
loans, dividends or otherwise. Our subsidiaries have no obligation to pay any
amounts due under the debentures or to make any funds available for that
purpose. Because we currently expect that our subsidiaries will retain and use
any earnings and cash flow to support their operations and to service their
respective debt obligations we may not receive enough cash to make payments on
the debentures.
In addition, the debt agreements of our subsidiaries impose significant
restrictions on the payment of dividends and the making of loans to us.
WE MAY NOT BE ABLE TO ACHIEVE COST SAVINGS UNDER OUR OPERATIONS IMPROVEMENT
PROGRAM.
A majority of the cost savings to be realized from the implementation of our
operations improvement program will be realized gradually over the next three
years. In addition, we expect that cost savings during the three fiscal years
ending September 29, 2001 will be offset by non-recurring costs of up to
approximately $25.0 million associated with the implementation of our operations
improvement program, plus consulting fees payable to George Group Inc. Our
failure to achieve cost savings from this program could have a material adverse
effect on us. See "--Forward Looking Statements" and "Business--Operations
Improvement Program."
THE LENDERS UNDER GROVE WORLDWIDE'S CREDIT FACILITY MAY FORECLOSE ON ALL OF THE
MEMBERSHIP INTERESTS OF GROVE WORLDWIDE WHICH WOULD LIMIT THE ASSETS AVAILABLE
TO US TO MAKE PAYMENTS ON THE DEBENTURES.
Grove Holdings has granted the lenders under Grove Worldwide's credit
facility a lien on all of the membership interests of Grove Worldwide owned by
it as security for its guarantee of Grove Worldwide's obligations under the
credit facility. If a default under the credit facility or the guarantee occurs,
the lenders under the credit facility could foreclose upon the assets pledged to
secure the credit
11
<PAGE>
facility, including the membership interests, and the holders of the debentures
may receive payments only when any payment default is cured or waived, or the
indebtedness under the credit facility is discharged or paid in full.
CHANGES IN EXCHANGE RATES BETWEEN THE UNITED STATES DOLLAR AND OTHER CURRENCIES
MAY HAVE AN ADVERSE EFFECT ON OUR REVENUES.
We sell our products in over 50 countries. In fiscal 1998, approximately
27.6% of our net sales were in foreign currencies, while the costs associated
with those net sales were only partly incurred in the same currencies. Because
our financial statements are denominated in United States dollars, changes in
exchange rates between the United States dollar and other currencies have had
and will have an impact on our reported results. In addition, changes in
currency rates can affect the competitiveness of our products and could result
in management reconsidering prices and strategies to maintain market share.
SALES OF THE PRODUCTS ARE CYCLICAL.
Historically, sales of our products have been cyclical. These cyclical
variations are caused by, among other things, cyclical changes in general
economic conditions and, in particular, in conditions in the construction
industry.
- During periods of expansion in construction activity, we have benefitted
from increased demand for our products.
- During recessionary periods, we have been adversely affected by reduced
demand for our products.
Downward cycles may result in reduction of our new unit sales and pricing, which
may materially and adversely impact our results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Cyclicality."
OPERATING AND FINANCIAL RESTRICTIONS IN DEBT INSTRUMENTS WE ARE SUBJECT TO MAY
PREVENT US FROM TAKING ACTIONS THAT MIGHT OTHERWISE BE AVAILABLE TO US.
The credit facility, the indenture governing Grove Worldwide's senior
subordinated notes and the indenture governing Grove Holdings' senior discount
debentures impose significant operating and financial restrictions on our
subsidiaries. The indenture governing the debentures imposes significant
financial restrictions on us. The financial restrictions imposed on us by the
indenture are discussed on page 75. See "Description of Debentures--Certain
Covenants."
The credit facility significantly limits or prohibits, among other things, the
ability of Grove Worldwide and its subsidiaries to:
- incur additional indebtedness;
- incur liens;
- pay dividends or make other restricted payments or investments;
- make certain asset sales;
- enter into certain transactions with affiliates;
- pay dividends or make certain payments to Grove Worldwide;
- merge or consolidate with any other person; or
12
<PAGE>
- sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of Grove Worldwide.
The credit facility also requires Grove Worldwide to maintain balance sheet and
fixed charge coverage and leverage ratios.
These restrictions could limit the ability of Grove Worldwide to respond to
market conditions or meet extraordinary capital needs or otherwise restrict
corporate activities. We cannot assure you that these restrictions will not
materially adversely affect the ability of Grove Worldwide to finance its future
operations or capital needs. See "Description of Credit Facility" and
"Description of Debentures--Certain Covenants."
UPON A CHANGE OF CONTROL, WE MAY NOT HAVE SUFFICIENT FUNDS AVAILABLE TO
REPURCHASE THE DEBENTURES.
The indenture governing the debentures provides that, upon a change of
control, we are required to make an offer to repurchase all the outstanding
debentures. However, we might not be able to repurchase the debentures because a
change of control under the indenture would require Grove Worldwide and Grove
Holdings to make offers to repurchase all their outstanding notes and debentures
under their indentures and would allow the lenders under the credit facility to
accelerate Grove Worldwide's obligations under the credit facility. See
"Description of Credit Facility."
If a change of control were to occur and Grove Worldwide did not obtain
waivers under its credit facility, it is unlikely that Grove Worldwide would be
able to repay all of its obligations under the credit facility and repurchase
its senior subordinated notes. In these circumstances, it is unlikely that we
would have sufficient funds available to repurchase the debentures.
A COURT COULD TAKE ACTION DETRIMENTAL TO YOUR RIGHTS AS A DEBENTURE HOLDER.
If a court in a suit by an unpaid creditor or a representative of creditors,
such as a trustee in bankruptcy or a debtor-in-possession, were to find that:
- either we did not receive fair consideration or reasonably equivalent
value for issuing the outstanding debentures; or,
- at the time of the incurrence of indebtedness represented by the
outstanding debentures, we:
-- were insolvent,
-- were rendered insolvent by reason of the incurrence,
-- were engaged in a business or transaction for which our remaining
assets constituted unreasonably small capital,
-- intended to incur, or believed that we would incur, debts beyond our
ability to pay as our debts matured, or
-- intended to hinder, delay or defraud our creditors,
a court could:
- avoid our indebtedness;
- subordinate our indebtedness to other existing and future indebtedness of
ours; or
- take other action detrimental to the holders of the debentures.
13
<PAGE>
OUR SUCCESS DEPENDS ON KEY MEMBERS OF SENIOR MANAGEMENT WHO CANNOT BE EASILY
REPLACED.
Our success depends to a significant extent upon the continued services of
Salvatore J. Bonanno, our Chairman and Chief Executive Officer. Although we have
an employment agreement with Mr. Bonanno, the loss of his services or those of
other members of senior management could have a material adverse effect on us.
WE MAY HAVE TO RECALL OUR PRODUCTS WHICH WOULD DECREASE OUR REVENUES AND
INCREASE OUR COSTS.
From time to time, we become aware of defects in the design of our products
and must repair these defects at our expense. Correcting any defects could:
- result in temporary disruptions in our business;
- be costly, and adversely affect our results of operations; and
- adversely affect our reputation or result in a decline in sales of our
products.
IF YOU DO NOT EXCHANGE YOUR OUTSTANDING DEBENTURES FOR REGISTERED DEBENTURES,
YOUR DEBENTURES WILL CONTINUE TO HAVE RESTRIDCTIONS ON TRANSFER.
If you do not exchange your outstanding debentures for registered debentures
in the exchange offer, or if your outstanding debentures are tendered but not
accepted, your debentures will continue to have restrictions on transfer. In
general, you may offer or sell any outstanding debentures only if the debentures
are registered under the Securities Act and applicable state laws, or under an
exemption from these laws. We do not intend to register the outstanding
debentures under the Securities Act, other than in the limited circumstances
described in the registration rights agreement discussed in the section
"Description of Debentures--Registration Rights; Liquidated Damages." In
addition, because some outstanding debentures will be tendered and accepted in
the exchange offer, the trading market for untendered and tendered but
unaccepted outstanding debentures could be adversely affected. See "The Exchange
Offer--Consequences of Failure to Exchange."
YOU MAY NOT BE ABLE TO SELL YOUR DEBENTURES EASILY.
The registered debentures will be registered under the Securities Act, but
will constitute a new issue of securities with no established trading market. We
do not intend to list the registered debentures on any national securities
exchange or to seek the admission of the registered debentures for quotation
through the Nasdaq Stock Market, Inc. Although Donaldson, Lufkin & Jenrette
presently intends to make a market in the registered debentures, Donaldson,
Lufkin & Jenrette is not obligated to do so, and they may discontinue any
market-making activity with respect to the debentures at any time without
notice. In addition, the registered debentures will not be eligible for Private
Offerings, Resales and Trading through Automated Linkages Market trading in
PORTAL.
Accordingly, we cannot assure you that:
- any market for the registered debentures or any outstanding debentures not
tendered will develop;
- you will be able to sell any registered debentures; or
- you will be able to sell any registered debentures at any particular
price.
14
<PAGE>
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus, including the above
risk factors, and the statements contained in the sections entitled "Prospectus
Summary," "Selected Historical Combined and Consolidation Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" constitute "forward-looking statements." Any
statements that express, or involve discussions as to, expectations, beliefs,
plans, objectives, assumptions or future events or performance are not
historical facts and may be forward-looking. Often, but not always, these type
of statements are expressed through the use of words or phrases like:
- "will likely result,"
- "are expected to,"
- "will continue,"
- "anticipates,"
- "expects,"
- "estimates,"
- "intends,"
- "plans,"
- "projects," and
- "outlook."
These forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, levels of activity, cost
savings, performance or achievements of ours, or industry results, to be
materially different from any future results, levels of activity, cost savings,
performance or achievements expressed or implied by these forward-looking
statements, and accordingly, these statements should be read in conjunction with
and are qualified in their entirety by reference to, the risks, uncertainties
and other factors, which are discussed in this prospectus. These factors
include, among others, the following:
- substantial leverage and ability to service debt;
- changing market trends in the mobile hydraulic crane, aerial work platform
and truck-mounted crane industries;
- general economic and business conditions including a prolonged or
substantial recession;
- our ability to implement our business strategy and maintain and enhance
our competitive strengths;
- our ability to implement the operations improvement program and any
estimates of potential cost savings derived from the operations
improvement program;
- our ability to obtain financing for general corporate purposes;
- competition;
- availability of key personnel;
- industry overcapacity; and
- changes in, or the failure to comply with, government regulations. See
"Risk Factors."
15
<PAGE>
As a result of these and other factors, we cannot give any assurance as to
future results, levels of activity and achievements. Neither we nor any other
person assumes responsibility for the accuracy and completeness of these
forward-looking statements. Any forward-looking statements in this prospectus
speak solely as of the date on which these statements are made. We undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which these statements were made or to reflect
the occurrence of unanticipated events.
16
<PAGE>
THE TRANSACTIONS
THE ACQUISITION
In December 1997, Grove Worldwide was formed as a Delaware limited liability
company to acquire the mobile hydraulic crane, aerial work platform and
truck-mounted crane businesses of Hanson Funding. In March 1998, Grove Worldwide
entered into an agreement to acquire these businesses for aggregate cash
consideration of approximately $583.0 million plus assumed liabilities of
approximately $258.4 million. The purchase price was subject to a post-closing
net worth adjustment. The acquisition was completed on April 29, 1998. The cost
of the acquisition, including the payment of related fees and expenses, was
approximately $607.4 million. We financed the acquisition through:
- $210.1 million of borrowings under the credit facility among Grove
Worldwide and certain banks;
- the issuance by Grove Worldwide of $225.0 million in gross proceeds of its
senior subordinated notes;
- the issuance by Grove Holdings of $50.0 million in gross proceeds of its
senior discount debentures; and
- the issuance by Grove Holdings of $120.0 million of its limited liability
company interests to us, the purchase price for which was financed with
the net proceeds of the issuance of the debentures and the issuance of
$75.0 million of our limited liability company interests to members of the
investor group referred to on page 18.
On April 29, 1998, Grove Holdings contributed the net proceeds from its
equity issuance and the offering of its senior discount debentures to Grove
Worldwide. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Grove Worldwide received approximately $16.8 million in
July 1998 and $10.5 million in November 1998 from Hanson Funding in payment of
the post-closing net worth adjustment.
17
<PAGE>
Our corporate structure, excluding inactive and immaterial subsidiaries, is
as follows:
[LOGO]
- ------------------------------
(1) Grove Investors and Grove Investors Capital, a wholly-owned subsidiary of
Grove Investors, offered the debentures.
(2) Grove Holdings and Grove Holdings Capital, Inc., a wholly-owned subsidiary
of Grove Holdings, offered the senior discount debentures.
(3) Grove Worldwide and Grove Capital, Inc., a wholly-owned subsidiary of Grove
Worldwide, offered the senior subordinated notes.
THE INVESTOR GROUP
Grove Holdings owns all of the limited liability company interests of Grove
Worldwide. We own all of the limited liability company interests of Grove
Holdings. Keystone, Inc. and its related parties, FW Strategic Partners, L.P.,
minority investors and certain principals of, and an entity formed by certain
employees of, the George Group Inc. and other investors, including members of
senior management (together with Keystone, FW Strategic Partners, the minority
investors and George Group Inc., the "investor group") beneficially own in the
aggregate all of our outstanding membership interests. Keystone is the principal
investment entity of Robert M. Bass. FW Strategic Partners is a Delaware limited
partnership formed to invest primarily in public and private debt and equity
securities. George Group is an acquisition and management consulting firm that
applies its strategic and operations management expertise to manufacturing
businesses.
GROVE INVESTORS CAPITAL, INC.
We organized Grove Investors Capital as our direct wholly owned subsidiary
to act as a co-issuer of the debentures. We did this so that institutional
investors that might have been unable to purchase debt securities issued by a
limited liability company because of the legal investment laws of their states
of organization or their charter documents, would be able to invest in the
outstanding debentures. Grove Investors Capital has no assets, no liabilities
other than the debentures, no operations and will not have any revenues and is
prohibited from engaging in any business activities. As a result, you should not
expect Grove Investors Capital to participate in servicing the interest and
principal on the debentures.
18
<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds or incur any additional indebtedness
from the issuance of the registered debentures. In exchange for issuing the
registered debentures, we will receive outstanding debentures in like original
principal amount. Outstanding debentures received in the exchange offer will be
canceled.
We used the net proceeds of $45.0 million from the sale of the debentures,
together with equity contributions by the investor group, to purchase the
limited liability company interests in Grove Holdings. Grove Holdings
contributed to Grove Worldwide those proceeds, together with the proceeds from
the sale of its senior discount debentures. Grove Worldwide used those
contributed funds, together with the:
- borrowings by Grove Worldwide totaling $210.1 million under the credit
facility; and
- gross proceeds of $225.0 million from the senior subordinated notes,
to pay the cash purchase price for the Grove acquisition and related fees and
expenses.
The sources and uses of funds in connection with the acquisition are listed
below (in millions):
<TABLE>
<CAPTION>
SOURCES AMOUNT
---------
Credit Facility:
<S> <C>
Revolving Credit Facility......................................... $ 10.1
Term Loan Facility................................................ 200.0
Senior Subordinated Notes........................................... 225.0
Senior Discount Debentures.......................................... 50.0
Senior Debentures................................................... 47.3
Issuance of Grove Investors' Equity................................. 75.0
---------
Total......................................................... $ 607.4
---------
---------
USES
Acquisition of the Acquired Businesses.............................. $ 583.0
Fees and Expenses................................................... 24.4
---------
Total......................................................... $ 607.4
---------
---------
</TABLE>
19
<PAGE>
CAPITALIZATION
(DOLLARS IN THOUSANDS)
The following table shows our capitalization at January 2, 1999. You should
read this table together with "Use of Proceeds," "Selected Historical Combined
and Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our historical combined and
consolidated financial statements and related notes appearing elsewhere in this
prospectus.
<TABLE>
<CAPTION>
AS OF
JANUARY 2,
1999
--------------
<S> <C>
Cash and cash equivalents..................................................... $ 21,155
Total debt:
Credit Facility(1):
Revolving Credit Facility................................................... $ --
Term Loan Facility.......................................................... 184,000
Senior Subordinated Notes..................................................... 225,000
Senior Discount Debentures.................................................... 54,004
Senior Debentures............................................................. 50,912
Other Debt(2)................................................................. 13,542
--------------
Total Debt.................................................................. 527,458
Total Invested Capital........................................................ 26,471
--------------
Total capitalization........................................................ $ 575,084
--------------
--------------
</TABLE>
- ------------------------
(1) In connection with the acquisition, Grove Worldwide and Grove Capital
entered into the credit facility, which consists of a $125,000 revolving
credit facility and a $200,000 term loan facility. The revolving credit
facility enables Grove Worldwide to obtain revolving credit loans and the
issuance of letters of credit. As of January 2, 1999, $700 of letters of
credit were outstanding under the revolving credit facility and $124,300 of
the revolving credit facility was available for future liquidity and capital
needs. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources" and "Description of
Credit Facility."
(2) Represents short-term borrowings by Deutsche Grove GmbH, which are secured
by an equal amount of trade receivables.
20
<PAGE>
SELECTED HISTORICAL COMBINED AND CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
The following table presents our selected historical financial data as of
and for each of the fiscal years ended September 28, 1996 and September 27,
1997, as of and for the seven months ended April 28, 1998, as of and for the
five months ended October 3, 1998, as of and for the three months ended December
27, 1997 and as of and for the three months ended January 2, 1999. Because of
the acquisition, which was accounted for using the purchase method, results of
operations for periods prior to April 29, 1998 are not comparable with those for
the periods after April 29, 1998.
You should read the following data with the more detailed information
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Selected Historical Combined and Consolidated Financial
Data" and our historical financial statements and the notes to those financial
statements included in this prospectus. You should also read the following
information with the data in the table below:
- Our gross profit for the five months ended October 3, 1998 was adversely
impacted by the write-off of $27.7 million of purchase accounting
adjustments with respect to the amount assigned to inventory in excess of
historical cost.
- Our net income (loss) includes losses by our Sunderland, United Kingdom
facility of $14,085 for the seven months ended April 28, 1998 and $5,999
for the five months ended October 3, 1998. In November 1998, we ceased
manufacturing operations at the Sunderland facility due to recurring
operating losses. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."
- Depreciation and amortization excludes depreciation on equipment held for
rent.
- Capital expenditures includes expenditures on our management information
system of approximately $4,300 in fiscal 1996, approximately $14,000 in
fiscal 1997, approximately $9,322 for the seven months ended April 28,
1998, approximately $5,377 for the five months ended October 3, 1998 and
approximately $950 for the three months ended January 2, 1999.
- Earnings used in computing the ratio or earnings to fixed charges consist
of earnings before provision for income taxes plus fixed charges. Fixed
charges are defined as interest expense, which includes the amortization
of deferred financing costs, and that portion of rental expense
representative of interest, deemed to be one-third or rental expense.
Earnings before fixed charges were insufficient to cover fixed charges by
$25,327 for the five months ended October 3, 1998 and $16,822 for the
three months ended January 2, 1999. Earnings for the five months ended
October 3, 1998 included fixed charges of $23,871. Earnings for the three
months ended January 2, 1999 included fixed charges of $13,813.
21
<PAGE>
SELECTED HISTORICAL COMBINED AND CONSOLIDATED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
(CONTINUED)
<TABLE>
<CAPTION>
PREDECESSOR GROVE INVESTORS
---------------------------------------------------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SEVEN MONTHS
FISCAL YEAR ENDED THREE MONTHS FIVE MONTHS THREE MONTHS
------------------------------------------ APRIL 28, ENDED ENDED ENDED
1994 1995 1996 1997 1998 DECEMBER 27, 1997 OCTOBER 3, 1998 JANUARY 2, 1999
--------- --------- --------- --------- ------------- ----------------- --------------- ---------------
STATEMENT OF
OPERATIONS DATA:
Net sales......... $ 393,526 $ 503,815 $ 794,209 $ 856,812 $ 476,200 $ 204,958 $ 393,779 $ 164,325
Gross profit...... 87,991 126,589 185,079 203,273 98,863 43,572 58,015 27,083
Operating
expenses........ 80,752 88,216 134,459 135,382 79,041 34,249 61,209 31,530
Operating profit
(loss).......... 7,239 38,373 50,620 67,891 19,822 9,323 (3,194) (4,447)
Net income
(loss).......... (4,942) 16,769 25,448 42,220 (395) 5,407 (29,664) (17,755)
BALANCE SHEET DATA
(AT PERIOD END):
Cash and cash
equivalents..... $ 7,135 $ 18,685 $ 8,184 $ 5,024 $ 34,289 $ 21,155
Total assets...... 509,189 652,000 730,158 881,496 915,243 874,720
Total debt........ -- -- 7,443 7,265 531,692 527,458
Total invested
capital......... 399,762 467,306 502,554 628,492 47,835 26,471
OTHER DATA:
Depreciation and
amortization.... $ 13,258 $ 13,765 $ 17,313 $ 17,985 $ 11,399 $ 4,694 $ 8,233 $ 5,192
Capital
expenditures.... 6,042 7,385 19,443 32,491 19,521 9,629 7,230 950
Sales backlog at
end of period... 109,350 208,152 185,237 229,513 268,682 236,649 163,314 171,700
Ratio of Earnings
to fixed
charges......... 2.1x 12.4x 12.2x 22.4x 4.6x 13.1x -- --
</TABLE>
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion together with the more detailed
information and our historical combined and consolidated financial statements
included elsewhere in this prospectus.
OVERVIEW
Our assets consist solely of membership interests of Grove Holdings and
capital stock of Grove Investors Capital. Grove Holdings' assets consist solely
of membership interests of Grove Worldwide and capital stock of Grove Holdings
Capital, Inc. We conduct all of our business through Grove Worldwide.
Grove Worldwide generates most of its net sales from the manufacture and
sale of new mobile hydraulic cranes, aerial work platforms and truck-mounted
cranes. Grove Worldwide also generates a portion of its net sales from
after-market sales, which include parts, service and used equipment, of the
products it manufactures. Sales of used equipment are not material and are
generally limited to trade-ins on new equipment through company-owned
distributors in France, Germany and the United Kingdom.
The following is a summary of net sales for the periods indicated (dollars
in millions):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR --------------------------
------------------------------- DECEMBER 27, JANUARY 2,
1996 1997 1998 1997 1999
--------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C>
New equipment sold (1).................................... $ 632.4 $ 670.1 $ 679.5 $ 158.5 $ 123.2
After-Market.............................................. 120.6 125.8 123.2 32.5 27.7
Other (2)(3).............................................. 41.2 60.9 67.3 14.0 13.4
--------- --------- --------- ------ -----------
Net sales................................................. $ 794.2 $ 856.8 $ 870.0 $ 205.0 $ 164.3
--------- --------- --------- ------ -----------
--------- --------- --------- ------ -----------
</TABLE>
- ------------------------
(1) Excludes specialty cranes and equipment sold to the United States
government.
(2) Includes specialty cranes and equipment sold to the United States government
and revenues from unit sales accounted for as operating leases.
(3) Includes revenues resulting from a non-recurring refurbishment contract in
the first quarter of fiscal 1998 with the Ministry of Defense of the United
Kingdom.
Consistent with industry practice, particularly in Germany, some of Grove
Worldwide's mobile hydraulic crane sales, generally less than 5% of units sold
annually, are made with residual value guarantees under which the full sales
price is collected in cash on normal commercial terms following delivery of the
cranes. However, these sales are accounted for in a manner similar to operating
leases. Upon collection, the sales price is deferred and accounted for as
deferred revenue, current and non-current, while the related inventory is
reclassified as "property, plant and equipment/equipment held for rent." Over
the term of the residual value guarantee, deferred revenue is recognized as
sales and the depreciation of the related equipment held for rent is classified
as cost of goods sold, the effect of which is to recognize sales, costs of goods
sold and gross profit over the residual value guarantee period, typically five
years, as opposed to at the time of delivery of the crane. Losses with respect
to residual value guarantees have been insignificant. See Note 3 to our combined
and consolidated financial statements.
We are a limited liability company organized under the laws of Delaware, as
a result of which:
- we do not have to pay income taxes;
- the taxable income of the mobile hydraulic crane, aerial work platform and
truck-mounted crane businesses in the United States is allocated to our
equity holders; and
- our equity holders are responsible for income taxes on their taxable
income.
23
<PAGE>
We intend to make distributions in the form of dividends to our equity holders
to enable them to meet their tax obligations with respect to income allocated to
them by us.
RESULTS OF OPERATIONS
For financial reporting purposes, the acquisition creates a new basis of
accounting and, accordingly, we are required to report results before the
acquisition separate from results after the acquisition. For purposes of the
following discussion of our results of operations, we have compiled financial
information for the fiscal year ended October 3, 1998 by combining results of
operations for the seven months ended April 28, 1998, before the acquisition,
with those for the five months October 3, 1998, after the acquisition. In
connection with the acquisition, we were formed as a limited liability company
and our capital structure was changed significantly. Accordingly, comparisons of
interest, taxes, and net income for fiscal 1998 and for the three months ended
January 2, 1999 relative to fiscal 1997 and for the three months ended December
27, 1997 would not be meaningful and are therefore not presented.
Listed below is information regarding our results of operations for the
periods indicated (dollars in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEAR ------------------------
---------------------------------- DECEMBER 27, JANUARY 2,
1996 1997 1998 1997 1999
---------- ---------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net sales......................................... $ 794,209 $ 856,812 $ 869,979 $ 204,958 $ 164,325
Cost of goods sold................................ 609,130 653,539 685,394 161,386 137,242
Write-off of amount assigned to inventory in
excess of historical costs resulting from
purchase accounting adjustments................. -- -- 27,707 -- --
---------- ---------- ---------- ------------ ----------
Gross profit...................................... 185,079 203,273 156,878 43,572 27,083
Selling, engineering, general and administrative
expenses........................................ 119,619 124,152 131,782 31,989 29,707
Management fees paid to Hanson Funding (G) PLC.... 5,655 2,176 162 162 --
Amortization of goodwill.......................... 9,185 9,054 8,306 2,260 1,823
---------- ---------- ---------- ------------ ----------
Operating profit (Loss)....................... $ 50,620 $ 67,891 $ 16,628 $ 9,323 $ (4,447)
---------- ---------- ---------- ------------ ----------
---------- ---------- ---------- ------------ ----------
</TABLE>
THREE MONTHS ENDED JANUARY 2, 1999 (THE "FISCAL 1999 THREE MONTHS") COMPARED TO
THE THREE MONTHS ENDED DECEMBER 27, 1997 (THE "FISCAL 1998 THREE MONTHS")
NET SALES. Net sales decreased $40.7 million, or 19.9%, from $205.0 million
for the fiscal 1998 three months to $164.3 million for the fiscal 1999 three
months. Although there was a decline in revenues from the fiscal 1998 three
months to the fiscal 1999 three months, management currently believes that
fiscal 1999 revenues will be flat to slightly below fiscal 1998. This outlook is
based on industry expectations and customer feedback as well as anticipation of
favorable industry acceptance of new products.
Net sales of mobile hydraulic cranes declined significantly from the fiscal
1998 three months to the fiscal 1999 three months. The decline in net sales was
caused by a lower volume, primarily of mobile hydraulic cranes produced by our
United States facility. Net sales to North American and Asian customers
declined; however this decline was offset by a slight increase in European
sales.
Net sales of aerial work platforms declined significantly from the fiscal
1998 three months to the fiscal 1999 three months. The decrease was a result of
lower unit sales in North America, Europe and Asia.
24
<PAGE>
Net sales of truck-mounted cranes decreased from the fiscal 1998 three
months to the fiscal 1999 three months. Net sales decreased as the result of
lower unit sales as well as significantly decreased demand for higher priced
models.
After-market sales, including parts and services, decreased 14.8% from the
fiscal 1998 three months to the fiscal 1999 three months predominantly due to a
decline in used equipment sales in Europe and parts sales in North America.
Other sales decreased 4.3% as a result of lower United States government
sales, which were partially offset by an increase in revenues from unit sales
that were accounted for as operating leases.
GROSS PROFIT. Gross profit decreased $16.5 million, or 37.8%, from $43.6
million in the fiscal 1998 three months to $27.1 million in the fiscal 1999
three months. The decrease in gross profit was attributable to a decline in
volume as well as a decline in gross profit at our Sunderland, United Kingdom
facility caused by higher price concessions and lower sales volume to absorb
fixed overhead. Also affecting the fiscal 1999 three months operations were
costs associated with the start-up of our new management information system in
the United States which affected production flow and operations visibility.
SELLING, ENGINEERING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,
engineering, general and administrative expenses decreased $2.1 million, or
6.6%, from $31.8 million in the fiscal 1998 three months to $29.7 million in the
fiscal 1999 three months. The savings were primarily attributable to cost
reductions at our United States facility, which were implemented in August 1998.
Included in selling, engineering, general and administrative expenses for the
1999 three months are approximately $2.0 million of consulting fees paid to the
George Group Inc. in connection with our operations improvement initiatives and
$0.1 million in transition costs related to the acquisition. As a percentage of
net sales, selling, engineering, general and administrative expenses were 15.5%
in the fiscal 1998 three months and 18.1% in the fiscal 1999 three months.
MANAGEMENT FEES. Management fees paid to Hanson Funding were $0.2 million
in the fiscal 1998 three months. Following the acquisition of the business from
Hanson Funding, no management fees have been paid.
FISCAL 1998 COMPARED TO FISCAL 1997
NET SALES. Net sales increased $13.2 million, or 1.5%, from $856.8 million
for fiscal 1997 to $870.0 million for fiscal 1998.
Net sales of mobile hydraulic cranes declined from fiscal 1997 to fiscal
1998 on higher unit sales. The decline in net sales was caused by a shift in
product mix and higher price concessions, primarily on mobile hydraulic cranes
produced by our Sunderland, United Kingdom facility. While net sales to North
American and European customers remained stable, net sales to Asia declined. The
modest decline in net sales to the Asian market was a result of Asia's recent
economic crisis.
Net sales of aerial work platforms increased modestly from fiscal 1997 to
fiscal 1998. Unit sales of aerial work platforms were down; however, net sales
increased as a result of improved sales mix.
Net sales of truck-mounted cranes increased significantly from fiscal 1997
to fiscal 1998. Net sales increased as the result of increased production
capacity as well as significantly increased demand for higher priced models.
After-market sales, including parts and services, decreased slightly from
fiscal 1997 to fiscal 1998. This decrease was due primarily to a decrease in
used equipment sales partially offset by a slight increase in parts sales.
Other sales increased 10.5% as a result of higher revenue from unit sales
that were accounted for as operating leases, partially offset by lower revenues
following the completion of a non-recurring contract for crane refurbishment
with the Ministry of Defence of the United Kingdom.
25
<PAGE>
GROSS PROFIT. Gross profit decreased $46.4 million, or 22.8%, from $203.3
million in fiscal 1997 to $156.9 million in fiscal 1998. Gross profit was
adversely impacted by a $27.7 million write-off of amounts assigned to inventory
in excess of historical costs in accounting for the acquisition. The decline in
gross profit was also attributable to a $14.8 million decline in gross profit at
our Sunderland, United Kingdom facility caused by higher price concessions and
lower sales volume available to absorb fixed overhead. The higher price
concessions were primarily required to induce the sale of United Kingdom-
manufactured products, including 17 all-terrain cranes that were built to order
for a customer that refused delivery in fiscal 1998. The sale of the 17 cranes,
which were sold for approximately $8.2 million during the second quarter of
fiscal 1998, resulted in a loss of approximately $1.5 million.
SELLING, ENGINEERING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,
engineering, general and administrative expenses increased $7.6 million, or
6.1%, from $124.2 million in fiscal 1997 to $131.8 million in fiscal 1998. As a
percentage of net sales, selling, engineering, general and administrative
expenses were 14.5% in fiscal 1997 and 15.1% in fiscal 1998. The expense growth
occurred broadly across Grove Worldwide as the result of the impact of the
acquisition on operations. Included in selling, engineering, general and
administrative expenses for fiscal 1998 are approximately $2.7 million of George
Group Inc. expenses and $3.1 million of ownership transition costs related to
the acquisition and the hiring of new management. Included in selling,
engineering, general and administrative expenses for fiscal 1997 are
approximately $2.0 million in restructuring charges related to the United
Kingdom crane manufacturing operation.
FISCAL 1997 COMPARED TO FISCAL 1996
NET SALES. Net sales increased $62.6 million, or 7.9%, from $794.2 million
in fiscal 1996 to $856.8 million in fiscal 1997.
Net sales of mobile hydraulic cranes were virtually unchanged from fiscal
1996 to fiscal 1997. Unit shipments increased in fiscal 1997 versus fiscal 1996,
with substantially all of the increase representing units sold to Latin American
customers. Sales of mobile hydraulic cranes reflected strong demand in North
America.
Net sales of aerial work platforms increased significantly from fiscal 1996
to fiscal 1997. Unit sales increased as a result of continued industry growth
led by efficiency considerations as well as government-mandated safety standards
for people working in elevated environments.
Net sales of truck-mounted cranes increased significantly from fiscal 1996
to fiscal 1997. Unit sales increased principally due to increased international
marketing efforts. Net sales of truck-mounted cranes also benefited from an
improved product sales mix resulting primarily from increased demand for higher
priced models.
After-market sales, including parts and services, increased from fiscal 1996
to fiscal 1997. This increase was due primarily to an increase in parts sales
resulting from a larger installed base and relatively high rental fleet
utilization.
Other sales increased significantly as a result of a non-recurring crane
refurbishment contract for cranes with the Ministry of Defence of the United
Kingdom.
GROSS PROFIT. Gross profit increased $18.2 million, or 9.8%, from $185.1
million in fiscal 1996 to $203.3 million in fiscal 1997. The increase in gross
profit was due primarily to increased sales in the aerial work platform and
truck-mounted crane businesses. As a percentage of sales, gross profit improved
modestly from 23.3% in fiscal 1996 to 23.7% in fiscal 1997.
SELLING, ENGINEERING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,
engineering, general and administrative expenses increased $4.6 million, or
3.8%, from $119.6 million in fiscal 1996 to $124.2 million in fiscal 1997.
However, as a percentage of net sales, selling, engineering, general and
administrative expenses declined from 15.1% in fiscal 1996 to 14.5% in fiscal
1997 as a result of higher
26
<PAGE>
sales that absorbed fixed costs. The dollar increase was principally related to
higher selling and advertising costs to support the sales growth of our product
lines as well as general cost increases.
Included in selling, engineering, general and administrative expenses are
research and development expenses, which increased 2.7% from $15.0 million in
fiscal 1996 to $15.4 million in fiscal 1997. In addition, general and
administrative expenses included $2.7 million in fiscal 1996 and $1.3 million in
fiscal 1997, due to process re-engineering and systems assessment costs
associated with the installation of our management information system. See
"--Management Information Systems and the Impact of Year 2000."
MANAGEMENT FEES. Results of operations included management fees paid to
Hanson Funding of $5.7 million in fiscal 1996 and $2.2 million in fiscal 1997.
We believe our results of operations in all material respects reflect all
operating costs on a stand alone basis. We estimate that costs to replace
services provided by Hanson Funding before the acquisition together with other
stand alone costs will be less than $1.0 million for the twelve months following
the acquisition. These costs, which are generally less than the management fees
charged by Hanson Funding on an annual basis, relate to additional treasury,
human resource and income tax requirements. We believe these additional costs
will be more than offset by planned costs savings in other general and
administrative areas.
NET INTEREST EXPENSE/INCOME. Net interest expense/income included (1)
interest income of $0.6 million in fiscal 1996 and $2.1 million in fiscal 1997,
which was generated primarily from notes receivable under Grove Worldwide's
special North American dealer financing program and (2) interest expense of $3.3
million in fiscal 1996 and $2.0 million in fiscal 1997, substantially all of
which was paid to Hanson Funding with respect to intercompany borrowings.
INCOME TAXES. Income tax expense, virtually all of which was U.S.-based,
increased 18.3% from $22.2 million in fiscal 1996 to $26.2 million in fiscal
1997. The overall effective tax rates were 46.6% for fiscal 1996 and 38.3% for
fiscal 1997. The decline in tax rate was caused principally by a reduction in
permanent goodwill additions which resulted from the transactions consummated to
effect a demerger of Hanson Funding's various businesses. We have established
valuation allowances for net operating losses generated by our foreign
subsidiaries.
NET INCOME. Net income increased $16.8 million, or 65.9%, from $25.4
million in fiscal 1996 to $42.2 million in fiscal 1997. The increase related
principally to increased sales and operating profits.
GEOGRAPHIC COMPARISONS DURING THE THREE YEARS ENDED OCTOBER 3, 1998
Net sales to unaffiliated customers by our domestic subsidiaries contributed
in excess of 70% of our sales in fiscal 1998 and virtually all of our income
from operations. Net sales to unaffiliated customers by our domestic
subsidiaries increased by $23.8 million or 3.9% in fiscal 1998 as compared to
fiscal 1997. The increase in net sales by our domestic subsidiaries was caused
by strong sales of aerial work platforms and truck-mounted cranes. Net sales of
mobile hydraulic cranes by our domestic subsidiaries were virtually unchanged in
fiscal 1998 as compared to fiscal 1997. Net sales to unaffiliated customers by
our foreign subsidiaries decreased by $10.6 million or 4.2% in fiscal 1998 as
compared to fiscal 1997. The decrease in net sales by our foreign subsidiaries
was primarily the result of Sunderland's completion of the Ministry of Defence
of the United Kingdom contract in February 1998. Recurring operating losses by
our manufacturing facility in Sunderland, United Kingdom of approximately $15.9
million in fiscal 1998 exceeded all of the operating earnings of our German and
French subsidiaries during the same period.
Net sales to unaffiliated customers by our domestic subsidiaries contributed
in excess of 70.0% of our sales in fiscal 1997 and virtually all of our net
income. Net sales to unaffiliated customers by our domestic subsidiaries
increased by $43.6 million or 7.8% in fiscal 1997 as compared to fiscal 1996,
which represented approximately 70.0% of our overall sales increase for fiscal
1997. The increase in net sales by our domestic subsidiaries was caused by
strong sales of aerial work platforms and truck-mounted cranes. Net sales of
mobile hydraulic cranes by our domestic subsidiaries were virtually
27
<PAGE>
unchanged in fiscal 1997 as compared to fiscal 1996. Net sales to unaffiliated
customers by our foreign subsidiaries increased by $16.7 million or 7.2% in
fiscal 1997 as compared to fiscal 1996. The increase in net sales by our foreign
subsidiaries was primarily the result of continued growth of aerial work
platform sales in Europe. Recurring operating losses by our manufacturing
facility in Sunderland, United Kingdom of approximately $2.5 million in fiscal
1997 offset virtually all of the operating earnings of our German and French
subsidiaries during the same period.
Net sales to unaffiliated customers by our domestic subsidiaries contributed
in excess of 70.0% of our sales in fiscal 1996 and all of our net income. The
acquisition of the KMK division of Fried.Krupp AG Hoesch-Krupp contributed
significant sales growth to both domestic and European operations. Operating
losses by our manufacturing facility in Sunderland, United Kingdom of
approximately $3.8 million in fiscal 1997 offset all of the operating earnings
of our German and French subsidiaries during the same period. The acquisitions
of Delta Systems SA and the KMK division of Fried.Krupp improved the operating
results of our German and French subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
Our business is working capital-intensive, requiring significant investments
in receivables and inventory. In addition, we require capital for replacement
and improvements of existing plant, equipment and processes.
During the three months ended January 2, 1999, our operating activities used
approximately $5.5 million in operating cash flow. This amount resulted
primarily from a loss from operations before non-cash charges of $17.8 million,
declines in investment in accounts receivable of $20.5 million and increases in
other non-current liabilities of approximately $9.2 million. Grove Worldwide has
entered into an agreement with a third-party financial institution to sell up to
$65.0 million of notes receivable obtained under its special North American
Dealer Finance Program. The third-party financial institution purchases the
notes at face value on a 90.0% non-recourse basis. Grove Worldwide retains 10%
of the credit risk. The sale of the notes qualifies as a sale under generally
accepted accounting principles and, accordingly, upon sale, the notes receivable
are removed from our balance sheet. See Note 4 to our combined and consolidated
financial statements.
During the three months ended January 2, 1999, we used $0.5 million in
investing activities, consisting of $1.0 million of capital expenditures and
$10.0 million of investment in equipment held for rent, offset by $10.5 million
received from Hanson Funding as the final purchase price adjustment.
During the twelve months ended October 3, 1998, our operating activities
generated approximately $150.4 million in operating cash flow ($93.1 million for
the seven months ended April 28, 1998 and $57.3 for the five months ended
October 3, 1998). This amount resulted primarily from income from operations
before non-cash charges of $80.3 million, declines in the investment in accounts
receivable and inventory of $34.4 million, proceeds from sales of notes
receivable to a third-party financial institution of $24.8 million and increases
in other non-current liabilities of approximately $10.0 million.
28
<PAGE>
During the seven months ended April 28, 1998, we used $35.9 million in
investing activities, consisting of $19.5 million of capital expenditures, of
which $9.3 million was for the new management information system, and $16.4
million of investment in equipment held for rent, due to the operating lease
treatment relating to sales which are accounted for as operating leases, and
$55.3 million in financing activities, principally consisting of amounts paid to
Hanson Funding.
During the five months ended October 3, 1998, we used approximately $589.4
million of cash flow for investing activities of which $562.7 million was
related to the acquisition, $7.2 million was for capital expenditures, of which
$5.4 million was for the new management information system, and $20.8 million
was for investment in equipment held for rent. The cash flows used in investing
activities were funded by cash flows from operating activities and through the
issuance of long-term debt of $547.6 million and an equity contribution from our
members of $75.0 million. Net cash flows from financing activities also included
there payment of $35.2 million of long-term debt and $19.5 million of deferred
financing costs.
In November 1998, we ceased manufacturing operations at our Sunderland,
United Kingdom facility due to recurring operating losses. Management believes
closing the facility will improve operating earnings as well as provide the
opportunity for additional cost reductions through product rationalization,
reduced selling, general and administrative expenses and reduced manufacturing
costs. Management has estimated total closure costs to be approximately $18.5
million, consisting of approximately:
- $11.5 million of employee severance; and
- $7.0 million of plant shut-down costs, which includes asset disposal and
plant clean up costs, all of which are expected to be expended in the next
twelve months.
We expect that cash flows from foreign operations will be required to meet
our domestic debt service requirements. Cash flows are expected to be generated
from intercompany interest expense on loans Grove Worldwide made to two of its
foreign subsidiaries to consummate the acquisition of Hanson Funding's crane and
aerial work platform subsidiaries in the United Kingdom, Germany and France and
for working capital requirements. The loans have been established with amounts
and interest rates to allow for repatriation without restriction or additional
tax burden. However, there is no assurance that the foreign subsidiaries will
generate the cash flow required to service the loans or that the laws in the
foreign jurisdictions will not change to limit repatriation or increase the tax
burden of repatriation.
In connection with the acquisition, Grove Worldwide entered into a
seven-year, $125 million revolving credit facility, permitting it, subject to
certain borrowing conditions, to obtain revolving credit loans and issue letters
of credit for working capital, acquisitions and general corporate purposes. A
portion of the revolving credit facility is available for borrowing in the euro
currency markets of British pounds sterling, German marks and French francs and
other currencies. As of January 2, 1999 Grove Worldwide had available borrowings
of $124.3 million under the revolving credit facility. For additional
information regarding the revolving credit facility, see Note 10 to our combined
and consolidated financial statements. We believe that our income from
operations and available borrowings under the revolving credit facility will be
sufficient to meet our debt service obligations and capital expenditure
requirements and to make distributions in the form of dividends to our equity
holders to enable them to meet their tax obligations with respect to income
allocated to them for at least the next twelve months. Subject to certain
exceptions, including the right of Grove Worldwide and Grove Holdings to make
distributions to us to enable us to make distributions to our equity holders
with respect to their tax obligations, Grove Worldwide's credit facility, the
indenture relating to Grove Worldwide's senior subordinated notes and the
indenture relating to Grove Holdings' senior discount debentures impose
significant restrictions on the ability of our subsidiaries to pay cash
dividends or make loans to us.
29
<PAGE>
GROVE INVESTORS CAPITAL
We issued the debentures together with our wholly owned subsidiary, Grove
Investors Capital. We organized Grove Investors Capital as our direct wholly
owned subsidiary to act as a co-issuer of the debentures and a co-registrant of
the Registration Statement. We did this so that institutional investors that
might have been unable to purchase debt securities issued by a limited liability
company because of the legal investment laws of their states of organization or
their charter documents, would be able to invest in the outstanding debentures.
You should not expect Grove Investors Capital to participate in servicing
the interest and principal on the debentures because:
- Grove Investors Capital has no assets, no liabilities other than the
debentures, no operations; and
- Grove Investors Capital will not have any revenues and is prohibited from
engaging in any business activities.
We have not included separate financial statements of Grove Investors
Capital in this prospectus. We believe that providing separate financial
statements and other disclosures concerning Grove Investors Capital would not be
material to you.
BACKLOG
Our backlog consists of firm orders for new equipment and replacement parts.
Total backlog as of March 20, 1999 was approximately $232.6 million compared to
total backlog as of March 21, 1998 of approximately $313.7 million. We expect
all of our backlog orders to be filled within one year, although there can be no
assurance that all backlog orders will be filled within that time period. Parts
orders are generally filled on an as-ordered basis.
CYCLICALITY
Historically, cyclical variations based, among other things, on general
economic conditions and, in particular, on conditions in the construction
industry have affected sales of our products. During periods of expansion in
construction activity, we generally have benefited from increased demand for
construction equipment. Conversely, during recessionary times, we have been
adversely affected by reduced demand for our products. Downward cycles result in
reductions in our new unit sales and prices, which adversely impact our results
of operations. We believe there are several factors that may lessen the effects
of future cyclical trends on our business. These factors include the continued
growth of our aerial work platform business, which has a lower correlation to
the results of the construction industry, the global diversification of our
sales network and the decrease in the fixed costs of our overall business.
After-market sales for parts and services accounted for 11.4% of our net sales
fiscal 1998. These sales typically have higher gross margins and are less
cyclical than new equipment sales. However, there can be no assurance that a
decline in the general condition of the economy will not have a material adverse
impact on us.
Net sales of new units to Asian customers represented 5.6% in fiscal 1996,
5.1% in fiscal 1997, 2.0% in fiscal 1998 and 2.0% in fiscal 1999 three months,
of our net sales. The Asian economic crisis has had a limited impact on our
results of operations. Although we are not dependent on sales to Asian
customers, we cannot reasonably predict what impact, if any, the crisis will
have on our competitors or on markets outside of Asia where we sell our
products.
30
<PAGE>
MANAGEMENT INFORMATION SYSTEMS AND THE IMPACT OF YEAR 2000
Many computer programs and microprocessors use two digits rather than four
to define the applicable year. Computer programs that have date-sensitive
software and microprocessors may recognize a date using "00" as the year 1900
rather than the year 2000. This phenomenon could cause a disruption of
operations, including, among other things, a temporary inability to use
manufacturing equipment, send invoices or engage in similar normal business
activities.
In fiscal 1995, we conducted a Year-2000 assessment of all management
information systems used at our crane and aerial work platform facilities in the
United States, United Kingdom and Germany. Upon completing this review in
October 1995, we launched the Year-2000 project, a campaign designed to replace
all existing software and hardware that was not Year-2000 compliant. In addition
to replacing all business application software and hardware, the Year-2000
project was designed to provide improved business processes and procedures.
We determined that we did not need to implement the Year-2000 project at our
National Crane facility in Waverly, Nebraska. Instead, National Crane upgraded
all of its existing hardware and software and converted all of its data.
Management believes the completion of this upgrade has rendered all of National
Crane's major computer systems Year-2000 compliant.
We expect to complete the Year-2000 project in September 1999. We expect the
project will have a total cost of approximately $38.0 million, of which
approximately $33.0 million had been spent as of January 2, 1999. If the
Year-2000 project is delayed, we will have to shorten our planning horizons and
replace certain computerized functions, like inventory and work-in-process
tracking, billing and order processing, with manual systems. Any delay in
completing the project could result in part shortages and slow the delivery of
products to our customers. We believe that all of our major computer systems
will be rendered Year-2000 compliant. If we do not complete the modifications
and conversions in a timely manner, the Year-2000 issue could have a material
impact on our operations. See "Business-- Management Information Systems."
We have also polled the manufacturers of our computerized numerical control
manufacturing/ production equipment. These manufacturers have informed us that
there are no Year-2000 issues with respect to these computerized numerical
control equipment at our Shady Grove, Pennsylvania and Waverly, Nebraska
facilities. We are also conducting an internal review of our computerized
numerical control equipment to confirm the equipments' Year-2000 readiness.
Although we believe that the Year-2000 issue will not have a material adverse
impact on our computerized numerical control equipment, there can be no
assurance that it will not.
In addition, we have initiated communications with suppliers and customers
to determine the extent to which we may be vulnerable to their failure to
remediate their own Year-2000 issues. There can be no guarantee that the systems
of other companies on which our systems rely will be timely converted, or that a
failure to convert by another company, or a conversion that is incompatible with
our systems, would not have material adverse effect on us. However, based on our
current assessment, we believe that the Year-2000 issue will not have a material
adverse impact on our future results of operations or financial conditions,
although there can be no assurance that this will be the case.
IMPACT OF CONVERSION BY THE EUROPEAN UNION TO A COMMON CURRENCY
On January 1, 1999, eleven of the fifteen member countries of the European
Union established fixed conversion rates between their existing currencies and
the euro, a new European currency, and adopted the euro as their common legal
currency. Either the euro or a participating country's existing currency will be
accepted as legal tender until January 1, 2002, from which date forward only the
euro will be accepted. The euro will be implemented initially as an additional
currency both in domestic and foreign markets for European businesses domiciled
in the European monetary zone. In fiscal 1998, we
31
<PAGE>
derived approximately 18% of our revenues from operations in member countries of
the European monetary union.
We initiated an assessment of euro-related issues and their impact on
information systems, currency exchange rate risk, employment and benefits,
taxation, contracts, competition, selling prices and costs, communications,
finance and administration. Initially we intend to continue to do business in
the national currencies of the countries adopting the euro. We will accommodate
customers and vendors who wish to do business in the euro. During fiscal 1999
and 2000 we intend to upgrade our information systems in Germany and France to
facilitate our ability to transact all business using the euro by January 1,
2002. After this date all of our transactions in countries participating in the
euro conversion will be based solely on the euro. We do not currently expect the
cost of these modifications to have a material effect on our results of
operations or financial condition.
We have outstanding foreign exchange contracts involving the currencies of
countries participating in the euro conversion. We believe that conversion to
the euro may reduce our exposure to exchange rate risk, due to the netting
effect of having assets and liabilities denominated in a single currency as
opposed to the various legacy currencies. As a result, our foreign exchange
hedging costs could be reduced. Conversely, because there will be less diversity
in our exposure to foreign currencies, movements of the euro's value relative to
the United States dollar could have a more pronounced effect, whether positive
or negative.
The United Kingdom, which, in fiscal 1998, accounted for approximately 10%
of our consolidated net sales, did not participate in the euro conversion. We
are considering the potential impact which the United Kingdom's nonparticipation
might have on trading activities with countries participating in the euro
conversion as well as on internal United Kingdom operations.
We do not expect the euro conversion, including the costs of implementation,
to have a material adverse effect upon our results of operations, financial
condition or cash flow. However, we cannot guarantee that, with respect to the
euro conversion, all problems, including long-term competitive implications of
the conversion, will be foreseen and corrected, that no material disruption of
our business will occur, or that there will be no delays in the dates targeted
by us for the euro conversion process.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our principal market risk exposure is changing interest rates, primarily
changes in short-term interest rates. We do not enter into financial instruments
for trading or speculative purposes. Our policy is to manage interest rates
through use of a combination of fixed and floating rate debt. We may also use
derivative financial instruments to manage our exposure to interest rate risk. A
summary of the principal financial instruments which are subject to interest
rate risk at January 2, 1999 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
AMOUNT OUTSTANDING AT INTEREST
DESCRIPTION JANUARY 2, 1999 RATE FAIR VALUE
- ---------------------------------------------------------------- --------------------- ------------ ----------
<S> <C> <C> <C>
Grove Worldwide's Revolving Credit Facility..................... $ -- Floating $ --
Grove Worldwide's Term Loan Facility............................ $ 184,000 Floating $ 184,000
Grove Worldwide's Senior Subordinated Notes..................... $ 225,000 9.25% $ 184,500
Grove Holdings' Senior Discount Debentures...................... $ 88,000 11.625% $ 31,680
Grove Investors' Debentures..................................... $ 54,004 14.50% $ 33,466
</TABLE>
At Grove Worldwide's option, loans under the revolving credit facility and
term loan facility bear interest (a) in the case of loans in United States
dollars, at the highest of (x) 1/2 of 1.0% in excess of the federal funds
effective rate (y) 1.0% in excess of a certificate of deposit rate and (z) the
bank's prime rate, plus the applicable margin, or (b) in the case of all loans,
the relevant euro currency rate,
32
<PAGE>
plus the applicable margin. The applicable margin will vary based upon Grove
Worldwide's operating results and will range between 1.25% and 2.25% for
borrowings under the revolving credit facility and between 2.0% and 2.5% for
borrowings under the term loan facility. As of January 2, 1999, the margins for
borrowings under the revolving credit facility were 2.25% and the margins for
borrowings under the term loan facility were 2.5%. The average interest rate on
borrowings under the term loan facility was 8.33% for the three months ended
January 2, 1999.
The revolving credit facility expires in fiscal 2005. The term loan facility
matures in fiscal 2006 and must be repaid in semi-annual installments in April
and October of each year in an aggregate amount of (1) $2,000 for the first six
years, (2) $88,000 during the fiscal 2005 and (3) the balance in fiscal 2006.
The senior subordinated notes mature in fiscal 2008. The senior discount
debentures mature in fiscal 2009. The senior discount debentures require no cash
payments prior to November 2003 except in limited circumstances. The debentures
mature in fiscal 2010. The debentures require no cash payments until maturity
except in limited circumstances.
We have an interest rate collar to manage exposure to fluctuations in
interest rates on $100.0 million of our floating rate long-term debt through
September 2001. Under the agreement we will receive, on a $100.0 million
notional amount, three month LIBOR and pay 6.5%, anytime LIBOR exceeds 6.5%, and
will receive three month LIBOR and pay 5.19% anytime LIBOR is below 5.19%. The
agreement effectively caps our exposure on $100.0 million of our floating rate
debt at 6.5% plus the applicable margin.
Movement in foreign currency exchange rates creates risk to our operations
to the extent of sales made and costs incurred in foreign currencies. The major
foreign currencies in which we do business are the British pound sterling,
German mark and French franc. In addition, changes in currency exchange rates
can affect the competitiveness of our products and could result in management
reconsidering pricing strategies to maintain market share. Specifically, we are
most sensitive to changes in the German mark. In the three months ended January
2, 1999, approximately 36% of our net sales were transacted in foreign
currencies and approximately 24% were transacted in the German mark. During the
past three fiscal years, the impact of currency fluctuations has not had
significant impact on our results of operations. Had the average exchange rate
for our foreign currencies been 10% higher in fiscal 1998 our reported earnings
would have been higher by $2.0 million for the seven months ended April 28, 1998
and $1.1 million for the five months October 3, 1998. Based on our overall
currency rate exposure at January 2, 1999, a 10% change in currency rates would
not have had a material effect on our financial position, results of operations
or cash flows.
To manage currency risk, our practice is to contract for purchases and sales
of goods and services in the functional currency of our subsidiary executing the
transaction. To the extent the purchases or sales are in currencies other than
the functional currency of the subsidiary, we generally purchase forward
contracts to hedge firm purchase and sales commitments. As of January 2, 1999,
we were a party to seven forward contracts with an aggregate value of $4.0
million. These forward contracts generally have average maturities of less than
three months. We have not taken any actions at this time to hedge our net
investment in foreign subsidiaries but may do so in the future.
We do not have any commodity contracts.
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ENVIRONMENTAL MATTERS
We generate hazardous and non-hazardous waste in the normal course of our
manufacturing operations. As a result, we are subject to a wide range of
Federal, state, local and foreign environmental laws, that:
- govern activities or operations that may have adverse environmental
effects, such as discharges to air and water, as well as handling and
disposal practices for hazardous and nonhazardous wastes; and
- impose liability for the costs of cleaning up, and damages resulting from,
sites of past spills, disposals or other releases of hazardous substances.
In order to comply with these laws , we have to make expenditures on a
continuing basis. We do not expect that these expenditures will have a material
adverse effect on our financial condition or results of operations.
In 1990, the Clean Air Act was amended to establish a list of 189 toxic air
pollutants that must be controlled using maximum achievable control technology
as prescribed by the Environmental Protection Agency. We believe that by 2003 we
will need to comply with the maximum achievable control technology regulations
with respect to our surface coating air omissions. At this time, we do not
expect the cost of compliance with these regulations to have a significant
impact on us.
CHANGE IN ACCOUNTING STANDARDS
In 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information." This
Statement requires that public business enterprises disclose information about
their products and services, operating segments, the geographic areas in which
they operate, and their major customers. Management will adopt the provisions of
this Standard in fiscal 1999. At this time, management has not definitively
determined the content or nature of our segment reporting.
In 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative instruments and
for hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities measured at fair value. Management has not yet
evaluated this statement's impact on our financial condition or results of
operations. Adoption of this statement will be required for fiscal 2000.
In 1998, the Accounting Standards Executive Committee issued Statement of
Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities." This
Statement provides guidance on the financial reporting of start-up costs and
organization costs. It requires costs of start-up activities and organization
costs to be expensed as incurred. We intend to adopt the pronouncement in fiscal
2000.
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THE EXCHANGE OFFER
GENERAL
We are offering to exchange up to $56,652,000 aggregate principal amount of
registered debentures for the same aggregate principal amount of outstanding
debentures properly tendered before the expiration date and not withdrawn. We
are making the exchange offer for all of the outstanding debentures. Your
participation in the exchange offer is voluntary and you should carefully
consider whether to accept this offer.
On the date of this prospectus, $56,652,000 aggregate principal amount of
the outstanding debentures is outstanding. We are sending this prospectus,
together with the letter of transmittal, on approximately , 1999, to
all holders of outstanding debentures that we are aware of. Our obligations to
accept outstanding debentures for exchange pursuant to the exchange offer are
limited by the conditions listed under "Conditions to the Exchange Offer" below.
We currently expect that each of the conditions will be satisfied and that no
waivers will be necessary.
PURPOSE OF THE EXCHANGE OFFER
We issued and sold $47,375,000 in principal amount of the outstanding
debentures on April 29, 1998 in a transaction exempt from the registration
requirements of the Securities Act. Because the transaction was exempt under the
Securities Act, you may re-offer, resell, or otherwise transfer the outstanding
debentures only if registered under the Securities Act or if an applicable
exemption from the registration and prospectus delivery requirements of the
Securities Act is available. We issued $9,277,000 of additional debentures as
interest payments in lieu of paying interest in cash.
In connection with the issuance and sale of the outstanding debentures, we
entered into the registration rights agreement, which requires us to:
- file with the SEC a registration statement relating to the exchange offer
not later than April 29, 1999 (365 days after the date of issuance of the
outstanding debentures);
- use our reasonable best efforts to cause the registration statement
relating to the exchange offer to become effective under the Securities
Act not later than August 27 1999 (485 days after the date of issuance of
the outstanding debentures); and
- cause the exchange offer to be completed not later than 30 business days
after the date of the effectiveness of the Registration Statement.
In addition, there are circumstances where we are required to use our reasonable
best efforts to file a shelf registration statement with respect to resales of
the debentures not later than 60 days after the filing obligation arises and
cause the shelf registration statement to become effective not later than 120
days after the date that we become obligated to file the shelf registration
statement. We have filed a copy of the registration rights agreement as an
exhibit to the registration statement that this prospectus forms a part of and
that has been filed with the SEC.
We are making the exchange offer to satisfy our obligations under the
registration rights agreement. Otherwise, we are not required to file any
registration statement to register any outstanding debentures. Holders of
outstanding debentures that do not tender their outstanding debentures or whose
outstanding debentures 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 outstanding debentures.
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<PAGE>
TERMS OF THE EXCHANGE
We are offering to exchange, upon the terms of this prospectus and the
letter of transmittal, $1,000 in principal amount at maturity of registered
debentures for each $1,000 in principal amount at maturity of the outstanding
debentures. The terms of the registered debentures are the same in all material
respects, including principal amount, interest rate, maturity and ranking, as
the terms of the outstanding debentures for which they may be exchanged pursuant
to the exchange offer, except that the registered debentures have been
registered under the Securities Act and, therefore, will not be subject to
restrictions on transfer applicable to the outstanding debentures and will be
entitled to registration rights only under limited circumstances. The registered
debentures will evidence the same indebtedness as the outstanding debentures and
will be entitled to the benefits of the indenture. See "Description of
Debentures."
The exchange offer is not conditioned upon any minimum aggregate amount of
outstanding debentures being tendered for exchange.
We have not requested, and do not intend to request, an interpretation by
the staff of the SEC as to whether the registered debentures issued pursuant to
the exchange offer in exchange for the outstanding debentures may be offered for
sale, resold or otherwise transferred by any holder without compliance with the
registration and prospectus delivery provisions of the Securities Act. Instead,
based on an interpretation by the Staff in a series of no-action letters issued
to third parties, we believe that registered debentures issued pursuant to the
exchange offer in exchange for outstanding debentures may be offered for sale,
resold and otherwise transferred by any holder of registered debentures, other
than any holder which is:
- an affiliate of ours or
- a broker-dealer that purchases debentures from us to resell pursuant to
Rule 144A under the Securities Act or any other available exemption,
without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the registered debentures
are acquired in the ordinary course of the holder's business and the
holder has no arrangement or understanding with any person to participate
in the distribution of the registered debentures and neither the holder
nor any other person is participating in or intends to participate in a
distribution of the registered debentures.
Since the SEC has not considered our exchange offer in the context of a
no-action letter, we cannot assure you that staff would make a similar
determination with respect to the exchange offer. Any holder that is an
affiliate of ours or that tenders in the exchange offer for the purpose of
participating in a distribution of the registered debentures may be deemed to
have received restricted securities and will not be allowed to rely on this
interpretation by the staff and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
If you participate in the exchange offer, you must acknowledge, among other
things, that you are not participating in, and do not intend to participate in,
a distribution of registered debentures. If you are a broker-dealer that
receives registered debentures for your own account in exchange for outstanding
debentures, where your outstanding debentures were acquired by you as a result
of your market-making activities or other trading activities, you must
acknowledge that you will deliver a prospectus in connection with any resale of
the registered debentures. See "Plan of Distribution."
You will not be required to pay brokerage commissions or fees or, if you
comply with the instructions in the letter of transmittal, transfer taxes with
respect to the exchange of the outstanding debentures pursuant to the exchange
offer.
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<PAGE>
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT
The exchange offer will expire at 5:00 p.m., New York City time, on
, 1999, unless we have extended the period of time that the exchange
offer is open. The expiration date will be at least 20 business days after the
beginning of the exchange offer as required by Rule 14e-1(a) under the Exchange
Act. We reserve the right to extend the period of time that the exchange offer
is open, and delay acceptance for exchange of any outstanding debentures, by
giving oral or written notice to the exchange agent and by timely public
announcement no later than 9:00 a.m. New York City time, on the next business
day after the previously scheduled expiration date. During any extension, all
outstanding debentures previously tendered will remain subject to the exchange
offer unless properly withdrawn.
We also reserve the right to:
- end or amend the exchange offer and not to accept for exchange any
outstanding debentures not previously accepted for exchange upon the
occurrence of any of the events specified below under "--Conditions to the
Exchange Offer" which have not been waived by us; and
- amend the terms of the exchange offer in any manner which, in our good
faith judgment, is advantageous to you, whether before or after any tender
of the outstanding debentures.
If any termination or amendment occurs, we will notify the exchange agent and
will either issue a press release or give oral or written notice to you as
promptly as practicable.
PROCEDURES FOR TENDERING OUTSTANDING DEBENTURES
Your tender to us of your outstanding debentures and our acceptance of the
debentures will constitute a binding agreement between you and us on the terms
contained in this prospectus and in the letter of transmittal.
You may tender outstanding debentures by:
- properly completing and signing the letter of transmittal or a facsimile
copy of the letter; and delivering the letter, together with the
certificate or certificates representing the outstanding debentures being
tendered and any required signature guarantees and any other documents
required by the letter of transmittal, to the exchange agent at its
address listed below on or before the expiration date; or
- complying with the procedure for book-entry transfer described below; or
- complying with the guaranteed delivery procedures described below.
If your outstanding debentures are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and you wish to tender
the debentures, you should contact the registered holder promptly and instruct
the registered holder to tender on your behalf. If you wish to tender on your
own behalf, you must, before completing and executing the letter of transmittal
and delivering the outstanding debentures, either make appropriate arrangements
to register ownership of the outstanding debentures in your name or obtain a
properly completed bond power from the registered holder. The transfer of
registered ownership may take considerable time.
THE METHOD OF DELIVERING THE OUTSTANDING DEBENTURES, LETTERS OF TRANSMITTAL
AND ALL OF THE REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT YOU USE REGISTERED MAIL PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO INSURE TIMELY DELIVERY. NO DEBENTURES OR LETTERS OF TRANSMITTAL
SHOULD BE SENT TO US.
If tendered outstanding debentures are registered in the name of the person
who signs the letter of transmittal and the registered debentures to be issued
in exchange for the tendered debentures are to be issued in the name of the
registered holder, the signature of the signer need not be guaranteed.
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In addition, if any untendered outstanding debentures are to be reissued in the
name of the registered holder, the signature need not be guaranteed. Registered
holder shall include any participant in The Depository Trust Company whose name
appears on a security listing as a owner of outstanding debentures.
In any other case, the tendered outstanding debentures must be endorsed or
accompanied by written instruments of transfer, in form satisfactory to us and
duly executed by the registered holder. The signature on the endorsement or
instrument of transfer must be guaranteed by an eligible institution. The
following are considered eligible institutions:
- a firm which is a member of a registered national securities exchange or a
member of the National Association of Securities Dealers, Inc.,
- a clearing agency,
- an insured credit union,
- a savings association or a commercial bank, or
- trust company having an office or correspondent in the United States.
If the registered debentures and/or outstanding debentures not exchanged are to
be delivered to an address other than that of the registered holder appearing on
the debenture registrar for the outstanding debentures, the signature in the
letter of transmittal must be guaranteed by an eligible institution.
We understand that the exchange agent has confirmed with The Depository
Trust Company that any financial institution that is a participant in The
Depository Trust Company's system may use its Automated Tender Offer Program to
tender outstanding debentures. We further understand that the exchange agent
will request, within two business days after the date the exchange offer
commences, that The Depository Trust Company establish an account relating to
the outstanding debentures for the purpose of facilitating the exchange offer,
and any participant may make book-entry delivery of outstanding debentures by
causing The Depository Trust Company to transfer the outstanding debentures into
the exchange agent's account in accordance with the Automated Tender Offer
Program procedures for transfer. However, the exchange of the outstanding
debentures will only be made after timely confirmation of the book-entry
transfer and timely receipt by the exchange agent of an agent's message, an
appropriate letter of transmittal with any registered signature guarantee, and
any other documents required. The term agent's message means a message,
transmitted by The Depository Trust Company and received by the exchange agent
and forming part of a book-entry confirmation, stating that The Depository Trust
Company has received an express acknowledgment from a participant tendering
outstanding debentures which are the subject of the book-entry confirmation and
that the participant has received and agrees to be bound by the terms of the
letter of transmittal and that we may enforce such agreement against the
participant.
If you want to tender outstanding debentures in the exchange offer and time
will not permit a letter of transmittal or outstanding debentures to reach the
exchange agent before the expiration date or you cannot comply with the
procedure for book-entry transfer on a timely basis, a tender may be effected if
the exchange agent has received at its address listed below before the
expiration date, a letter, telegram or facsimile transmission from an eligible
institution listing your name and address, the names in which the outstanding
debentures are registered and, if possible, the certificate number of the
outstanding debentures to be tendered, and stating that the tender is being made
by the letter, telegram or facsimile transmission and guaranteeing that within
three business days after the expiration date, the outstanding debentures in
proper form for transfer, or a confirmation of book-entry transfer of the
outstanding debentures into the exchange agent's account at The Depository Trust
Company, will be delivered by the eligible institution together with a properly
completed and duly executed letter of
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transmittal, and any other required documents. Unless outstanding debentures
being tendered by the method described in the proceeding sentence are deposited
with the exchange agent within the time period described in the proceeding
sentence and accompanied or preceded by a properly completed letter of
transmittal and any other required documents, we may, at our option, reject the
tender. You may obtain copies of the notice of guaranteed delivery from the
exchange agent.
Your tender will be deemed to have been received when:
- the exchange agent receives your properly completed and duly signed letter
of transmittal accompanied by the outstanding debentures, or a
confirmation of book-entry transfer of such outstanding debentures into
the exchange agent's account at The Depository Trust Company; or
- a notice of guaranteed delivery or letter, telegram or facsimile
transmission to similar effect from an eligible institution is received by
the exchange agent.
We will issue registered debentures in exchange for outstanding debentures
tendered pursuant to a notice of guaranteed delivery or letter, telegram or
facsimile transmission to similar effect by an eligible institution only when
the exchange agent receives (1) the letter of transmittal and any other required
documents and (2) the tendered outstanding debentures.
We will determine all questions regarding the validity, form, eligibility,
time of receipt and acceptance of outstanding debentures tendered for exchange.
You should be aware that:
- We reserve the absolute right to reject any and all tenders of any
particular outstanding debentures not properly tendered or not to accept
any particular outstanding debentures which acceptance might, in our
judgment or that of our counsel, be unlawful.
- We reserve the absolute right to waive any defects or irregularities or
conditions of the exchange offer as to any particular outstanding
debentures either before or after the expiration date, including the right
to waive the ineligibility of any holder that seeks to tender outstanding
debentures in the exchange offer.
- Our interpretation of the terms and conditions of the exchange offer,
including the letter of transmittal and the instructions, shall be final
and binding on all parties.
- Unless waived, any defects or irregularities in connection with tenders of
outstanding debentures for exchange must be cured within a reasonable
period of time as we shall determine.
- Neither we, the exchange agent nor any other person shall have any duty to
give notification of any defect or irregularity with respect to any tender
of outstanding debentures for exchange.
If the letter of transmittal is signed by a person or persons other than the
registered holder or holders of outstanding debentures, the outstanding
debentures must be endorsed or accompanied by appropriate powers of attorney, in
either case signed exactly as the name or names of the registered holder or
holders appear on the outstanding debentures.
If the letter of transmittal or any outstanding debentures or powers of
attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, they should indicate they are acting in that capacity
when signing, and, unless waived by us, you should provide evidence of their
authority to act in that capacity.
If you tender, you will be representing to us that:
- the registered debentures you acquire pursuant to the exchange offer are
being acquired in the ordinary course of business of the person receiving
registered debentures, whether or not the person is the holder;
- you are not an affiliate of ours;
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- you are not participating in, and do not intend to participate in, and
have no arrangement or understanding with any person to participate in, a
distribution of the outstanding debentures or the registered debentures;
and
- if you are a broker or dealer registered under the Exchange Act, you will
receive the registered debentures for your own account in exchange for
outstanding debentures that were acquired as a result of market-making
activities or other trading activities. You must acknowledge that you will
deliver a prospectus in connection with any resale of the registered
debentures. See "Plan of Distribution."
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
By signing and returning the letter of transmittal you will be agreeing to
the following terms and conditions, which are part of the exchange offer.
- You are exchanging, assigning and transferring the outstanding debentures
to us and irrevocably constitute and appoint the exchange agent as your
agent and attorney-in-fact to cause the outstanding debentures to be
assigned, transferred and exchanged.
- You represent and warrant that you have full power and authority to
tender, exchange, assign and transfer the outstanding debentures and
acquire registered debentures issuable upon the exchange of tendered
outstanding debentures.
- When we accept outstanding debentures are accepted for exchange, we will
acquire good and unencumbered title to the tendered outstanding
debentures, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim.
- You will, upon request execute and deliver any additional documents deemed
by the exchange agent or us to be necessary or desirable to complete the
exchange, assignment and transfer of tendered outstanding debentures or
transfer ownership of such outstanding debentures on the account books
maintained by The Depository Trust Company.
- Your acceptance of any tendered outstanding debentures by us and the
issuance of registered debentures in exchange for the debenture will
constitute performance in full by us of our obligations under the
registration rights agreement to complete the exchange offer.
All authority conferred by you will survive your death or incapacity and every
obligation of yours will be binding upon your heirs, legal representatives,
successors, assigns, executors and administrators. You will also make the
representations described above under "Procedures for Tendering Outstanding
Debentures."
WITHDRAWAL RIGHTS
You may withdraw your tenders of outstanding debentures at any time before
5:00 p.m., New York City time, on the expiration date.
For a withdrawal to be effective, the exchange agent must receive a written
notice of withdrawal, sent by telegram, facsimile transmission, receipt
confirmed by telephone, or letter, before the expiration date. Any notice of
withdrawal must:
- specify the name of the person that tendered the outstanding debentures to
be withdrawn;
- identify the outstanding debentures to be withdrawn, including the
certificate number or numbers and principal amount of such outstanding
debentures;
- specify the principal amount of outstanding debentures to be withdrawn;
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- include a statement that the holder is withdrawing its election to have
the outstanding debentures exchanged;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the outstanding debentures were
tendered or as otherwise described above, including any required signature
guarantees, or be accompanied by documents of transfer sufficient to have
the trustee under the indenture register the transfer of the outstanding
debentures into the name of the person withdrawing the tender; and
- specify the name in which any of the outstanding debentures are to be
registered, if different from that of the person that tendered the
outstanding debentures.
The exchange agent will return the properly withdrawn outstanding debentures
promptly following receipt of notice of withdrawal. If outstanding debentures
have been tendered pursuant to the procedure for book-entry transfer, any notice
of withdrawal must specify the name and number of the account at The Depository
Trust Company to be credited with the withdrawn outstanding debentures or
otherwise comply with The Depository Trust Company's procedures.
Any outstanding debentures withdrawn will not have been validly tendered for
exchange for purposes of the exchange offer. Any outstanding debentures which
have been tendered for exchange but which are not exchanged for any reason will
be returned to the holder without cost to the holder as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer. In
the case of outstanding debentures tendered by book-entry transfer into the
exchange agent's account at The Depository Trust Company pursuant to its
book-entry transfer procedures, the outstanding debentures will be credited to
an account with The Depository Trust Company specified by the holder, as soon as
practicable after withdrawal, rejection of tender or termination of the exchange
offer. Properly withdrawn outstanding debentures may be retendered by following
one of the procedures described under "--Procedures for Tendering Outstanding
Debentures" above at any time on or before the expiration date.
ACCEPTANCE OF OUTSTANDING DEBENTURES FOR EXCHANGE; DELIVERY OF REGISTERED
DEBENTURES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the exchange date, all outstanding debentures
properly tendered and will issue the registered debentures promptly after the
acceptance. See "--Conditions to the Exchange Offer" below. For purposes of the
exchange offer, we will be deemed to have accepted properly tendered outstanding
debentures for exchange, give notice of acceptance to the exchange agent.
For each outstanding debenture accepted for exchange, the holder of the
outstanding debenture will receive a registered debenture having a principal
amount at maturity equal to that of the surrendered outstanding debenture.
In all cases, we will issue registered debentures for outstanding debentures
that are accepted for exchange pursuant to the exchange offer only after the
exchange agent timely receives certificates for the outstanding debentures or a
book-entry confirmation of the outstanding debentures into the exchange agent's
account at The Depository Trust Company, a properly completed and duly executed
letter of transmittal and all other required documents.
CONDITIONS TO THE EXCHANGE OFFER
We will not be required to accept for exchange, or to issue registered
debentures in exchange for, any outstanding debentures and may end or amend the
exchange offer, by notice to the exchange agent or by a timely press release, if
at any time before the acceptance of the outstanding debentures for
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exchange or the exchange of the registered debentures for the outstanding
debentures, any of the following conditions exist:
- any action or proceeding is instituted or threatened in any court or by or
before any governmental agency or regulatory authority or any injunction,
order or decree is issued with respect to the exchange offer which, in our
sole judgment, might materially impair our ability to proceed with the
exchange offer or have a material adverse effect on the contemplated
benefits of the exchange offer to us; or
- any change, or any development involving a prospective change, shall have
occurred or be threatened in our business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects that is or may be adverse to us, or we become aware of facts
that have or may have adverse significance with respect to the value of
the outstanding debentures or the registered debentures or that may
materially impair the contemplated benefits of the exchange offer to us;
or
- any law, rule or regulation or applicable interpretation of the staff of
the SEC is issued or promulgated which, in our good faith determination,
does not permit us to effect the exchange offer; or
- any governmental approval has not been obtained, which we think is
necessary for the completion of the exchange offer; or
- there shall have been proposed, adopted or enacted any law, statute, rule
or regulation, or an amendment to any existing law, statute, rule or
regulation, which might materially impair our ability to proceed with the
exchange offer or have a material adverse effect on the contemplated
benefits of the exchange offer to us; or
- there shall occur a change in the current interpretation by the staff of
the SEC which permits the registered debentures issued pursuant to the
exchange offer in exchange for outstanding debentures to be offered for
resale, resold and otherwise transferred by holders, other than any holder
that is a broker-dealer or an affiliate of ours within the meaning of Rule
405 under the Securities Act, without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the
registered debentures are acquired in the ordinary course of the holders'
business and the holders have no arrangement with any person to
participate in the distribution of such registered debentures.
We reserve the right to end the exchange offer and reject for exchange any
outstanding debentures upon the occurrence of any of the preceding conditions.
In addition, we may amend the exchange offer at any time before the expiration
date if any of these conditions exist.
In addition, we will reject for exchange any outstanding debentures
tendered, and no registered debentures will be issued in exchange for any
outstanding debentures, if at the time any stop order is threatened or in effect
with respect to the registration statement of which this prospectus constitutes
a part or the qualification of the indenture under the Trust Indenture Act of
1939. If any stop order is in effect we will be required to use our best efforts
to obtain its withdrawal at the earliest possible time.
The exchange offer is not conditioned upon any minimum principal amount of
outstanding debentures being tendered for exchange.
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EXCHANGE AGENT
We have appointed the United States Trust Company of New York as the
exchange agent for the exchange offer. You should direct all executed letters of
transmittal to the exchange agent the addresses listed below:
<TABLE>
<S> <C>
BY HAND UP TO 4:30 PM: United States Trust Company of New York
111 Broadway
Lower Level
New York, New York 10006
Attention: Corporate Trust Services
Telephone: 1(800) 548-6565
Facsimile: (212) 780-0592
BY OVERNIGHT COURIER AND BY United States Trust Company of New York
HAND AFTER 4:30 PM ON THE 770 Broadway, 13th Floor
EXPIRATION DATE ONLY: New York, New York 10003
Attention: Corporate Trust Services
Telephone: 1(800) 548-6565
Facsimile: (212) 780-0592
BY REGISTERED OR CERTIFIED MAIL: United States Trust Company of New York
Post Office Box 844
New York, New York 10276-0844
Attention: Corporate Trust Services, Cooper
Station
Telephone: 1(800) 548-6565
Facsimile: (212) 780-0592
</TABLE>
You should direct questions and requests for assistance, requests for
additional copies of this prospectus or of the letter of transmittal and
requests for notices of guaranteed delivery to the exchange agent at the address
and telephone number listed above.
DELIVERY TO AN ADDRESS OTHER THAN AS LISTED ABOVE, OR TRANSMISSIONS OF
INSTRUCTIONS BY A FACSIMILE NUMBER OTHER THAN AS LISTED ABOVE, WILL NOT
CONSTITUTE A VALID DELIVERY.
SOLICITATION OF TENDERS; FEES AND EXPENSES
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. However, we 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 with the exchange offer.
We will pay the estimated cash expenses to be incurred in connection with
the exchange offer. We estimate that those expenses will be, in the aggregate,
approximately $135,000, including fees and expenses of the exchange agent and
trustee, registration fees, accounting, legal and printing expenses and other
related fees and expenses.
Neither the delivery of this prospectus nor any exchange made hereunder
shall, under any circumstances, create any implication that there has been no
change in our affairs since the respective dates as of which information is
given herein. The exchange offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of outstanding debentures in any
jurisdiction in which the making of the exchange offer or the acceptance thereof
would not be in compliance with the laws of the jurisdiction. However, we may,
at our discretion, take any action as we may deem necessary to
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make the exchange offer in any jurisdiction and extend the exchange offer to
holders of outstanding debentures in the jurisdiction concerned.
TRANSFER TAXES
We will pay all transfer taxes, if any, applicable to the exchange of
outstanding debentures under the exchange offer. If, however, certificates
representing registered debentures or outstanding debentures for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be issued in the name of, any person other than the registered holder of the
outstanding debentures tendered, or if tendered outstanding debentures 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 outstanding debentures pursuant to the exchange offer, then the
amount of the transfer taxes whether imposed on the registered holder or any
other person, will be payable by the tendering holder. If satisfactory evidence
of payment of the taxes or exemption therefrom is not submitted with the letter
of transmittal, the amount of the transfer taxes will be billed directly to the
tendering holder.
ACCOUNTING TREATMENT
The registered debentures will be recorded at the carrying value of the
outstanding debentures as reflected in our accounting records on the date the
exchange offer is completed. Accordingly, we will not recognize any gain or loss
for accounting purposes upon the exchange of registered debentures for
outstanding debentures. We will amortize the expenses incurred in connection
with the issuance of the registered debentures over the term of the registered
debentures.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your outstanding debentures for registered debentures
pursuant to the exchange offer, you will continue to be subject to the
restrictions on transfer of the outstanding debentures as described in the
legend on the debentures. In general, the outstanding debentures may be offered
or sold only if registered under the Securities Act, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. We do not currently anticipate that we will
register the outstanding debentures under the Securities Act. However, under
limited circumstances we may be required to file with the SEC a shelf
registration statement to cover resales of the outstanding debentures by the
holders of debentures who satisfy conditions relating to the provision of
information in connection with the shelf registration statement. See
"Description of Debentures--Registration Rights; Liquidated Damages."
Your participation in the exchange offer is voluntary, and you should
carefully consider whether to participate. We urge you to consult your financial
and tax advisors in making a decision whether or not to tender your outstanding
debentures. See "Federal Income Tax Consequences."
As a result of the making of, and upon acceptance for exchange of all
validly tendered outstanding debentures pursuant to the terms of, this exchange
offer, we will have fulfilled a covenant contained in the registration rights
agreement. If you do not tender your outstanding debentures in the exchange
offer you will be entitled to all the rights and limitations applicable to the
outstanding debentures under the indenture, except for any rights under the
registration rights agreement that by their terms end or cease to have further
effectiveness as a result of the making of this exchange offer. To the extent
that outstanding debentures are tendered and accepted in the exchange offer, the
trading market for untendered, or tendered but unaccepted, outstanding
debentures could be adversely affected. See "Risk Factors--If you do not
exchange your outstanding debentures for registered debentures, your debentures
will continue to have restrictions on transfer."
We may in the future seek to acquire, subject to the terms of the indenture,
untendered outstanding debentures in open market or privately negotiated
transactions, through subsequent
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exchange offers or otherwise. The terms of these purchases or offers may differ
form the terms of the exchange offer.
RESALE OF REGISTERED DEBENTURES
As noted above, we are making the exchange offer in reliance on the position
of the staff of the SEC in interpretive letters addressed to third parties in
other transactions. However, we have not sought an interpretive letter from the
staff and we cannot assure you that the staff would make a similar determination
with respect to the exchange offer as it has in past interpretive letters to
third parties. Any holder who is an affiliate of ours or who has an arrangement
or understanding with respect to the distribution of the registered debentures
to be acquired pursuant to the exchange offer, or any broker-dealer who
purchased outstanding debentures from us to resell pursuant to Rule 144A or any
other available exemption under the Securities Act:
- cannot rely on the applicable interpretations of the staff and
- must comply with the registration and prospectus delivery requirements of
the Securities Act.
A broker-dealer who holds outstanding debentures that were acquired for its own
account as a result of market-making or other trading activities may be deemed
to be an underwriter within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of registered debentures. Each broker-dealer that
receives registered debentures for its own account in exchange for outstanding
debentures, where the outstanding debentures were acquired by a broker-dealer as
a result of market-making activities or other trading activities must
acknowledge in the letter of transmittal that it will deliver a prospectus in
connection with any resale of the registered debentures. A secondary resale
transaction in the United States by a holder using the exchange offer to
participate in a distribution of outstanding debentures must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 of Regulation S-K. See "Plan of Distribution."
In addition, to comply with the securities laws of some jurisdictions, the
registered debentures may be offered or sold only if they have been registered
or qualified for sale in the jurisdiction or an exemption from registration or
qualification is available and is complied with. We have agreed, pursuant to the
registration rights agreement and subject to specified limitations in the
registration rights agreement, to register or qualify the registered debentures
for offer or sale under the securities or blue sky laws of these jurisdictions
as any holder of the registered debentures reasonably requests. Registration or
qualification may require the imposition of restrictions or conditions,
including suitability requirements for offerees or purchasers, in connection
with the offer or sale of any registered debentures.
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BUSINESS
Through Grove Worldwide, we are a leading international designer,
manufacturer and marketer of a comprehensive line of mobile hydraulic cranes,
aerial work platforms and truck-mounted cranes. In North America, Grove Crane,
our largest operating division, has a number one market position and a 41%
market share. Commercial and residential building contractors, as well as
industrial, municipal and military end-users use our products in a wide variety
of applications. We market our products to independent equipment rental
companies and directly to end-users under three widely recognized brand
names--Grove Crane, Grove Manlift and National Crane. We believe we have
achieved a leading position in each of our principal markets due to our:
- strong brand name and reputation for quality products;
- superior customer service;
- established network of distributors;
- broad product line; and
- commitment to superior engineering design and product innovation.
We sell our products in over 50 countries primarily through an established,
global network of approximately 240 independent distributors. Our major markets
are listed below.
<TABLE>
<CAPTION>
PERCENTAGE OF
OUR FISCAL 1998
GEOGRAPHICAL MARKET NEW EQUIPMENT SALES
- ------------------------------------------------------------------------ -------------------------
<S> <C>
North America........................................................... 70%
Europe.................................................................. 21%
Latin America........................................................... 4%
Africa and the Middle East.............................................. 3%
Asia.................................................................... 2%
</TABLE>
We market our products through three operating divisions:
- GROVE CRANE, which accounted for approximately 69% of our net sales in
1997 and 66% of our net sales in 1998, designs and manufactures over 40
models of mobile hydraulic cranes.
- GROVE MANLIFT, which accounted for approximately 23% of our net sales in
1997 and 24% of our in 1998 net sales, designs and manufactures over 50
models of aerial work platforms.
- NATIONAL CRANE, which accounted for approximately 8% of our net sales in
1997 and 10% of our net sales in 1998, designs and manufactures over 10
models of telescoping and 14 models of articulating truck-mounted cranes.
Telescoping and articulating cranes are mounted on a standard truck
chassis or on a pedestal at a fixed location.
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COMPETITIVE STRENGTHS
We believe that we benefit from the following competitive strengths:
- MARKET POSITIONS. Our three operating divisions have established a
leading position in most of their principal markets.
<TABLE>
<CAPTION>
MARKET MARKET
DIVISION PRODUCTS PRINCIPAL MARKETS POSITION(1) SHARE(1)
- ---------------------------- ---------------------------- --------------------- ----------------- -----------
<S> <C> <C> <C> <C>
Grove Crane................. Mobile Hydraulic Cranes North America (2) 1 41.0%
Europe (2) 2 14.0%
Grove Manlift............... Aerial Work Platforms North America 3 8.5%
Europe 5 14.7%
National Crane.............. Truck-Mounted Cranes: 43.0%
Telescoping North America 1 13.0%
Articulating North America (3) 4
</TABLE>
- STRONG BRAND NAME AND REPUTATION FOR QUALITY PRODUCTS. We have created
significant brand awareness as a result of our innovative designs,
quality products and product reliability. With over 100,000 units sold
during the past 50 years, we believe that we currently have one of the
industry's largest installed bases of cranes and aerial work platforms.
The quality of our products and the value of our brand name are reflected
in the North American marketplace, where we believe that our cranes
generally command premium prices and have higher residual values than
comparable products manufactured by our competitors. For example, Grove
Crane's products typically have residual values in excess of 50.0% of
their original cost after five years, which management believes is
significantly greater than the average residual value of our competitors'
products.
- SUPERIOR CUSTOMER SERVICE. We are committed to providing superior
training, sales and service support to our distributors and end-users as
a standard part of our sales and marketing effort. Management believes
that no other major competitor matches the extent and quality of our
customer support services and that these services significantly
contribute to our ability to charge premium prices for our products. In
addition, we have focused on providing ready availability of service
parts. For example, in fiscal 1998, we shipped over 90.0% of our
replacement parts within 24 hours after receipt of an order. After-market
sales for parts and services accounted for 11.4% of our net sales and
34.0% of gross profits in fiscal 1998. These sales typically have higher
gross margins and are less cyclical than new equipment sales.
- ------------------------
(1) Market share data for Grove Manlift's share of the North American aerial
work platform market is based on fiscal 1998 revenues. Market share data
for Grove Crane is based on units shipped during calender 1998. All other
market share data is based on units shipped during fiscal 1998. With
respect to aerial work platforms, we believe that because Grove Manlift
primarily competes in the North American market for larger, high-end
aerial work platforms, comparisons based on revenues are more
appropriate. Market data is derived from industry statistics together
with our estimates and including, as applicable, our assumptions
regarding unit price.
(2) Excludes companies that do not report to any statistical groups.
(3) In the United States, we have a number three market position and a 17%
market share. National Crane has only a nominal presence in the Canadian
market for articulating cranes.
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- ESTABLISHED NETWORK OF DISTRIBUTORS. We benefit from an established base
of approximately 240 independent distributors located in 50 countries
around the world. Over two-thirds of Grove Crane's North American
distributors have sold our products for over 10 years. We believe that,
in many cases, our products represent an important portion of our
distributors' business. Many of these distributors also represent
Caterpillar Inc. or Komatsu Ltd. and, as such, are considered among the
best-capitalized in the industry. We believe that the strength of our
distributor network is an important competitive advantage. For example,
within twelve months after acquiring the mobile hydraulic crane business
of Fried.Krupp in August 1995, by using Grove's brand name and
distribution network we increased annual sales in the United States of
the cranes, formerly manufactured by Fried.Krupp, by 100% from
approximately 40 units in 1995 to approximately 80 units in 1996.
- BROAD PRODUCT LINE. We believe that we have the broadest product line in
the industry. Our three operating divisions offer 10 product categories
and over 120 models. We believe the breadth of our product line enables
us to more effectively serve the equipment rental market, which we
estimate represents approximately 80% of our net sales. Our broad product
line allows us to satisfy the rental market's demand for models
addressing specific end-user needs, while also providing customers the
opportunity to save on support, maintenance and training costs by
purchasing from a single manufacturer.
BUSINESS STRATEGY
Our management team expects to capitalize on the experience and expertise of
senior management as we implement our operations improvement program. We are led
by Salvatore J. Bonanno who joined us in March 1998 from Foamex International
Inc., where he headed an organizational restructuring designed to reduce
manufacturing and overhead costs. We are implementing the operations improvement
program and the other key elements of our business strategy described below to
reach our objective of increased net sales and EBITDA.
- PROVIDING SUPERIOR PRODUCTS. We maintain a commitment to superior
engineering design and technological innovation. We believe that we have
the most extensive engineering capability in the crane industry. Our
engineering group focuses on developing innovative, high performance and
low maintenance products that satisfy the demands of our customers.
Together with our manufacturing and marketing staff, engineers seek to
use new technologies and effectively introduce new products. For example,
we have introduced lighter booms with greater lifting capacity,
electronic controls that facilitate operations and product features that
enhance safety and increase versatility. We believe that the greater
sophistication of our products contributes to our ability to sustain
higher residual values. We intend to intensify our efforts to design
products that meet evolving customer needs while reducing manufacturing
costs and the period from product conception to introduction.
- EXPANDING EXISTING INTERNATIONAL BUSINESS. We intend to use our
significant brand awareness and strong distribution network to expand our
existing international business selectively. As an industry leader, we
believe we are well-positioned to increase sales internationally as
infrastructure development in existing and emerging markets stimulates
demand for cranes and aerial work platforms. In 1995, we expanded our
product offerings and strengthened our manufacturing and distribution
presence in Europe by acquiring the mobile hydraulic crane business of
Fried.Krupp in Germany and the aerial work platform business of Delta
Systems in France. In addition, all of our manufacturing facilities have
received ISO 9001 certifications, which enhances our international
marketing efforts.
- CAPITALIZING ON THE GROWTH OF THE GROVE WORLDWIDE AERIAL WORK PLATFORM
MARKET. We seek to capitalize on the increasing recognition that aerial
work platforms are an economical and safe
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alternative to scaffolding and ladders. The North American aerial work
platform industry experienced a compound annual growth rate in total unit
shipments from 1992 to 1997 of 32%. In 1998, approximately 57,000 aerial
work platforms were shipped in North America while only 19,000 units were
shipped in markets outside of North America. We expect to generate
increased sales of aerial work platforms in international markets as
international end-users recognize the productivity and safety advantages
of aerial work platforms.
THE OPERATIONS IMPROVEMENT PROGRAM
We are implementing a comprehensive program that we believe will enable us
to reduce annual costs by fiscal 2001. Our operations improvement program is
intended to improve our operating efficiency and our margins by:
- rationalizing product lines;
- reducing manufacturing costs; and
- reducing selling, general and administrative expenses.
In addition, we believe our operations improvement program should enable us
to reduce our working capital requirements by decreasing inventory levels. It is
expected that these cost savings will be offset by non-recurring costs
associated with the implementation of the operations improvement program, plus
consulting fees payable to George Group. Estimates of potential cost savings and
implementation costs are inherently uncertain and the description of our
operations improvement program should be read in conjunction with "Special Note
Regarding Forward-Looking Statements" and "Risk Factors--We may not be able to
achieve cost savings under our operations improvement program."
The key components of our operations improvement program are described
below:
RATIONALIZE PRODUCT LINES. We have begun a product line rationalization
program to reduce both operating costs and working capital requirements. The
product line rationalization program identifies key product requirements by
different customer groups within each of the markets which we serve. We will use
this information to create a more focused product portfolio which, when compared
to our existing product lines, will help identify opportunities to reduce
components, standardize features and eliminate models. We believe that these
actions will:
- reduce inventory;
- increase labor productivity;
- improve purchasing leverage; and
- help reduce selling, general and administrative expenses without
negatively affecting revenue.
REDUCE MANUFACTURING COSTS. We intend to reduce the annual costs of goods
sold by fiscal 2001 by rationalizing our product line and undertaking the
following initiatives to improve our manufacturing process:
- Accelerating the use of established manufacturing techniques that are
designed to lower material and labor costs by redesigning products,
incorporating more standardized components and allowing a simplified
fabrication and assembly process. Our initial efforts during fiscal 1998
resulted in greater than 15% reduction in labor costs for a test model.
- Consolidating sourcing by using fewer suppliers to meet our global
requirements. As a result of our product rationalization program, we
expect to purchase a greater volume of fewer components, enabling us to
reduce the number of suppliers and the cost of supplies.
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<PAGE>
- Implementing other procedures to reduce manufacturing costs, including:
(1) improving planning and scheduling by introducing continuous flow
manufacturing principles and integrating our new management information
system; (2) improving product flow and reducing cycle time to increase
manufacturing flexibility and capacity; and (3) shifting the production
of certain models and components to facilities where they can be more
efficiently produced.
REDUCE SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. We believe we can
reduce annual selling, general and administrative expenses by approximately $10
million to $20 million by fiscal 2001 by reducing redundant functions across
facilities, utilizing our new management information system and streamlining
existing business processes, including redesigning sales and administrative
functions. See "Business--Management Information Systems."
INDUSTRY OVERVIEW
The markets in which we compete include North America (the United States and
Canada), Latin America (Central and South America), Europe, Africa, the Middle
East and Asia. All statistical and numerical information contained below are
based on industry data, which we have not independently verified, together with
our estimates and assumptions regarding unit prices.
MOBILE HYDRAULIC CRANES (GROVE CRANE)
Approximately 8,160 mobile hydraulic cranes worth $2.7 billion were sold
worldwide in fiscal 1998. Demand in the crane industry primarily depends on
industrial and construction activity and replacement cycles for existing cranes.
Because of the different demands of each project, including boom lengths and
lifting capacities, contractors, particularly those in North America, tend to
rent specific machines as needed rather than own a fleet of machines with
varying capabilities. We estimate that 80% of all new sales in North America are
made to the equipment rental market. In periods of economic recovery, rising
end-user demand is initially reflected in rising rental fleet utilization. Then,
as rental fleet utilization reaches a maximum level, new orders for cranes
generally tend to increase.
In 1998, demand for mobile hydraulic cranes in North America was
approximately 2,600 machines, representing 32% of global demand. From 1993 to
1998, demand in North America grew at a compound annual growth rate of 19%.
Demand for mobile hydraulic cranes in Europe was approximately 2,100
machines in 1998, representing 26% of global demand. Since 1993, demand in
Europe has experienced little growth. European construction activity has
remained at recessionary levels for the last five years. We believe that this
initially was due to a cyclical downturn and more recently to fiscal tightening
as European countries met the budget deficit targets established by the
Maastricht Treaty. We believe that we are well positioned to participate in any
cyclical improvements in Europe due to our local manufacturing operations,
strong local distribution and our established market position in the region. We
believe that European growth could act as a buffer to a possible future economic
downturn in the United States.
In addition to North America and Europe, markets for mobile hydraulic cranes
include Africa, the Middle East, Asia, notably Japan, and Latin America. These
markets represented 42%of global demand in 1998 with approximately 3,450 units
shipped. The Japanese market represents approximately 31% of the world market on
a unit basis, with approximately 2,520 machines sold in 1998. We, like other
crane manufacturers in the United States and Europe, have chosen not to compete
in Japan due to barriers to entry.
AERIAL WORK PLATFORMS (GROVE MANLIFT)
The aerial work platform industry in North America has developed over the
past 20 years as end-users realize that aerial work platforms are an efficient
and safer alternative to scaffolding and
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ladders. Customers use these products for indoor or outdoor applications in a
variety of construction, industrial and commercial settings which require
workers to be lifted to high elevations. The industry has grown rapidly because
of efficiency considerations and regulations mandating safety standards for
people working in elevated areas. We believe that approximately 80% of all
aerial work platform sales in North America are to rental fleets. The rental
market represents such a large percentage of the overall market because:
- contractors need workers to be elevated only for limited periods during a
given job, and different jobs require different platform heights, making
ownership of a single specification unit uneconomical; and
- industrial customers increasingly outsource their equipment requirements
to rental providers.
Demand for aerial work platforms is greatest in the United States. Since
1993, demand in North America has grown at a compound annual growth rate of 32%.
In 1998, demand for aerial work platforms in North America was approximately
57,000 machines, representing 75% of global demand. The demand for aerial work
platforms in the worldwide market, excluding North America, in comparison, was
only 19,000 units in 1998. We expect increased sales of aerial work platforms in
international markets, where the number of aerial work platforms remains
significantly lower than in the United States.
We expect our aerial work platform division to be an important factor in our
long-term growth strategy. We expect that growth in the aerial work platform
market will be driven primarily by new product introductions and applications,
as well as continued compliance in the United States with government-mandated
safety regulations. Furthermore, as foreign governments adopt stricter safety
regulations and foreign end-users realize the efficiency benefits of using
aerial work platforms, we believe that we are well-positioned to capture a share
of international growth because of our existing international market presence
and distribution capabilities, particularly in Europe.
TRUCK-MOUNTED CRANES (NATIONAL CRANE)
The truck-mounted crane division manufactures both telescoping and
articulating cranes. These cranes are used primarily by contractors engaged in
the industrial, commercial, public works and residential construction, railroad
and oil field service industries and in maintenance applications to lift
materials or personnel at the same job site or to move material to another job
site or location. In 1998, demand for truck-mounted telescoping cranes in North
America was approximately 2,100 machines, representing 48% of total North
American demand. Since 1993, demand has grown at a compound annual growth rate
of 16%. Demand for truck-mounted articulating cranes in North America was
approximately 2,300 machines in 1998, representing 52% of total North American
demand. Since 1993, demand has grown at a compound annual growth rate of 5%.
Telescoping cranes are more popular in the United States while articulating
cranes are more popular in Europe.
PRODUCTS
MOBILE HYDRAULIC CRANES (GROVE CRANE)
We believe that, based on the superior reputation of our products as well as
our strong network of distributors, we are well positioned to capitalize on any
growth in the North American mobile hydraulic crane market. In addition, our
product line, which is the broadest in the industry, enables rental fleet owners
to provide a wide range of models for end-users while maintaining low
after-market maintenance and service costs by buying from a single manufacturer.
See "--Competitive Strengths."
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GROVE CRANE manufactures over 40 models of mobile hydraulic cranes, which
are used primarily in industrial, commercial and public works construction and
in maintenance applications to lift material at job sites. There are four main
types of mobile hydraulic cranes:
- Rough-Terrain;
- All-Terrain;
- Truck-Mounted; and
- Industrial.
In addition, Grove Crane produces three models of specialty cranes for the
United States Department of Defense.
ROUGH-TERRAIN CRANES are designed to lift materials and equipment on rough
or uneven terrain. These cranes cannot be driven on highways, and, accordingly,
must be transported by truck to a work -site. Grove Crane produces 15 models of
rough-terrain cranes capable of working heights of up to 208 feet and maximum
load capacities of up to 100 tons. We believe our line of rough-terrain-cranes
is the broadest in the world.
ALL-TERRAIN CRANES are versatile cranes designed to lift materials and
equipment on rough or uneven terrain and yet are highly maneuverable and capable
of highway speeds. Grove Crane produces 11 models of all-terrain cranes capable
of working heights of up to 372 feet and maximum load capacities of up to 300
tons.
TRUCK-MOUNTED CRANES are designed to provide simple set-up, long reach high
capacity booms and the capability of traveling from site to site at highway
speeds. These cranes are suitable for urban and suburban uses. Grove Crane
produces eight models of truck-mounted cranes capable of working heights of up
to 270 feet and maximum load capacities of up to 150 tons. We believe our line
of truck-mounted cranes is the broadest in the world.
INDUSTRIAL CRANES are designed primarily for plant maintenance, storage yard
and material handling jobs. Grove Crane produces three models of industrial
cranes capable of working heights of up to 85 feet and maximum load capacities
of up to 18 tons.
AERIAL WORK PLATFORMS (GROVE MANLIFT)
GROVE MANLIFT manufactures over 40 models of aerial work platforms which
elevate workers and their materials more safely, quickly and easily than
alternative methods including scaffolding and ladders. The work platform is
mounted to either a telescoping or articulating boom or to a vertical scissor or
mast lift mechanism. The boom lifting mechanism is mounted on a chassis powered
by electric motors or gas, diesel or propane engines. Grove Manlift manufactures
four types of aerial work platforms:
- Scissor Lift;
- Articulating Boom;
- Telescoping Boom; and
- Vertical Mast.
SCISSOR LIFTS have a work platform that is mounted on top of a scissor type
lifting mechanism. The lifts are designed to set up and move quickly from job to
job in construction, industrial and commercial settings. Grove Manlift produces
10 models of scissor lifts capable of working heights of up to 46 feet and
maximum load capacities of up to 1,750 pounds.
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ARTICULATING BOOM LIFTS have a work platform that is mounted on top of a
jointed boom. These lifts are used primarily in the industrial and construction
settings where articulation allows users to access elevated areas over machines
or structural obstacles. Grove Manlift produces 10 models of articulating boom
lifts capable of working heights of up to 131 feet with maximum load capacities
of up to 600 pounds.
TELESCOPING BOOM LIFTS have a work platform that is mounted on top of a
telescoping boom and designed for strength, rigidity and resistance to
deflection. These lifts are used primarily outdoors in residential, commercial
and industrial construction and maintenance projects. Grove Manlift produces
nine models of telescoping boom lifts capable of working heights of up to 116
feet with maximum load capacities of up to 700 pounds.
VERTICAL MAST LIFTS have work platforms that are either mounted on top of
fork-lift type devices or on push-around type devices. These lifts are designed
for use by workers for general purpose indoor maintenance. Some models are for
vertical lifting applications only, while others also have out-reach
capabilities. Grove Manlift produces 13 models of vertical mast lifts capable of
working heights of up to 46 feet with maximum load capacities of up to 500
pounds.
TRUCK-MOUNTED CRANES (NATIONAL CRANE)
National Crane manufactures 25 models of truck-mounted cranes used primarily
by contractors engaged in the industrial, commercial, public works and
residential construction, railroad and oil field service industries. They are
also used in maintenance applications to lift materials or personnel at the same
job site or to move material to another job site or location. National Crane
manufactures two types of truck-mounted cranes: telescoping and articulating,
and also produces four models of pedestal-mounted, fixed location cranes.
TELESCOPING CRANES are used primarily for lifting material and personnel on
a job site. National Crane produces 11 models of truck-mounted telescoping
cranes capable of working heights of up to 166 feet and maximum load capacities
of up to 36 tons.
ARTICULATING CRANES are used primarily to load and unload truck beds at a
job site. National Crane produces 14 models of truck-mounted articulating cranes
capable of working heights of up to 71 feet and maximum load capacities of up to
28 tons.
National Crane also produces four models of pedestal-mounted cranes designed
for docks, factories, yards, and other areas where fixed, stationary lifting is
required. These cranes are capable of working heights of up to 90 feet and
maximum load capacities of up to 23 tons.
MARKETING AND DISTRIBUTION
GENERAL
We benefit from an established base of approximately 240 independent
distributors located in 50 countries around the world. Over two thirds of Grove
Crane's North American distributors have been with us for over 10 years.
MOBILE HYDRAULIC CRANES
We distribute our mobile hydraulic cranes primarily through a global network
of independent distributors, except in Germany, France and the United Kingdom,
where we have our own distributors. In addition, we sell directly to some large
corporate customers and the United States Government.
In fiscal 1998, 73% of our unit sales of mobile hydraulic cranes were
derived from units shipped to North American and Latin American distributors and
customers. We have longstanding relationships with our 45 North American and 24
Latin American distributors. Shipments to Europe comprised
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approximately 19% of our shipments in fiscal 1998 through three Company stores,
located in the United Kingdom, Germany and France, and 42 third-party
distributors. In fiscal 1998, unit shipments to Asia comprised approximately 2%
of our total unit shipments. Africa comprised 2% and the Middle East comprised
3% of our total unit shipments in fiscal 1998.
AERIAL WORK PLATFORMS
In fiscal 1998, aerial work platforms sold to North American distributors
represented approximately 67% of our unit sales of aerial work platforms. We
have 65 authorized distributors in 187 locations across North America providing
coverage in most major markets. For fiscal 1998, sales to customers in Europe
represented approximately 28% of our units shipped. Our 13 European dealers
include independent and company-owned distributors. Three company locations in
the United Kingdom, Germany and France and a major independent distributor in
the Netherlands collectively accounted for more than 70% of our aerial work
platform net sales in Europe.
Asian customers purchased approximately 3% of our units shipped in fiscal
1998. Asia is supported by authorized distributors located in Hong Kong, India,
Indonesia, Korea, the Philippines, Singapore/ Malaysia, Taiwan, Thailand and
Vietnam and a company-owned distribution facility in Penrith, Australia. Latin
American customers purchased approximately 2% of our units shipped in fiscal
1998, while African and Middle Eastern customers purchased less than 1% of our
units during the same period.
TRUCK-MOUNTED CRANES (NATIONAL CRANE)
Our North American truck-mounted crane distribution network consists of 66
distributors that carry multiple product lines, the majority of which maintain
rental fleets. In addition, we have eight distributors that focus either on
limited product lines and/or market niches. Certain of our "niche" distributors
primarily sell to railroads and are a particular strength of our customer base.
END-USERS AND CUSTOMERS
Mobile hydraulic cranes are primarily used by contractors engaged in
industrial, commercial and public works construction, and for maintenance
applications and job site material handling. Aerial work platforms are primarily
used by contractors engaged in residential, commercial and industrial
construction and in maintenance projects. National Crane's truck-mounted cranes
are primarily used by contractors engaged in industrial, commercial, public
works and residential construction, railroad and oil field service industries,
and in maintenance applications to lift materials or personnel at the same job
site or to move material to another job site or location. In addition, United
States railroad companies and United States equipment rental companies use our
truck-mounted cranes. We also sell mobile hydraulic cranes and aerial work
platforms to the United States Department of Defense and other government
agencies.
Six major customers accounted for approximately 20% of our revenues in
fiscal 1996, approximately 19% of our revenues in fiscal 1997 and approximately
25% of our revenues in fiscal 1998. No one customer accounted for more than 10%
of total revenue in any of the last three fiscal years. Approximately 31% of the
outstanding accounts and notes receivable balance as of September 27, 1997 were
due from these customers. Approximately 13% of the outstanding accounts and
notes receivable balance as of October 3, 1998 were due from these customers.
DEALER FINANCING PROGRAM
We offer some of our distributors up to 366-day inventory financing. Units
sold under this program generate secured notes receivable, which we sell, from
time to time, to a third-party financial
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institution. The terms of the notes provide that if the distributor sells the
equipment before the maturity of the notes, the notes must be repaid immediately
along with any interest accrued thereon.
We have an agreement with a third-party financial institution to sell up to
$65.0 million of notes receivable generated from sales of mobile hydraulic
cranes, truck-mounted cranes and aerial work platforms on credit terms of up to
366 days on a revolving basis. The third-party financial institution purchases
the notes receivable at face value on a 90% non-recourse basis. The agreement
requires us to purchase credit insurance on behalf of the third-party to insure
the 90% risk assumed by the third-party financial institution. We retain 10% of
the credit risk.
ENGINEERING AND DESIGN
Our team of engineers focuses on developing innovative, high performance,
low maintenance products that create significant brand loyalty among customers.
Design engineers work closely with our manufacturing and marketing staff,
enabling us to quickly identify changing end-user requirements, implement new
technologies and effectively introduce product innovations. We spent
approximately $15.0 million in fiscal 1996, approximately $15.4 million in
fiscal 1997 and approximately $14.1 million in fiscal 1998 on company-sponsored
research and development activities.
MANUFACTURING AND FACILITIES
We maintain major manufacturing and engineering facilities in Shady Grove,
Pennsylvania and Wilhelmshaven, Germany, as well as plants in Tonneins, France
and Waverly, Nebraska. All of our manufacturing facilities are ISO 9001
certified. We also maintain administrative and service facilities in the United
Kingdom, France, Germany, and Australia, and offices in Singapore, the United
Arab Emirates, and China.
The following table shows the principal facilities that we own or lease:
<TABLE>
<CAPTION>
APPROXIMATE
FACILITY LOCATION TYPE OF FACILITY SQUARE FOOTAGE OWNED/ LEASED
- -------------------------------------------- ---------------------------------- -------------- ----------------
<S> <C> <C> <C>
Shady Grove, Pennsylvania................... Manufacturing/ Headquarters 1,165,600 owned
Quincy, Pennsylvania........................ Manufacturing 40,100 owned
Chambersburg, Pennsylvania.................. Office/Storage 81,000 owned
Waverly, Nebraska........................... Manufacturing/ Headquarters 303,800 owned
Sunderland, U.K.(1)......................... Warehouse/Office 102,200 leased
Wilhelmshaven, Germany(2)................... Manufacturing/ Storage/Office 410,400 owned/ leased
Langenfeld, Germany(3)...................... Storage/Office/ Field Testing 80,300 leased
Tonneins, France(4)......................... Manufacturing/ Storage/Office 101,900 owned/ leased
Osny, France................................ Storage/Repair/Office 43,000 owned
</TABLE>
- ------------------------
(1) The lease for the Sunderland facilities expires on December 31, 1999.
(2) We own the buildings and lease the underlying land from the Federal Republic
of Germany and Fried.Krupp. The lease with the Federal Republic of Germany
expires December 31, 2043 and the lease with Fried.Krupp expires December
31, 2042.
(3) The lease at Langenfeld, Germany runs through July 31, 2000.
(4) Includes two facilities, one of which is leased. The lease expires on
November 29, 2004.
We expect to be able to renew leases of leased properties or lease
comparable facilities on terms commercially acceptable to us. We believe that
our facilities are suitable for our operations and provide sufficient capacity
to meet our requirements for the foreseeable future.
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Grove Worldwide's obligations under its credit facility are secured by a
mortgage on some of its owned, domestic real properties.
COMPETITION
The markets in which we compete are highly competitive. To compete
successfully, we must remain competitive in areas of quality, value, product
line, ease of use, safety, comfort and customer service. We face competition in
each of our operating divisions from a number of manufacturers. Competition in
each of our markets generally is based on product design, overall product
quality, maintenance costs and price. The following table sets forth our primary
competitors in each of our major product groups:
<TABLE>
<CAPTION>
OPERATING DIVISIONS PRODUCTS PRIMARY COMPETITORS
- ------------------------------ ---------------------------- ---------------------------------------------------
<S> <C> <C>
Grove Crane................... Mobile Hydraulic Cranes Liebherr Werk Nenzing, Link-Belt Construction
Equipment Co., Mannesman DeMatic, Tadano Ltd. and
Terex Corporation.
Grove Manlift................. Aerial Work Platforms JLG Industries, Inc., Genie Industries, Sky Jack
Inc., The Snorkel Company, Terex Corporation and
UpRight, a division of W.R. Carpenter North
America, Inc.
National Crane................ Truck-Mounted Cranes Fassi Gru Idrauliche Spa, Hiab BV, Iowa Mold
Tooling Co. Inc. (IMT), Manitex, Inc., Palfinger
GmbH, Pioneer Truck Cranes, manufactured by Pioneer
Engineering Corporation, Terex Corporation and USTC
Inc.
</TABLE>
RAW MATERIALS
The principal materials that we use in our various manufacturing processes
include steel, castings, engines, tires, axles, transmissions, hydraulic
components and controls, hydraulic cylinders, electric controls, motors, and a
variety of other fabricated or manufactured items either purchased complete or
manufactured internally. Substantially all materials are normally available from
multiple suppliers but are designed and tested to meet specific requirements.
Current and potential suppliers are evaluated on a regular basis on their
ability to meet our requirements and standards regarding quality, delivery and
value.
CYCLICALITY
Historically, sales of our products have been subject to cyclical variations
caused by, among other things, cyclical changes in general economic conditions
and, in particular, in conditions in the construction industry. During periods
of expansion in construction activity, we generally have benefitted from
increased demand for our products. Conversely, during recessionary periods, we
have been adversely affected by reduced demand for our products. Downward cycles
may result in reduction of our new unit sales and pricing, which may materially
and adversely impact our results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations-- Cyclicality."
BACKLOG
Our backlog consists of firm orders for new equipment and replacement parts.
Total backlog as of March 20, 1999 was approximately $232.6 million compared to
total backlog as of March 21, 1998 of approximately $313.7 million. We expect to
fill substantially all of our backlog orders within one year,
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although there can be no assurance that we will fill all backlog orders within
that time period. We generally fill parts orders on an as-ordered basis.
EMPLOYEES
As of April 1, 1999, we had a total of approximately 4,136 employees, of
which approximately 3,022 were employed in the United States. Approximately
19.6% of our employees are represented by labor unions. In the United States,
workers at our Waverly, Nebraska facility are organized and are covered by a
collective bargaining agreement that expired on April 11, 1999. Negotiations for
contract renewal are in progress, and we expect to enter into a new three-year
agreement. Employees at our Sunderland, United Kingdom, Wilhelmshaven, Germany
and Tonneins, France facilities are organized under the host country's labor
laws. The collective bargaining agreements covering the employees at our
Sunderland, United Kingdom facility expired in October 1998. The collective
bargaining agreements covering the Wilhelmshaven, Germany employees will end
only if proper notice is given by either party under special provisions in the
collective bargaining agreements, but are subject to renegotiation at various
times. At all facilities, we consider our relations with our employees and union
representatives to be good.
MANAGEMENT INFORMATION SYSTEMS
In fiscal 1995, we launched our year 2000 project. The year 2000 project,
which is expected to be completed at the end of fiscal 1999, will have a total
cost of approximately $38.0 million, of which approximately $33.0 million had
been expended as of January 2, 1999. We believe that this new system will enable
us to reduce costs, improve productivity and product development times, and
enhance inventory management.
We expect our new system to provide improved cost data, facilitate inventory
and work-in-process tracking and provide improved order processing. In addition,
we expect the system to improve organizational performance because it will
provide management information in a more timely and accurate fashion. The new
software will cover our product lifecycle, including the functionality needed
for new product development, order management and lifetime product service and
support, as well as accounting support activities. The system will also address
our global requirements such as a multi-lingual and multi-currency system to
cover all of our facilities.
The completion of the year 2000 project is expected to render all of our
major computer systems year-2000 compliant. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Management
Information Systems and the Impact of Year 2000."
ENVIRONMENTAL MATTERS
We generate hazardous and non-hazardous waste in the normal course of our
manufacturing operations. As a result, we are subject to a wide range of
Federal, state, local and foreign environmental laws, including the
Comprehensive Environmental Response, Compensation and Liability Act, that:
- govern activities or operations that may have adverse environmental
effects, such as discharges to air and water, as well as handling and
disposal practices for hazardous and nonhazardous wastes, and
- impose liability for the costs of cleaning up, and damages resulting from,
sites of past spills, disposals or other releases of hazardous substances.
In order to comply with these laws we have to make expenditures on a continuing
basis. We do not expect that these expenditures will have a material adverse
effect on our financial condition or results of operations.
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In 1990, the Clean Air Act was amended to establish a list of 189 toxic air
pollutants that must be controlled using maximum achievable control technology
as prescribed by the Environmental Protection Agency. We believe that by 2003 we
will need to comply with the maximum achievable control technology regulations
with respect to our surface coating air omissions. At this time, we do not
expect the cost of compliance with these regulations to have a significant
impact on our operations.
LEGAL PROCEEDINGS
We are involved in various legal proceedings which have arisen in the normal
course of our operations. The outcome of these legal proceedings, if determined
adversely to us, is unlikely to have a material effect on us. We are also
subject to product liability claims for which we believe we have adequate
insurance.
INTELLECTUAL PROPERTY
Our products are sold primarily under the logo "G-Registered Trademark-",
and the trademarks GROVE-Registered Trademark-, G Grove
Worldwide-Registered Trademark-, GROVE MANLIFT-Registered Trademark-,
MANLIFT-Registered Trademark-, G MANLIFT-Registered Trademark-, G MEGATRAK-TM-,
MAXX-Registered Trademark-, SUPER-MAXX-Registered Trademark-,
TOUCAN-Registered Trademark-, and YARDBOSS-TM-. We own patents and trademarks
relating to the products it manufactures that have been obtained over a number
of years. These patents and trademarks have been of value in the growth of our
business and may continue to be of value in the future.
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AVAILABLE INFORMATION
When this registration statement is declared effective by the SEC, we will
become subject to the periodic reporting and to the informational requirements
of the Exchange Act, and as required by the Exchange Act, we will file reports,
proxy statements and other information with the SEC. Reports, proxy and
information statements and other information filed by us may be inspected and
copied at the public reference facilities maintained by the Securities and
Exchange Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's Regional Offices located at Seven World Trade Center,
13th Floor, New York, New York 10048 and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of these materials may be
obtained upon written request from the Public Reference Section of the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, the SEC maintains a site on the World Wide Web at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC.
No separate financial statements of Grove Investors Capital are included in
this prospectus. We believe that providing separate financial statements and
other disclosures concerning Grove Investors Capital would not be material to
you. Grove Investors Capital has no assets, liabilities, other than the
debentures, or operations.
The indenture dated as of April 29, 1998, between us and the United States
Trust Company of New York, under which the outstanding debentures were issued
and under which the registered debentures are to be issued, requires us to
furnish to holders of the debentures:
- all quarterly and annual financial information that would be required to
be contained in a filing with the SEC on Forms 10-Q and 10-K if we were
required to file these forms, including a "Management's Discussion and
Analysis of Financial Condition and Results of Operations" that describes
our financial condition and results of operations and, with respect to the
annual information only, a report by our certified independent
accountants; and
- all current reports that would be required to be filed with the SEC on
Form 8-K if we were required to file these reports, in each case within
the time periods specified in the SEC's rules and regulations.
In addition, following the completion of the exchange offer, whether or not
required by the rules and regulations of the SEC, we will file a copy of all
such information and reports with the SEC for public availability within the
time periods specified in the SEC's rules and regulations, unless the SEC would
reject the filing, and make such information available to securities analysts
and prospective investors upon request. In addition, (1) at all times the SEC
does reject the filings provided for in the preceding sentence or (2) the
filings provided for in the preceding sentence do not contain the information
required to be delivered upon request pursuant to Rule 144A(d)(4) under the
Securities Act, then, in each case, we have agreed that, for so long as any
debentures remain outstanding, it will furnish to the holders of the debentures
and to securities analysts and prospective investors, upon their request, the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
This prospectus constitutes a part of a registration statement on Form S-4
filed by us with the SEC under the Securities Act of 1933. This prospectus does
not contain all the information contained in the registration statement, parts
of which are omitted as required by the rules and regulations of the SEC, and
reference is hereby made to the registration statement and to the exhibits
relating thereto for further information with respect to us and the registered
debentures. Any statements contained in this prospectus concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of the document filed as an exhibit to the
registration statement or otherwise filed with the SEC. Each of these statements
is qualified in its entirety by these references.
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MANAGEMENT
MANAGEMENT COMMITTEE AND EXECUTIVE OFFICERS OF GROVE INVESTORS
Our executive officers serve at the discretion of our management committee.
The following table sets forth information concerning our executive officers and
the members of our management committee:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Salvatore J. Bonanno................................. 58 Chairman and Chief Executive Officer and Member of
Management Committee
Stephen L. Cripe..................................... 42 Vice President and Chief Financial Officer
Keith R. Simmons..................................... 48 Vice President and Secretary
J Taylor Crandall.................................... 45 Member of Management Committee
Michael L. George.................................... 59 Member of Management Committee
Gerald Grinstein..................................... 66 Member of Management Committee
Steven B. Gruber..................................... 40 Member of Management Committee
Robert B. Henske..................................... 37 Member of Management Committee
Gerard E. Holthaus................................... 49 Member of Management Committee
Anthony P. Scotto.................................... 51 Member of Management Committee
</TABLE>
Mr. Bonanno serves as our Chairman and Chief Executive Officer and serves as
a member of the management committee. From July 1995 to June 1997, he was
President of Foamex L.P. and from July 1997 to March 1998, he was President,
Chief Operating Officer and a Board Member of Foamex International Inc., a $1
billion polyurethane manufacturing company, where he was responsible for
directing all manufacturing operations, strategic planning and policy-making
activities for Foamex International's cushioning foams, automotive foams and
technical foams businesses. While at Foamex International, Mr. Bonanno led an
organizational restructuring which included streamlining three layers of
management, restructuring manufacturing operations and reducing costs. From July
1993 to July 1995, Mr. Bonanno served as General Manager of International
Manufacturing Operations for Chrysler Corporation where his responsibilities
included solely owned operations, joint ventures and licensing agreements
outside of North America. Mr. Bonanno joined Chrysler in 1965.
Mr. Cripe serves as our Vice President and Chief Financial Officer, a
position in which he has served since October 1998. He has served as Senior Vice
President and Chief Financial Officer of Grove Worldwide, a position in which he
has served since August 1998. Mr. Cripe is responsible for accounting and
control, treasury functions, budgeting and planning and information systems
oversight for us and our operating companies. From April 1996 to August 1998, he
was Vice President of the Tenneco Automotive Group, Lake Forest, Illinois. From
1993 to April 1996, he was Controller for the Industrial Fibers Group of Allied
Signal.
Mr. Simmons serves as our Vice President and Secretary, a position in which
he has served since April 1998. He has served as Senior Vice President, General
Counsel and Business Development of Grove Worldwide since May 1995, and is
responsible for managing the legal affairs of Grove Worldwide and its operating
companies and, in conjunction with the operating companies, for developing and
implementing external growth initiatives. From April 1992 to May 1995, he was
Senior Vice President and General Counsel of Grove Worldwide.
Mr. Crandall serves as a member of the management committee. Mr. Crandall
has been a Managing Partner of Oak Hill Capital Management, Inc. since November
1998, and the Chief Operating Officer of Keystone, Inc. since October 1998.
Between 1986 and October 1998, he served as Chief Financial Officer and Vice
President of Keystone, Inc. Since 1991, he has served as a President and a
director of Acadia MGP, Inc. Mr. Crandall is a director of Bell & Howell
Company, Quaker State Corporation, Specialty Foods, Inc., Washington Mutual,
Inc., Integrated Orthopedics, Inc.,
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Physician Reliance Network Inc. and Sunterra Corporation. Mr. Crandall also
serves on the Board of Advisors of Oak Hill Strategic Partners, L.P. and on the
Investment Committees of Insurance Partners, L.P. and Brazos Fund, L.P.
Mr. George serves as a member of the management committee. Since 1984, Mr.
George has served as Chief Executive Officer and Chairman of the Board of George
Group Inc., an acquisition and management consulting firm based in Dallas,
Texas. He is a director of Reliant Building Products, Inc.
Mr. Grinstein serves as a member of the management committee. Since August
1997, Mr. Grinstein has been the non-executive Chairman of Delta Air Lines, Inc.
He served as Chairman of Burlington Northern Santa Fe Corp., a railroad
transportation company, until his retirement in 1995. He was Chairman and Chief
Executive Officer of Burlington Northern Inc. from 1991 to 1995. Before joining
Burlington Northern in 1987, he was Chairman of Western Airlines from 1983 to
1987 and a partner in the law firm of Preston, Thorgrimson, Ellis and Holman
from 1969 to 1983. In addition to being a director of Delta Airlines, Mr.
Grinstein also serves as a director of Browning-Ferris Industries, Inc., PACCAR
Inc., Sundstrand Corp., Imperial Holly Corp and The Pittston Company and Vans,
Inc.
Mr. Gruber serves as a member of the management committee. Mr. Gruber has
been a Managing Partner of Oak Hill Capital Management, Inc. since November
1998, and has been a Managing Director of Oak Hill Partners, Inc. since March
1992. From May 1990 to March 1992, he was a Managing Director of Rosecliff, Inc.
Since February 1994, Mr. Gruber has also been an officer of Insurance Partners
Advisors, L.P., an investment adviser to Insurance Partners, L.P. Since October
1992, he has been a Vice President of Keystone, Inc. From 1981 to 1990, Mr.
Gruber was a Managing Director and co-head of High Yield Securities and held
various other positions at Lehman Brothers, Inc. Mr. Gruber serves as a director
of Superior National Insurance Group, Inc., MVE Holdings, Inc., Reliant Building
Products, Inc., Integrated Orthopedics, Inc. and several private companies
related to Keystone, Inc., Insurance Partners, L.P. and Oak Hill Partners, Inc.
Mr. Henske serves as a member of the management committee. Since November
1998, Mr. Henske has been a Partner of Oak Hill Capital Management, Inc. Since
January 1997, Mr. Henske has served as a principal at Arbor Investors, LLC. From
January 1996 to December 1996, he was Executive Vice President, Chief Financial
Officer and Board Member of American Savings Bank, F.A., a federally-chartered
thrift. From 1986 to January 1996, he was a partner or held various other
positions with Bain & Company, Inc., a management consulting firm. Mr. Henske is
a director of Reliant Building Products, Inc. and Williams Scotsman, Inc.
Mr. Holthaus serves as a member of the management committee. Since April
1997, Mr. Holthaus has been President and Chief Executive Officer of Williams
Scotsman, Inc. From September 1995 to April 1997, he was President and Chief
Operating Officer of Williams Scotsman, Inc. and was Executive Vice President
and Chief Financial Officer prior thereto. He has served as a director of
Williams Scotsman, Inc. since June 1994. Before joining Williams Scotsman, Inc.,
Mr. Holthaus served as Senior Vice President of MNC Financial, Inc. from April
1988 to June 1994. From 1971 to 1988, Mr. Holthaus was associated with the
accounting firm of Ernst & Young LLP (Baltimore), where he served as a partner
from 1982 to 1988. He is a director of the Baltimore Life Insurance Company and
Avitech Solutions.
Mr. Scotto serves as a member of the management committee. Mr. Scotto has
been a consultant to Oak Hill Capital Management, Inc. since November 1998, and
has served as a Managing Director of Oak Hill Partners, Inc. since 1992. Mr.
Scotto is a director of Holophane Corporation, Ivex Packaging Corporation and
Specialty Foods, Inc.
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MANAGEMENT COMMITTEE SUBCOMMITTEES AND FEES
The management committee does not have a compensation committee, audit
committee or nominating committee. The members of the management committee are
not compensated for their services as members.
EXECUTIVE COMPENSATION
Our executive officers are not compensated for their services as executive
officers. They are compensated for their services as executive officers of Grove
Worldwide.
DESCRIPTION OF MANAGEMENT OPTION PLAN
In April 1998, we adopted a management option plan. The purpose of the
option plan is to promote our and our members' interests by:
- attracting and retaining exceptional officers and other key employees of
ours and our affiliates, specifically Grove Worldwide; and
- enabling these individuals to acquire an equity interest in, and
participate in our long-term growth and financial success.
Subject to a participant's continued employment with Grove Worldwide or its
affiliates, options granted under the option plan will vest over a five year
period as follows. For each of the first five fiscal years beginning after the
date the options are granted, the options will vest and become cumulatively
exercisable with respect to 20% of our membership interests representing these
options on the last day of each fiscal year if Grove Worldwide and its
subsidiaries meet the EBITDA target established for that fiscal year. If the
EBITDA actually achieved for a year is less than the EBITDA target for that
year, then the vesting schedule for that year will be proportionately reduced.
In addition, options will not vest in any year if the actual EBITDA for that
year is less than a minimum percentage of the EBITDA target.
To the extent not previously canceled, any unvested portion of an option
will, as of the date of a change in control, be deemed vested and exercisable
immediately before a change in control. In addition, as a result of a
termination of employment by any participant, we have the assignable right but
not the obligation to purchase the participant's membership interests in us for
an amount to be calculated based on the participant's reason for termination of
employment.
EMPLOYMENT ARRANGEMENTS
Mr. Bonanno entered into an employment contract with Grove Worldwide in
March 1998. Mr. Bonanno's term of employment is two years, beginning on April
29, 1998, subject to two-year automatic renewal periods. Mr. Bonanno is entitled
to an annual salary of $500,000, short-term incentive plan awards and two
additional payments of $450,000 on March 31, 1999 and March 31, 2000. See
"--Short-Term Incentive Plan." In addition, Grove Worldwide arranged with a
third party to purchase Mr. Bonanno's former residence for approximately
$219,000, the difference between the residence's estimated market value and the
outstanding mortgage balance, and reimbursed the third party for the $219,000
payment. Upon sale of the residence, any amount received by the third party in
excess of the outstanding mortgage balance will be paid to Grove Worldwide.
As part of his employment contract, Mr. Bonanno was granted an option under
the option plan to purchase 2.0% of our outstanding membership interests,
calculated as of April 29, 1998. See "--Description of Management Option Plan."
The contract also provides that Mr. Bonanno has the option to purchase
additional membership interests of ours.
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In March 1998, Mr. Bonanno entered into a separate employment agreement with
Grove Worldwide covering the period between March 16, 1998 and April 29, 1998,
under which he received a ratable payment based on the actual number of days
elapsed during this period based on a yearly salary of $500,000.
Joseph Shull, the former President of Grove Crane, entered into an executive
agreement with Grove Worldwide in June 1998, providing for his employment
through September 1998. During the term of his employment, Mr. Shull was
entitled to a ratable payment based on his current salary and short-term
incentive plan awards. See "--Short-Term Incentive Plan." In addition, in
consideration of his agreeing not to compete with Grove Worldwide through August
31, 2001, and to waive his change of control agreement, Mr. Shull will receive
additional annual payments through August 31, 2001. See "--Termination and
Change of Control Agreements." Mr. Shull also entered into a consulting
arrangement covering the period between October 1, 1998 and December 31, 2000.
TERMINATION AND CHANGE OF CONTROL AGREEMENTS
In 1997, a number of executives of Grove Worldwide, including Mr. Shull and
Mr. Simmons, entered into separate change of control agreements with Grove
Worldwide. Each executive's agreement provides that if, within two years after a
change in control of Grove Worldwide, (a) the executive is terminated by Grove
Worldwide without cause or due to death, disability or retirement, or (b) the
executive ends his employment for good reason, then, in addition to payment for
unreimbursed expenses, deferred compensation, health coverage premiums,
including reimbursement for any income tax liability resulting from these
payments, and other employment-related benefits, the executive will also be
entitled to a lump-sum payment equal to two times the sum of (x) his highest
annual base salary in effect within 180 days before the change of control and
(y) his highest annual bonus paid or payable for either of the last two
completed years by Grove Worldwide or its predecessors. Each executive is also
entitled to the above-described severance amount if his employment is terminated
within 180 days before a change in control (a) by Grove Worldwide without cause
or (b) by him for good reason, based on an event that occurred within the
180-day period, or (c) due to his death. Pursuant to Mr. Shull's 1998 executive
agreement, he has waived any rights under his change of control agreement. See
"--Employment Arrangements." Three former executive officers of Grove Worldwide
were paid, in total, approximately $4.3 million under their change of control
agreements upon their departures from Grove Worldwide.
SHORT-TERM INCENTIVE PLAN
Grove Worldwide's short-term incentive plan permits Grove Worldwide to pay
officers and other key employees, including prospective officers and employees,
of Grove Worldwide and its affiliates an annual bonus conditioned on the
attainment of pre-established financial performance criteria based on EBITDA
targets for Grove Worldwide and/or designated business sub-units. The short-term
incentive plan is administered by persons designated by the Compensation
Committee of Grove Worldwide.
MANAGEMENT OF GROVE INVESTORS CAPITAL
Messrs. Henske, Scotto and Bonanno are the directors of Grove Investors
Capital. They are not compensated in any way for acting as directors. The board
of directors of Grove Investors Capital lacks a compensation committee, audit
committee or nominating committee.
Mr. Bonanno is the Chief Executive Officer of Grove Investors Capital. Mr.
Simmons is the Vice President and Secretary of Grove Investors Capital. Mr.
Cripe is the Vice President and Chief Financial Officer of Grove Investors
Capital. None of the executive officers of Grove Investors Capital are
compensated for their services as officers of Grove Investors Capital. See
"Directors and Executive Officers of the Registrant" for biographical
information on the directors and executive officers of Grove Investors Capital.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of
our membership interests by (1) each person or entity that owns five percent or
more of our membership interests, (2) each member of the management committee
individually who holds membership interests, (3) each executive officer of ours
who holds membership interests and (4) all executive officers and members of the
management committee as a group:
<TABLE>
<CAPTION>
PERCENTAGE OF
GROVE INVESTORS
NAME OF BENEFICIAL OWNER MEMBERSHIP INTERESTS
- ---------------------------------------------------------------------------------- ---------------------
<S> <C>
FW Strategic Partners, L.P.(1) (2)................................................ 43.38%
201 Main Street, Suite 3200
Fort Worth, Texas 7610
FW Grove Coinvestors, L.P.(2) (3)................................................. 43.38%
201 Main Street, Suite 3200
Fort Worth, Texas 76102
GGEP-Grove, L.P. (2) (4).......................................................... 2.66%
One Galleria Tower
13355 Noel Road, Suite 1100
Dallas, Texas 75240
D. Brown (3)...................................................................... --
J Crandall (1).................................................................... --
M. George (2) (4)................................................................. 1.89%
S. Bonanno (5).................................................................... 2.67%
K. Simmons (5).................................................................... *
S. Cripe (5)...................................................................... 1.16%
All executive officers and members of the management committee as a group (10
persons) (5).................................................................... 6.9%
</TABLE>
- ------------------------
* Indicates less than one percent.
(1) The general partner of FW Strategic Partners, L.P. is FW Strategic Asset
Management, L.P., whose general partner is Strategic Genpar, Inc. J Taylor
Crandall is the sole stockholder of Strategic Genpar, Inc. Accordingly, Mr.
Crandall may be deemed to be the beneficial owner of the membership
interests of FW Strategic Partners, L.P. Mr. Crandall disclaims beneficial
ownership of these membership interests.
(2) Represents Class B Membership Interests. The Class B Membership Interests
and the Class A Membership Interests are substantially identical except
that, under the terms of our operating agreement, the issuance of additional
Class B Membership Interests will not result in dilution to the holders of
the Class A Membership Interests.
(3) The general partner of FW Grove Coinvestors, L.P. is FW Group Genpar, Inc.
David G. Brown is the sole stockholder of FW Group Genpar, Inc. Accordingly,
Mr. Brown may be deemed to be the beneficial owner of the membership
interests of FW Grove Coinvestors, L.P. Mr. Brown disclaims beneficial
ownership of these membership interests.
(4) GGEP-Grove, L.P., is an entity formed by employees of George Group Inc. Mr.
George, the Chief Executive Officer and Chairman of the Board and majority
stockholder of George Group Inc., is a member of each Management Committee.
(5) Represents Class A Membership Interests.
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Some members of senior management have purchased approximately 6.9% of our
membership interests. The purchase price of these interests was partially
financed through approximately $3.6 million in loans from Grove Worldwide. We
have also granted some members of senior management options to purchase our
membership interests under the option plan. See "Executive
Compensation--Description of Management Option Plan." Our membership interests
held by senior management members are subject to calls by us upon a termination
of employment. See "Executive Compensation--Description of Management Option
Plan."
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OPERATING AGREEMENTS
GROVE INVESTORS LLC OPERATING AGREEMENT
We are a limited liability company formed under the Delaware Limited
Liability Company Act and are governed by the Second Amended and Restated
Limited Liability Company Agreement, as amended from time to time. The members
of the investor group have delegated our management to a management committee.
The operating agreement establishes the composition of the management committee.
See "Management--Management Committee and Executive Officers of Grove
Investors."
The management committee has the power to manage and control our business
and affairs, to make all decisions affecting our business and affairs and to
take all actions as it deems necessary or appropriate with respect to our
business and affairs. The management committee may delegate this power to
another person, committee or entity.
Under our operating agreement, we are authorized to issue two classes of
membership interests, Class A membership interests and Class B membership
interests. Members of the investor group beneficially own in the aggregate all
of our outstanding membership interests. See "Security Ownership of Certain
Beneficial Owners and Management." The Class A membership interests and Class B
membership interests are substantially identical except that, under the terms of
our operating agreement, the issuance of additional Class B membership interests
will not result in dilution to the holders of the Class A membership interests.
Generally, income and loss will be allocated to the holders of membership
interests in proportion to their percentage of ownership. To the extent cash is
available to do so, we will make quarterly tax distributions to holders of
membership interests in proportion to allocations of taxable income. Upon
liquidation, distributions will be in proportion to the positive capital account
balances of the holders of membership interests.
GROVE HOLDINGS LLC OPERATING AGREEMENT
We own Grove Holdings. We are also the managing member of Grove Holdings. As
managing member, we have delegated the management of Grove Holdings to the Grove
Holdings' management committee, which is identical in composition to Grove
Worldwide's management committee. Subject to restrictions contained in the
indenture relating to Grove Holdings' senior discount debentures, all
distributions in respect of membership interests of Grove Holdings will be made
to us.
GROVE WORLDWIDE LLC OPERATING AGREEMENT
Grove Worldwide is wholly owned by Grove Holdings, which is also the
managing member. As managing member, Grove Holdings has delegated the management
of Grove Worldwide to Grove Worldwide's management committee. Subject to
restrictions contained in the credit facility and the indenture relating to
Grove Worldwide's senior subordinated notes, all distributions in respect of
membership interests of Grove Worldwide will be made to Grove Holdings.
AGREEMENTS WITH GEORGE GROUP INC. FOR MANAGEMENT CONSULTING SERVICES
George Group provides consulting services to facilitate the development and
achievement of our business plan, including services with respect to the
operations improvement program, strategic planning, operations and financial
matters. For these services, George Group is paid cash fees equivalent to its
costs and is reimbursed for its out-of-pocket expenses. George Group has advised
us that it estimates its engagement will be completed within 42 months and that
the total cash fees and expenses would approximate $14.0 million, including
approximately $2.7 million it received in fiscal
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1998. In addition, if we achieve defined levels of performance in fiscal 1999,
2000, 2001 and 2002, George Group will be entitled to receive additional
ownership interests in us for each year the defined levels of performance are
achieved. We have agreed to indemnify George Group, its owners, employees, and
agents from liabilities and claims relating to or arising from the engagement of
George Group, other than those resulting from gross negligence or willful
misconduct of George Group. Michael L. George, a member of the management
committee, is Chief Executive Officer and Chairman of the Board and majority
stockholder of George Group. See "Business" and "Management."
AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
Grove Worldwide has entered into agreements with Messrs. Bonanno, Simmons
and Shull and other current and former executive officers of Grove Worldwide and
made payments to three former executive officers under their change of control
agreements. See "Executive Compensation-- Employment Arrangements" and
"--Termination and Change of Control Agreements." In addition, Grove Worldwide
has entered into an executive agreement with Mr. Shull. See "Executive
Compensation--Employment Arrangements."
LOANS TO EXECUTIVE OFFICERS
Grove Worldwide has provided approximately $3.8 million in loans to certain
executive officers of Grove Worldwide to finance their investment in our
membership interests. These loans are evidenced by promissory notes which bear
interest at a rate per annum equal to the prime rate of Wells Fargo Bank and,
except for a $912,000 note made by Mr. Bonanno, are secured by a pledge of the
executive's membership interests in us. Except as described in the next
sentence, all of the notes are due ten years from their date of issuance. The
$912,000 note made by Mr. Bonanno is due in June 2005, a $250,000 note made by
Mr. Cripe is due in April 1999, and a $50,000 note made by Mr. Donald Mallo is
due in October 1999. As of April 3, 1999, Mr. Bonanno was indebted to Grove
Worldwide in the amount of approximately $1.9 million, Mr. Bust was indebted in
the amount of approximately $375,000, Mr. John Wheeler was indebted in the
amount of approximately $150,000, Mr. Mallo was indebted in the amount of
approximately $150,000, Mr. Cripe was indebted in the amount of approximately
$687,500 and Mr. Donald Manvel was indebted in the amount of approximately
$300,000.
CERTAIN TRANSACTIONS WITH HANSON FUNDING BEFORE THE CLOSING DATE
Before the completion of the acquisition, Grove Worldwide and its
subsidiaries were affiliates of Hanson Funding. Hanson Funding provided Grove
Worldwide and its subsidiaries with various services, including, without
limitation, cash management, tax reporting and risk management services and
charged a management fee for these services. See "Management's Discussion and
Analysis of Financial Condition Operations--Results of Operations." Before the
completion of the acquisition, Hanson Funding also purchased small quantities of
Grove Worldwide's products on an arm's-length basis.
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DESCRIPTION OF CREDIT FACILITY
CREDIT FACILITY
In connection with the acquisition, Grove Worldwide entered into a senior
secured credit facility with a syndicate of banks, as lenders, and Chase Bank of
Texas, National Association, as administrative agent, Donaldson, Lufkin &
Jenrette, as documentation agent, and BankBoston N.A., as syndication agent. The
credit facility consists of a $200 million term loan facility and a $125 million
revolving credit facility.
The revolving credit facility enables Grove Worldwide to obtain revolving
credit loans and the issuance of letters of credit for the account of Grove
Worldwide from time to time for working capital, acquisitions and general
corporate purposes. A portion of the revolving credit facility is available for
borrowings by Grove Worldwide in the Eurocurrency markets of British pounds
sterling, German marks, French francs and certain other currencies. At Grove
Worldwide's option, loans under the credit facility bear interest:
(a) in the case of loans in United States dollars, at the highest of (x)
1/2 of 1% in excess of a federal funds effective rate, (y) 1.0% in excess
of a certificate of deposit rate and (z) the administrative agent's prime
rate, plus an applicable margin; or
(b) in the case of all loans, a relevant eurocurrency rate as determined by
the agent, plus the applicable margin.
Grove Worldwide also pays certain fees with respect to the credit facility.
The term loan facility has a term of eight years unless terminated sooner
because of an event of default. The term loan facility must be repaid in
semi-annual installments until April 2006 after the closing date of in an
aggregate amount for each year following the closing date of the credit
facility:
- $2 million for the first six years;
- $88 million during the seventh year; and
- $100 million during the eighth year.
The revolving credit facility has a term of seven years, unless terminated
sooner because of an event of default. Outstanding revolving credit loans are
payable in April 2005 unless the revolving credit loans are accelerated
following the occurrence of any event of default.
The obligations of Grove Worldwide under the credit facility are guaranteed
by Grove Holdings and each of Grove Worldwide's domestic subsidiaries. The
obligations of Grove Worldwide under the credit facility are secured by a first
priority lien, with permitted encumbrances for some property, on substantially
all of Grove Worldwide's and each guarantor's real, personal and intellectual
property and on the capital stock of Grove Worldwide and its domestic and
first-tier foreign subsidiaries. In addition, certain first tier foreign
subsidiaries have pledged their equity interests in their subsidiaries to secure
intercompany notes issued by them to Grove Worldwide.
The credit facility contains covenants that restrict Grove Worldwide from
taking specified actions and require Grove Worldwide to achieve and maintain
financial covenants relating to balance sheet, fixed charge coverage and
leverage ratios. The credit facility includes restrictions on:
- capital expenditures,
- liens,
- indebtedness,
- guarantees,
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- mergers,
- acquisitions,
- disposition of assets,
- dividends,
- changes in business activities and corporate activities.
The credit facility also contains customary events of default:
- nonpayment of principal, interest or fees,
- violation of covenants,
- inaccuracy of representations or warranties in any material respect,
- cross default and cross acceleration to other indebtedness,
- bankruptcy,
- Employee Retirement Income Security Act,
- material judgments and
- certain changes in control of Grove Worldwide or Grove Holdings.
Oak Hill Securities Fund, L.P. participated as a lender in the term loan
facility and received customary fees in connection with the loan. Oak Hill
Securities Fund is a Delaware limited partnership that acquires and actively
manages a diverse portfolio of investments principally in leveraged companies.
Some principals of the general partner of Oak Hill Securities Fund and Oak Hill
Advisors, Inc., the adviser of Oak Hill Securities Fund, have business
relationships with Keystone, and Keystone has an equity investment in Oak Hill
Securities Fund. Keystone is a member of the investor group. See "The
Transactions."
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<PAGE>
DESCRIPTION OF DEBENTURES
You can find the definitions of certain terms used in this description under
the subheading "Certain Definitions" on page 95. In this description, the word
"Grove Investors" refers only to Grove Investors LLC and not to any of its
subsidiaries. In addition, the words "we," "our," "ours" and "us" refer only to
Grove Investors LLC and Grove Investors Capital and not to any other
subsidiaries of Grove Investors.
The outstanding debentures were, and the registered debentures will be,
issued under an indenture among us and the United States Trust Company of New
York, as trustee, in a private transaction that was not subject to the
registration requirements of the Securities Act. The terms of the debentures
include those stated in the indenture and those made part of the indenture by
reference to the Trust Indenture Act of 1939. The debentures are subject to all
such terms, and Holders of debentures are referred to the indenture and the
Trust Indenture Act for a statement of those terms.
The following description is a summary of the material provisions of the
indenture. It does not restate that agreement in its entirety. We urge you to
read the indenture because it and not this description, defines your rights as
holders of the debentures. We have filed a copies of the indenture and the
registration rights agreement as exhibits to the registration statement which
includes this prospectus.
GENERAL
The form and terms of the registered debentures are substantially identical
to the form and terms of the outstanding debentures except that the registered
debentures will be registered under the Securities Act. Therefore, the
registered debentures will not bear legends restricting their transfer and will
not be entitled to registration under the Securities Act. The registered
debentures will evidence the same debt as the outstanding debentures. The same
indenture will govern both the outstanding debentures and the registered
debentures.
The debentures are:
- general unsecured obligations of ours;
- rank equal in right of payment with all existing and future senior
indebtedness of ours; and
- rank senior in right of payment to all subordinated indebtedness of ours.
As indebtedness of ours, however, the debentures are effectively subordinated to
all indebtedness of Grove Holdings and its subsidiaries. As of January 2, 1999,
the debentures were subordinated to approximately $737.4 million of liabilities
of Grove Holdings and its subsidiaries. See "Risk Factors-- The debentures are
subordinated to all liabilities of our subsidiaries."
Our operations are conducted through our subsidiaries. We are dependent upon
the cash flow of such subsidiaries to meet our obligations, including our
obligations under the debentures. As of January 2, 1999, all of our subsidiaries
were Restricted Subsidiaries. However, under limited circumstances, we will be
able to designate current or future subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to many of the restrictive
covenants contained in the indenture.
Grove Investors Capital is a wholly owned subsidiary of ours that was
incorporated in Delaware solely for the purpose of serving as a co-issuer of the
debentures to facilitate the offering of the outstanding debentures. We believe
that certain prospective purchasers of the outstanding debentures may have been
restricted in their ability to purchase debt securities of limited liability
companies, like us, unless such debt securities were jointly issued by a
corporation. Other than serving as a co-issuer of the debentures and any
additional debentures subsequently issued after the offering, Grove Investors
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Capital lacks any assets, operations or revenues. Grove Investors Capital is
also prohibited from engaging in any business activities. As a result, you
should not expect Grove Investors Capital to participate in servicing the
interest and principal obligations on the debentures.
PRINCIPAL, MATURITY AND INTEREST
The debentures:
- are limited in aggregate principal amount to $300.0 million at maturity of
which $47,375,000 was issued in the offering;
- will mature on May 1, 2010;
- accrue interest at a rate of 14 1/2% per annum, which is payable quarterly
in arrears on February 1, May 1, August 1 and November 1 of each year, to
Holders of record on the immediately preceding January 15, April 15, July
15 and October 15.
Interest on the debentures is payable, at our option, in the form of cash or
additional debentures for the life of the debentures.
Additional debentures may be issued from time to time after the offering,
subject to the provisions of the indenture described below under the caption
"--Certain Covenants--Incurrence of Indebtedness and Issuance of Disqualified
Stock." The debentures and any additional debentures subsequently issued will be
treated as a single class for all purposes under the indenture, including
without limitations,
- waivers,
- amendments,
- redemptions and
- offers to purchase.
Interest on the debentures will accrue from the most recent date to which
interest has been paid. If no interest has been paid, interest on the debentures
will accrue from the date of issuance. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months. Principal, premium and
Liquidated Damages, if any, and interest on the debentures will be payable, at
our option:
- at the office or agency of ours maintained for such purpose within the
City and State of New York; or
- by check mailed to the Holders of the debentures at their respective
addresses listed in the register of Holders of debentures.
However, if a Holder of debentures gives us wire transfer instructions, all
payments of principal, premium, interest and Liquidated Damages, if any, will be
required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Until otherwise designated by us, our
office or agency in New York will be the office of the United States Trust
Company maintained for such purpose. The debentures will be issued in
denominations of $1,000 and integral multiples of $1,000.
OPTIONAL REDEMPTION
At our option, the debentures are redeemable at any time. The debentures are
redeemable in whole or in part upon not less than 30 nor more than 60 days'
notice, in cash at the redemption prices set forth below plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the
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<PAGE>
applicable redemption date, if redeemed during the twelve-month period beginning
on May 1 of the years indicated below. The redemption prices are expressed as
percentages of principal amount.
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- --------------------------------------------------------------------------------- -----------
<S> <C>
2003............................................................................. 107.250%
2004............................................................................. 104.833%
2005............................................................................. 102.417%
2006 and thereafter.............................................................. 100.000%
</TABLE>
However, at any time before May 1, 2003, we may redeem all but not less than
all of the aggregate principal amount of debentures originally issued at a
redemption price equal to 114.5% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the redemption
date.
SELECTION AND NOTICE
If less than all of the debentures are to be redeemed or repurchased at any
time, selection of debentures for redemption or repurchase will be made by the
United States Trust Company in compliance with the requirements of the principal
national securities exchange, if any, on which the debentures are listed, or if
the debentures are not so listed, on a pro rata basis, by lot or by such method
as the United States Trust Company shall deem fair and appropriate; provided
that no debentures of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date to each Holder of debentures to be redeemed at
its registered address. Notices of redemption or repurchase may not be
conditional. If any debenture is to be redeemed or repurchased in part only, the
notice of redemption or repurchase that relates to such debenture shall state
the portion of the principal amount thereof to be redeemed or repurchased. A new
debenture in principal amount equal to the unredeemed or unrepurchased portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original debenture. Debentures called for redemption or repurchase become
due on the date fixed for redemption or repurchase. On and after the redemption
or repurchase date, interest and Liquidated Damages ceases to accrue on
debentures or portions of them called for redemption or repurchase.
MANDATORY REDEMPTION
We are not required to make mandatory redemption or sinking fund payments
with respect to the debentures.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a change of control, each Holder of debentures will
have the right to require us to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Holder's debentures pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any change of control, we
will mail a notice to each Holder describing the transaction or transactions
that constitute the change of control and offering to repurchase debentures on
the date specified in such notice, which date shall be no earlier than 30 days
and no later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"), pursuant to the procedures required by the indenture and
described in such notice.
We will comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in
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connection with the repurchase of the debentures as a result of a change of
control. To the extent that the provisions of any securities laws or regulations
directly conflict with the provisions of the indenture relating to such Change
of Control Offer, we will comply with the applicable securities laws and
regulations and shall not be deemed to have breached our obligations described
in the indenture by virtue such compliance.
On the Change of Control Payment Date, we will, to the extent lawful:
- accept for payment all debentures or portions thereof properly tendered
pursuant to the Change of Control Offer;
- deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all debentures or portions thereof so tendered; and
- deliver or cause to be delivered to the United States Trust Company the
debentures so accepted together with an Officers' Certificate stating the
aggregate principal amount of debentures or portions thereof being
purchased by us.
The Paying Agent will promptly mail to each Holder of debentures so tendered the
Change of Control Payment for such debentures, and the United States Trust
Company will promptly authenticate and mail, or cause to be transferred by book
entry, to each Holder a registered debenture equal in principal amount to any
unpurchased portion of the debentures surrendered, if any; provided that each
such registered debenture will be in a principal amount of $1,000 or an integral
multiple thereof. We will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
The change of control provisions described above will be applicable whether
or not any other provisions of the indenture are applicable. Except as described
above with respect to a change of control, the indenture does not contain
provisions that permit the Holders of the debentures to require that us
repurchase or redeem the debentures in the event of a takeover, recapitalization
or similar transaction. Due to change of control repayment provisions in certain
indebtedness of Grove Investors' subsidiaries, including the senior discount
debentures and the senior subordinated notes, and the existence of a change of
control event of default in the credit facility, it is unlikely that we would be
able to repurchase all of the debentures upon the occurrence of a change of
control. See "Risk Factors--Upon a change of control, we may not have sufficient
funds available to repurchase the debentures." In addition, the debentures will
rank equal in right of payment with other senior Indebtedness of Grove
Investors. The ability of Grove Investors to redeem all of the debentures upon a
change of control may also be limited by restrictions on the ability of Grove
Investors' Subsidiaries to pay dividends to Grove Investors. Finally, the
debentures will be effectively subordinated to obligations of the Subsidiaries
of Grove Investors, including with respect to Change of Control Payments. See
"--General."
We will not be required to make a Change of Control Offer upon a change of
control if:
- a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in the
indenture applicable to a Change of Control Offer made by us; and
- purchases all debentures validly tendered and not withdrawn under such
Change of Control Offer.
"Change of Control" means the occurrence of any of the following:
- the sale, lease, transfer, conveyance or other disposition, other than by
way of merger or consolidation, in one or a series of related
transactions, of all or substantially all of the assets of Grove Investors
and its Subsidiaries, determined on a consolidated basis, to any "person,"
as
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such term is used in Section 13(d)(3) of the Exchange Act) other than
Grove Investors or a Wholly Owned Restricted Subsidiary or any Permitted
Holder or Permitted Holders;
- the adoption of a plan relating to the liquidation or dissolution of one
of both of us other than in a transaction which complies with the
provisions described under "--Merger, Consolidation or Sale of Assets";
- the completion of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any "person" (as
defined above), other than one or more Permitted Holders, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition), directly or
indirectly, of more than 50% of the Voting Stock of Grove Investors
(measured by voting power rather than number of shares) and the Permitted
Holders do not beneficially own as much or more of the Voting Stock of
Grove Investors (measured by voting power rather than by number of shares)
than such person;
- the first day on which a majority of the members of the Management
Committee of Grove Investors are not Continuing Members; or
- the first day on which Grove Investors fails to own 100% of the issued and
outstanding Equity Interests of Grove Investors Capital (other than by
reason of the merger of Grove Investors Capital with and into a corporate
successor to Grove Investors).
The definition of change of control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of Grove Investors and its Subsidiaries, determined on a
consolidated basis. Although there is a developing body of case law interpreting
the phrase "substantially all," there is no precise established definition of
the phrase under applicable law. Accordingly, the ability of a Holder of
debentures to require us to repurchase such debentures as a result of a sale,
lease, transfer, conveyance or other disposition of less than all of the assets
of Grove Investors and its Subsidiaries taken as a whole to another Person or
group may be uncertain.
"Continuing Members" means, as of any date of determination, any member of
the Management Committee of Grove Investors who:
- was a member of such Management Committee on the date of the indenture; or
- was nominated for election or elected to such Management Committee with
the approval of a majority of the Continuing Members who were members of
such Management Committee at the time of such nomination or election.
"Permitted Holders" means:
- any of:
-- Keystone, Inc.,
-- FW Grove Coinvestors, L.P.,
-- FW Strategic Partners, L.P.,
-- George Group Employee Partners--Grove, L.P.,
-- Michael George
-- and their respective affiliates on the date of the indenture;
- any of the Permitted Transferees of the Persons referred to above; and
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- any person or group which holds, directly or indirectly, Equity Interests
in Grove Investors so long as a majority of the Equity Interests in Grove
Investors are beneficially owned by the Persons referred to under the
definition of Permitted Holders.
"Permitted Transferee" means, with respect to any Person:
- in the case of any Person who is a natural person, such individual's
spouse or children, any trust for such individual's benefit or the benefit
of such individual's spouse or children;
- in the case of any corporation, partnership, limited liability company or
similar entity in which the direct and beneficial owner or owners of 80%
or more of the Equity Interests in such Person or such individual's spouse
or children or any trust for the benefit of such Persons; and
- in the case of any Person who is a natural person, the heirs, executors,
administrators or personal representatives upon death of such Person or
upon the incompetence or disability of such Person for purposes of the
protection and management of such individual's assets.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The indenture provides that Grove Investors will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of Grove Investors' or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment
in connection with any merger or consolidation involving Grove Investors or
any of its Restricted Subsidiaries) or to the direct or indirect holders of
Grove Investors' or any of its Restricted Subsidiaries' Equity Interests in
their capacity as such (other than dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of Grove Investors or
dividends or distributions payable to Grove Investors or a Restricted
Subsidiary of Grove Investors);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving us) any Equity Interests of Grove Investors (other
than Equity Interests owned by Grove Investors or any Restricted Subsidiary
of Grove Investors) or any direct or indirect parent of Grove Investors;
(3) make any payment on or with respect to, or purchase, redeem, defease
or otherwise acquire or retire for value any Indebtedness that is
subordinated to the debentures (other than any subordinated indebtedness
held by Grove Investors), except a payment of interest or principal at
Stated Maturity; or
(4) make any Restricted Investment (all such payments and other actions
set forth in clauses (1) through (4) above being collectively referred to as
"Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) Grove Investors would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described below under the caption "--Incurrence
of Indebtedness and Issuance of Disqualified Stock"; and
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(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by Grove Investors and its Restricted
Subsidiaries after the date of the indenture (excluding Restricted
Payments permitted by clauses (2), (3), (4), (6), (8), (10), (11) and
(13) of the next succeeding paragraph), is less than the sum, without
duplication, of:
(v) 50% of the Consolidated Net Income of Grove Investors for the
period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing after the date of the indenture to
the end of Grove Investors' most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit), plus
(w) 100% of the aggregate net cash proceeds received by Grove
Investors since the date of the indenture as a contribution to its
equity capital or from the issue or sale of Equity Interests of Grove
Investors (other than Disqualified Stock) or from the issue or sale
of Disqualified Stock or debt securities of Grove Investors that have
been converted into such Equity Interests (other than Equity
Interests (or Disqualified Stock or convertible debt securities) sold
to a Subsidiary of Grove Investors), plus
(x) to the extent that any Restricted Investment that was made
after the date of the indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of:
(A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment, plus
(y) 50% of any dividends received by Grove Investors or a Wholly
Owned Restricted Subsidiary after the date of the indenture from an
Unrestricted Subsidiary of Grove Investors, to the extent that such
dividends were not otherwise included in Consolidated Net Income of
Grove Investors' for such period, plus
(z) to the extent that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary after the date of the
indenture, the lesser of:
(A) the fair market value of the Grove Investors' Investment
in such Subsidiary as of the date of such redesignation or
(B) such fair market value as of the date on which such
Subsidiary was originally designated as an Unrestricted
Subsidiary.
The foregoing provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity
Interests of Grove Investors in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary of
Grove Investors) of, other Equity Interests of Grove Investors (other than
any Disqualified Stock); provided that the amount of any such net cash
proceeds that are used for any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (c)(w) of the
preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness;
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(4) the payment of any dividend or making of any distribution by a
Subsidiary of Grove Investors to the holders of its Equity Interests on a
pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Grove Investors or any Subsidiary of Grove
Investors held by any former member of Grove Investors' (or any of its
Subsidiaries') Management Committee or any former officer, employee or
director of Grove Investors or any of its Subsidiaries pursuant to any
equity subscription agreement, stock option agreement, employment agreement
or other similar agreement and any dividends or distributions to Grove
Investors to fund such purchase, redemption or other acquisition or
retirement; provided that
(A) the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed (x) $5.0 million in
any calendar year (with unused amounts in any calendar year being carried
over to succeeding calendar years subject to a maximum (without giving
effect to clause (y)) of $10.0 million plus (y) the aggregate cash
proceeds received by Grove Investors during such calendar year from any
reissuance of Equity Interests by Grove Investors or Grove Worldwide to
members of management of Grove Investors and its Restricted Subsidiaries
and
(B) no Default or Event of Default shall have occurred and be
continuing immediately after such transaction; provided, further that the
aggregate cash proceeds referred to in (y) above shall be excluded from
clause (c)(w) of the preceding paragraph;
(6) so long as Grove Investors is a limited liability company either
treated as a partnership or disregarded as an entity separate from its owner
for federal income tax purposes (as evidenced by a certificate of an officer
of Grove Investors, prepared based on such officer's best knowledge, at
least annually), distributions to members of Grove Investors in an amount
with respect to any period after December 31, 1997 not to exceed the Tax
Amount of Grove Investors for such period; provided, however, that such
distributions shall be allowed to be made quarterly based on an estimation
and after the end of a taxable year based on the partnership tax return of
Grove Investors (or, if Grove Investors is disregarded as an entity separate
from its owner, its nearest owner that is not so disregarded) for such
taxable year (or at such other times as reasonably appropriate including in
connection with an audit adjustment), taking into account any previous
payments of Tax Amount for such taxable year or, if Grove Investors becomes
included in a consolidated tax group for federal income tax purposes,
payments to the common parent of the taxable group in an amount, with
respect to any period after December 31, 1997, not to exceed the tax
liability attributable to Grove Investors on a stand-alone basis for such
period;
(7) any Investment to the extent that the consideration therefor
consists of the net cash proceeds of the concurrent issue and sale (other
than to a Restricted Subsidiary) of Equity Interests of Grove Investors
(other than any Disqualified Stock);
(8) so long as no Default or Event of Default has occurred and is
continuing and Grove Investors can incur at least $1.00 of additional
indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
the first paragraph of the covenant described below under caption
"--Incurrence of Indebtedness and Issuance of Disqualified Stock," the
declaration and payment of dividends to holders of any class or series of
Disqualified Stock of Grove Investors, issued after the date of the
indenture in accordance with the covenant described below under the caption
"Incurrence of Indebtedness and Issuance of Disqualified Stock";
(9) Investments made by Grove Investors or one of its Restricted
Subsidiaries within 30 days of the date of the indenture, the proceeds of
which are used to fund the Transactions or capitalize Restricted
Subsidiaries;
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(10) repurchase of Equity Interests deemed to occur upon exercise of
stock options if such Equity Interests represent a portion of the exercise
price of such options;
(11) Restricted Investments having an aggregate fair market value, taken
together with all other Restricted Investments made pursuant to this clause
(11) that are at that time outstanding, not to exceed $100.0 million (with
the fair market value of each Investment being measured at the time made and
without giving effect to subsequent changes in value);
(12) distributions or payments of Receivables Fees; and
(13) Restricted Payments not to exceed $50.0 million since the date of
the indenture.
The Management Committee may designate any Restricted Subsidiary, other than
Grove Investors Capital, to be an Unrestricted Subsidiary if such designation
would not cause a Default. For purposes of making such determination, all
outstanding Investments by Grove Investors and its Restricted Subsidiaries,
except to the extent repaid in cash, in the Subsidiary so designated will be
deemed to be Restricted Payments at the time of such designation and will reduce
the amount available for Restricted Payments under the first paragraph of this
covenant. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the fair market value of such Investments at
the time of such designation. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
For purposes of determining compliance with this covenant, if a Restricted
Payment meets the criteria of more than one of the exceptions described in (1)
through (13) above or is entitled to be made pursuant to the first paragraph of
this covenant, Grove Investors shall, in its sole discretion, classify such
Restricted Payment in any manner that complies with the covenant. The amount of
all Restricted Payments (other than cash) shall be the fair market value on the
date of the Restricted Payment of the asset(s) or securities proposed to be
transferred or issued by Grove Investors or such Restricted Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined by the Management Committee
whose resolution with respect thereto shall be delivered to the United States
Trust Company, such determination to be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing if such fair market value exceeds $5.0 million. Not later than the date
of making any Restricted Payment, we shall deliver to the United States Trust
Company an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed, together with a copy of any
fairness opinion or appraisal required by the indenture.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The indenture provides that Grove Investors will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness, including Acquired Debt, and that Grove Investors will not issue
any Disqualified Stock and will not permit any of its Subsidiaries to issue any
shares of Disqualified Stock; provided, however, that we may incur Indebtedness,
including Acquired Debt, or issue shares of Disqualified Stock and Grove
Investors' Subsidiaries may incur Indebtedness or issue preferred equity if the
Fixed Charge Coverage Ratio for Grove Investors' most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least 1.75 to 1,
determined on a pro forma basis, including a pro forma application of the net
proceeds therefrom, as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
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The provisions of the first paragraph of this covenant does not apply to the
incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(1) the incurrence by us and the Restricted Subsidiaries of Indebtedness
under the credit facility; provided that the aggregate principal amount of
all term Indebtedness outstanding under the credit facility after giving
effect to such incurrence does not exceed an amount equal to $200.0 million
plus (in the case of any refinancing thereof) the aggregate amount of fees,
underwriting discounts, premiums and other costs and expenses incurred in
connection with such refinancing less the aggregate amount of all scheduled
or mandatory repayments of the principal of any term Indebtedness under the
credit facility (other than repayments that are immediately reborrowed) that
have been made since the date of the indenture;
(2) the incurrence by us and the Restricted Subsidiaries of Indebtedness
and letters of credit under Credit Facilities; provided that the aggregate
principal amount of all revolving credit Indebtedness (with letters of
credit being deemed to have a principal amount equal to the maximum face
amount thereunder) outstanding under all Credit Facilities after giving
effect to such incurrence does not exceed an amount equal to the greater of
(A) the amount of the Borrowing Base and
(B) $125.0 million less, in the case of clause (B), the aggregate
amount of all Net Proceeds of Asset Sales applied to permanently reduce
revolving credit commitments under a Credit Facility pursuant to the
covenant described above under the caption "--Asset Sales";
(3) the incurrence by Grove Investors and the Restricted Subsidiaries of
the Existing Indebtedness;
(4) the incurrence by
(A) us of Indebtedness represented by the debentures sold in the
offering,
(B) Grove Holdings and Grove Holdings Capital of Indebtedness
represented by the senior discount debentures and
(C) Grove Worldwide and Grove Capital of Indebtedness represented by
the senior subordinated notes and the incurrence by the Subsidiary
Guarantors (as defined in the senior subordinated note indenture) of
Indebtedness represented by the guarantees of such senior subordinated
notes;
(5) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations or similar financings, in
each case incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property, plant or
equipment used in the business of Grove Investors or such Restricted
Subsidiary, in an aggregate principal amount not to exceed $20.0 million at
any time outstanding;
(6) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition of assets or
a new Subsidiary; provided that such Indebtedness was incurred by the prior
owner of such assets or such Subsidiary before such acquisition by Grove
Investors or one of its Restricted Subsidiaries and was not incurred in
connection with, or in contemplation of, such acquisition by Grove Investors
or one of it Restricted Subsidiaries; and provided further that the
principal amount (or accreted value, as applicable) of such Indebtedness,
together with any other outstanding Indebtedness incurred pursuant to this
clause (6) and any Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any Indebtedness incurred pursuant to this clause (6),
does not exceed $10.0 million;
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(7) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that was permitted by the indenture
to be incurred under the first paragraph hereof or clauses (3), (4), (5),
(6) or (10) of this paragraph;
(8) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among Grove Investors
and any of its Wholly Owned Subsidiaries, including a pledge of assets in
connection therewith; provided, however, that
(A) if one of us is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the debentures, and
(B)(1) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than Grove
Investors or a Restricted Subsidiary thereof and (2) any sale or other
transfer of any such Indebtedness to a Person that is not either Grove
Investors or a Wholly Owned Restricted Subsidiary thereof shall be
deemed, in each case, to constitute an incurrence of such Indebtedness by
Grove Investors or such Restricted Subsidiary, as the case may be, that
was not permitted by this clause (8);
(9) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging
(A) interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of this indenture to be outstanding,
(B) the value of foreign currencies purchased or received by Grove
Investors in the ordinary course of business as conducted by Grove
Investors or
(C) commodity risk relating to commodity agreements to the extent
entered into in the ordinary course of business to protect Grove
Investors and its Restricted Subsidiaries from fluctuations in the prices
of raw materials used in its business;
(10) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (10), not to exceed $80.0
million;
(11) the incurrence by Grove Investors' Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of Grove Investors that was not permitted by this clause (11);
(12) the Guarantee by Issuers or any of its Restricted Subsidiaries of
Indebtedness of Grove Investors or a Subsidiary of Grove Investors, which
Indebtedness was permitted to be incurred by another provision of this
covenant;
(13) the incurrence of Indebtedness (including letters of credit) in
respect of workers' compensation claims, self-insurance obligations,
performance, surety, bid or similar bonds and completion guarantees provided
by Grove Investors or a Restricted Subsidiary in the ordinary course of
business and consistent with past practices;
(14) the incurrence of Indebtedness, including Guarantees, by Grove
Investors or any of its Restricted Subsidiaries in connection with a Dealer
Financing Program;
(15) the incurrence of Equipment Financing Guarantees; and
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(16) the incurrence of Indebtedness arising from agreements of Grove
Investors or any Restricted Subsidiary providing for indemnification,
adjustment of purchase price or similar obligations, in each case, incurred
or assumed in connection with the disposition or acquisition of any
business, assets or Capital Stock of a Subsidiary; provided that the maximum
aggregate liability of such Indebtedness shall at no time exceed the gross
proceeds actually received by Grove Investors and its Restricted
Subsidiaries in connection with any such disposition or the gross proceeds
actually paid by Grove Investors and its Restricted Subsidiaries in
connection with any such acquisition.
For purposes of determining compliance with this covenant, if an item of
Indebtedness meets the criteria of more than one of the categories of Permitted
Debt described in clauses (1) through (16) above or is entitled to be incurred
pursuant to the first paragraph of this covenant, we shall, in our sole
discretion, classify such item of Indebtedness in any manner that complies with
this covenant. Accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock
will not be deemed to be an incurrence of Indebtedness or an issuance of
Disqualified Stock for purposes of this covenant; provided, in each such case,
that the amount thereof is included in Fixed Charges of Grove Investors as
accrued.
LIENS
The indenture provides that we will not directly or indirectly, create,
incur, assume or suffer to exist any Lien securing Indebtedness or trade
payables on any asset now owned or hereafter acquired, or any income or profits
therefrom or assign or convey any right to receive income therefrom, except
Permitted Liens.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The indenture provides that neither Issuer may consolidate or merge with or
into (whether or not such Issuer is the surviving corporation), or sell, assign,
transfer, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another Person
unless:
(1) such Issuer is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than one
of us) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation or other entity
organized or existing under the laws of the United States, any state thereof
or the District of Columbia;
(2) the entity or Person formed by or surviving any such consolidation
or merger (if other than one of us) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of such Issuer under the registration
rights agreement, the debentures and the indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the United
States Trust Company;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) except in the case of a merger of one of us with or into a Wholly
Owned Subsidiary of Grove Investors, the Issuer or the entity or Person
formed by or surviving any such consolidation or merger (if other than one
of us), or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made will, at the time of such transaction
and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
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Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant described above under the caption "--Incurrence of Indebtedness and
Issuance of Disqualified Stock."
Notwithstanding the foregoing, Grove Investors is permitted to reorganize as a
corporation in accordance with the procedures established in the indenture (and
Grove Investors Capital may thereafter liquidate); provided that Grove Investors
shall have delivered to the United States Trust Company an opinion of counsel in
the United States reasonably acceptable to the United States Trust Company
confirming that such reorganization (and, if applicable, liquidation of Grove
Investors Capital) is not adverse to holders of the debentures and certain other
conditions are satisfied, it being recognized that such reorganization shall not
be deemed adverse to the holders of the debentures solely because.
(1) of the accrual of deferred tax liabilities resulting from such
reorganization or
(2) the successor or surviving corporation (A) is subject to income tax
as a corporate entity or (B) is considered to be an "includible corporation"
of an affiliated group of corporations within the meaning of the Internal
Revenue Code of 1986, as amended, or any similar state or local law.
LIMITATION ON LEASES
The indenture provides that Grove Investors will not, directly or
indirectly, lease all or substantially all of its properties or assets to any
Person.
TRANSACTIONS WITH AFFILIATES
The indenture provides that Grove Investors will not, and will not permit
any of its Restricted Subsidiaries to, make any payment to, or sell, lease,
transfer or otherwise dispose of any of its properties or assets to, or purchase
any property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any affiliate (each of the foregoing, an "Affiliate Transaction"),
unless
(1) such Affiliate Transaction is on terms that are no less favorable to
Grove Investors or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by Grove Investors or such
Restricted Subsidiary with an unrelated Person and
(2) we deliver to the United States Trust Company:
(A) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$2.0 million, a resolution of the Management Committee set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies
with clause (1) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Management
Committee and
(B) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing.
Notwithstanding the foregoing, the following items shall not be deemed to be
Affiliate Transactions:
(1) any employment agreement, compensation or employee benefit
arrangements and incentive arrangements with any officer, director, member
or employee entered into by Grove Investors or any of its Restricted
Subsidiaries in the ordinary course of business of Grove Investors or such
Restricted Subsidiary, as well as customary change of control and severance
payments,
(2) transactions between or among us and/or our Restricted Subsidiaries,
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(3) payment of reasonable managers and directors fees to Persons who are
not otherwise affiliates of ours,
(4) Restricted Payments, Permitted Investments and other payments and
distributions that are permitted by the provisions of the indenture
described above under the caption "--Restricted Payments,"
(5) any Permitted George Group Transaction;
(6) loans and advances to officers, directors and employees of Grove
Worldwide or any Restricted Subsidiary for travel, entertainment, moving and
other relocation expenses, in each case made in the ordinary course of
business;
(7) transactions permitted by the provisions of the covenant described
below under the caption "--Sales of Accounts Receivables";
(8) transactions permitted by clauses (12) and (14) of the covenant
described above under the caption "--Incurrence of Indebtedness and Issuance
of Disqualified Stock"; and
(9) transactions pursuant to any contract or agreement in effect on the
date of the indenture as the same may be amended, modified or replaced from
time to time so long as such amendment, modification or replacement is no
less favorable to Grove Investors and its Restricted Subsidiaries than the
contract or agreement as in effect on the date of the indenture.
SALE AND LEASEBACK TRANSACTIONS
The indenture provides that Grove Investors will not, and will not permit
any of its Restricted Subsidiaries to, enter into any sale and leaseback
transaction; provided that Grove Investors or any of its Restricted Subsidiaries
may enter into a sale and leaseback transaction if:
(1) Grove Investors or such Restricted Subsidiary could have (a)
incurred Indebtedness in an amount equal to the Attributable Debt relating
to such sale and leaseback transaction pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of the covenant described above
under the caption "--Incurrence of Additional Indebtedness and Issuance of
Disqualified Stock" and (b) incurred a Lien to secure such Indebtedness
pursuant to the covenant described above under the caption "--Liens,"
(2) the gross cash proceeds of such sale and leaseback transaction are
at least equal to the fair market value (as determined in good faith by the
Management Committee and set forth in an Officers' Certificate delivered to
the United States Trust Company) of the property that is the subject of such
sale and leaseback transaction and
(3) the transfer of assets in such sale and leaseback transaction is
permitted by, and, if applicable, we apply the proceeds of such transaction
in compliance with, the covenant described above under the caption "--Asset
Sales."
Notwithstanding the foregoing, Delta Manlift, S.A. and Grove France, S.A. and
its successor, may enter into any sale and leaseback transaction, provided that
such sale and leaseback transaction is in the ordinary course of business
consistent with past practices as in effect on the date of the indenture and the
aggregate amount of any Attributable Debt in connection with such transaction
does not exceed $4.0 million in any calendar year.
RESTRICTIONS ON PREFERRED STOCK OF SUBSIDIARIES
The indenture provides that Grove Investors will not permit any of its
Restricted Subsidiaries to issue any preferred stock (other than Grove, which
may issue preferred stock that is not Disqualified
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Stock), or permit any Person to own or hold an interest in any preferred stock
of any such Subsidiary, except for preferred stock issued to Grove Investors.
RESTRICTIONS ON ACTIVITIES OF GROVE INVESTORS CAPITAL
The indenture provides that Grove Investors Capital may not hold any assets,
become liable for any obligations or engage in any business activities; provided
that Grove Investors Capital may be a co-obligor with respect to debentures
issued pursuant to the indenture and engage in any activities directly related
or necessary in connection therewith.
PAYMENTS FOR CONSENT
The indenture provides that neither Grove Investors nor any of its
Restricted Subsidiaries will, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
of any debentures for or as an inducement to any consent, waiver or amendment of
any of the terms or provisions of the indenture or the debentures unless such
consideration is offered to be paid or is paid to all Holders of the debentures
that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
SALES OF ACCOUNTS RECEIVABLE
Grove Investors may, and any of its Restricted Subsidiaries may, sell at any
time and from time to time, accounts receivable and or notes receivable and
related assets to an Accounts Receivable Subsidiary; provided that:
(1) the aggregate consideration received in each such sale is at least
equal to the aggregate fair market value of the receivables sold, as
determined by the Management Committee in good faith,
(2) no less than 80% of the consideration received in each such sale
consists of either cash or a promissory note (a "Promissory Note") which is
subordinated to no Indebtedness or obligation other than the financial
institution or other entity providing the financing to the Accounts
Receivable Subsidiary with respect to such accounts receivable (the
"Financier") or an Equity Interest in such Accounts Receivable Subsidiary;
provided further that the initial sale will include all accounts receivable
of Grove Investors and/or its Restricted Subsidiaries that are party to such
arrangements that constitute eligible receivables under such arrangements,
and
(3) Grove Investors and its Restricted Subsidiaries will sell all
accounts receivable that constitute eligible receivables under such
arrangements to the Accounts Receivable Subsidiary no less frequently than
on a weekly basis.
Grove Investors:
(1) will not permit any Accounts Receivable Subsidiary to sell any
accounts receivable purchased from Grove Investors or any of its Restricted
Subsidiaries to any other person except on an arms-length basis and solely
for consideration in the form of cash or Cash Equivalents,
(2) will not permit the Accounts Receivable Subsidiary to engage in any
business or transaction other than the purchase, financing and sale of
accounts receivable of Grove Investors and its Restricted Subsidiaries and
activities incidental thereto,
(3) will not permit any Accounts Receivable Subsidiary to incur
Indebtedness in an amount in excess of the book value of such Accounts
Receivable Subsidiary's total assets, as determined in accordance with GAAP,
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(4) will, at least as frequently as monthly, cause the Accounts
Receivable Subsidiary to remit to Grove Investors or any of its Restricted
Subsidiaries as payment on the Promissory Notes or a dividend, all available
cash or Cash Equivalents not held in a collection account pledged to a
Financier, to the extent not applied to pay or maintain reserves for
reasonable operating expenses of the Accounts Receivable Subsidiary or to
satisfy reasonable minimum operating capital requirements and
(5) will not, and will not permit any of its Subsidiaries to, sell
accounts receivable to any Accounts Receivable Subsidiary upon (A) the
occurrence of a Default with respect to Grove Investors and its Restricted
Subsidiaries and (B) the occurrence of certain events of bankruptcy or
insolvency with respect to such Accounts Receivable Subsidiary.
REPORTS
The indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission, so long as any debentures
are outstanding, Grove Investors will furnish to the Holders of debentures:
- all quarterly and annual financial information that would be required to
be contained in a filing with the Securities and Exchange Commission on
Forms 10-Q and 10-K if Grove Investors was required to file such Forms,
including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and
results of operations of ours and their consolidated Subsidiaries and,
with respect to the annual information only, a report thereon by our
certified independent accountants; and
- all current reports that would be required to be filed with the Securities
and Exchange Commission on Form 8-K if Grove Investors was required to
file such reports, in each case within the time periods specified in the
Securities and Exchange Commission's rules and regulations.
In addition, following the completion of the exchange offer contemplated by the
registration rights agreement, whether or not required by the rules and
regulations of the Securities and Exchange Commission, Grove Investors will file
a copy of all such information and reports with the Securities and Exchange
Commission for public availability within the time periods specified in the
Securities and Exchange Commission's rules and regulations (unless the
Securities and Exchange Commission will reject such a filing) and make such
information available to securities analysts and prospective Grove Investors
upon request. In addition,
- at all times the Securities and Exchange Commission does reject the
filings provided for in the preceding sentence or
- such filings provided for in the preceding sentence do not contain the
information required to be delivered upon request pursuant to Rule
144A(d)(4) under the Securities Act, then, in each case, Grove Investors
has agreed that, for so long as any debentures remain outstanding, it will
furnish to the Holders and to securities analysts and prospective Grove
Investors, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The indenture provides that each of the following constitutes an Event of
Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the debentures;
(2) default in payment when due of the principal of or premium, if any,
on the debentures;
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(3) failure by Grove Investors or any of its Restricted Subsidiaries for
30 days after notice by the United States Trust Company or by the Holders of
at least 25% in principal amount of debentures then outstanding to comply
with the provisions described under the captions "--Change of Control,"
"--Restricted Payments" or "--Incurrence of Indebtedness and Issuance of
Disqualified Stock";
(4) failure by Grove Investors or any of its Restricted Subsidiaries for
60 days after notice by the United States Trust Company or by the Holders of
at least 25% in principal amount of debentures then outstanding to comply
with any of its other agreements in the indenture or the debentures;
(5) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by Grove Investors or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Grove Investors or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee
now exists, or is created after the date of the indenture, which default
(A) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness before the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment
Default") or
(B) results in the acceleration of such Indebtedness before its
stated maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10.0 million or more and
provided that in the case of any guarantees, a default shall not be
deemed to occur unless Grove Investors or such Restricted Subsidiary, as
applicable, defaults in its payment obligations under such guarantee
after demand has been made in accordance with the terms of such
guarantee;
(6) failure by Grove Investors or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $10.0 million (net of any
amount with respect to which a reputable insurance company with assets over
$100.0 million has acknowledged liability in writing), which judgments are
not paid, discharged or stayed for a period of 60 days;
(7) failure by Grove Worldwide or its Subsidiaries to apply the proceeds
from the offering as set forth under the caption "Use of Proceeds" above
before the 10th Business Day after the date of the indenture; and
(8) certain events of bankruptcy or insolvency with respect to Grove
Investors or any of its Subsidiaries.
If any Event of Default occurs and is continuing, the United States Trust
Company or the Holders of at least 25% in principal amount of the then
outstanding debentures may declare all the debentures to be due and payable
immediately; provided, that so long as any Indebtedness permitted to be incurred
by any of Grove Investors' Restricted Subsidiaries shall be outstanding, such
acceleration shall not be effective until the earlier of;
(1) an acceleration of such Indebtedness of any of Grove Investors'
Restricted Subsidiaries; or
(2) ten business days after receipt by us of written notice of such
acceleration.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to us, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding debentures will become due and payable
without further action or notice. Holders of the Notes may not enforce the
indenture
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or the debentures except as provided in the indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the United States Trust Company in its exercise of any trust or
power. The United States Trust Company may withhold from Holders of the
debentures notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of us with the
intention of avoiding payment of the premium that we would have had to pay if we
then had elected to redeem the debentures pursuant to the optional redemption
provisions of the indenture, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the acceleration
of the debentures.
The Holders of a majority in aggregate principal amount of the debentures
then outstanding by notice to the United States Trust Company may on behalf of
the Holders of all of the debentures waive any existing Default or Event of
Default and its consequences under the indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the
debentures.
We are required to deliver to the United States Trust Company annually a
statement regarding compliance with the indenture, and we are required upon
becoming aware of any Default or Event of Default, to deliver to the United
States Trust Company a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, MEMBERS AND
STOCKHOLDERS
No director, officer, employee, incorporator, member or stockholder of ours,
as such, shall have any liability for any obligations of ours under the
debentures or, the indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of debentures by
accepting a debenture waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the debentures. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Securities and Exchange Commission that such a
waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
We may, at their option and at any time, elect to have all of their
obligations discharged with respect to the outstanding debentures ("Legal
Defeasance") except for:
(1) the rights of Holders of outstanding debentures to receive payments
in respect of the principal of, premium and Liquidated Damages, if any, and
interest on such debentures when such payments are due from the trust
referred to below,
(2) our obligations with respect to the debentures concerning issuing
temporary debentures, registration of debentures, mutilated, destroyed, lost
or stolen debentures and the maintenance of an office or agency for payment
and money for security payments held in trust,
(3) the rights, powers, trusts, duties and immunities of the United
States Trust Company, and our obligations in connection therewith and
(4) the Legal Defeasance provisions of the indenture.
In addition, we may, at their option and at any time, elect to have the
obligations of us released with respect to certain covenants that are described
in the indenture ("Covenant Defeasance") and thereafter any omission to comply
with such obligations shall not constitute a Default or Event of Default with
respect to the debentures. In the event Covenant Defeasance occurs, certain
events (not
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including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the debentures.
To exercise either Legal Defeasance or Covenant Defeasance,
(1) we must irrevocably deposit with the United States Trust Company, in
trust, for the benefit of the Holders of the debentures, cash in United
States dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest and Liquidated Damages on the
outstanding debentures on the stated maturity or on the applicable
redemption date, as the case may be, and we must specify whether the
debentures are being defeased to maturity or to a particular redemption
date;
(2) in the case of Legal Defeasance, we shall have delivered to the
United States Trust Company an opinion of counsel in the United States
reasonably acceptable to the United States Trust Company confirming that:
(A) we have received from, or there has been published by, the
Internal Revenue Service a ruling or
(B) since the date of the indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, subject to
customary assumptions and exceptions, the Holders of the outstanding
debentures will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(3) in the case of Covenant Defeasance, we shall have delivered to the
United States Trust Company an opinion of counsel in the United States
reasonably acceptable to the United States Trust Company confirming that,
subject to customary assumptions and exceptions, the Holders of the
outstanding debentures will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance had
not occurred;
(4) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or
insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material agreement
or instrument (other than the indenture) to which Grove Investors or any of
its Subsidiaries is a party or by which Grove Investors or any of its
Subsidiaries is bound;
(6) we must have delivered to the United States Trust Company an opinion
of counsel to the effect that, subject to customary assumptions and
exceptions, after the 91st day following the deposit, the trust funds will
not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(7) we must deliver to the United States Trust Company an Officers'
Certificate stating that the deposit was not made by us with the intent of
preferring the Holders of debentures over the other creditors of ours with
the intent of defeating, hindering, delaying or defrauding creditors of ours
or others; and
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(8) we must deliver to the United States Trust Company an Officers'
Certificate and an opinion of counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or registered debentures in accordance with the
indenture. The Registrar and the United States Trust Company may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and we may require a Holder to pay any taxes and fees required by law
or permitted by the indenture. We are not required to transfer or exchange any
debenture selected for redemption. Also, we are not required to transfer or
exchange any debenture for a period of 15 days before a selection of debentures
to be redeemed.
The registered Holder of a debenture will be treated as the owner of it for
all purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the debentures may be amended or supplemented with the consent of the Holders of
at least a majority in principal amount at maturity of the debentures then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, debentures), and any
existing default or compliance with any provision of the indenture or the
debentures may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding debentures (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, debentures).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any debenture held by a non-consenting Holder):
(1) reduce the principal amount of debentures whose Holders must consent
to an amendment, supplement or waiver,
(2) reduce the principal of or change the fixed maturity of any
debenture or alter the provisions with respect to the redemption of the
debentures (other than provisions relating to the covenants described above
under the caption "--Repurchase at the Option of Holders"),
(3) reduce the rate of or change the time for payment of interest on any
debenture,
(4) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest on the debentures (except a rescission of
acceleration of the debentures by the Holders of at least a majority in
aggregate principal amount of the debentures and a waiver of the payment
default that resulted from such acceleration),
(5) make any debenture payable in money other than that stated in the
debentures,
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of Holders of debentures to receive
payments of principal of or premium, if any, or interest on the debentures,
(7) waive a redemption payment with respect to any debenture (other than
a payment required by one of the covenants described above under the caption
"--Repurchase at the Option of Holders") or
(8) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of
debentures, together with the United States Trust Company, we may amend or
supplement the indenture or the debentures to cure
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any ambiguity, defect or inconsistency, to provide for uncertificated debentures
in addition to or in place of certificated debentures, to provide for the
assumption of our obligations to Holders of debentures in the case of a merger
or consolidation or sale of all or substantially all of our assets, to make any
change that would provide any additional rights or benefits to the Holders of
debentures or that does not adversely affect the legal rights under the
indenture of any such Holder, or to comply with requirements of the Securities
and Exchange Commission to effect or maintain the qualification of the indenture
under the Trust Indenture Act.
CONCERNING THE UNITED STATES TRUST COMPANY
The indenture contains certain limitations on the rights of the United
States Trust Company, should it become a creditor of ours, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The United States Trust Company will
be permitted to engage in other transactions; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Securities and Exchange Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
debentures will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the United
States Trust Company, subject to certain exceptions. The indenture provides that
in case an Event of Default shall occur (which shall not be cured), the United
States Trust Company will be required, in the exercise of its power, to use the
degree of care of a prudent man in the conduct of his own affairs. Subject to
such provisions, the United States Trust Company will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
Holder of debentures, unless such Holder shall have offered to the United States
Trust Company security and indemnity satisfactory to it against any loss,
liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this prospectus may obtain a copy of the indenture and
registration rights agreement without charge by writing to us at 1565 Buchanan
Trail East, Shady Grove, Pennsylvania 17256, Attention: Keith R. Simmons,
Secretary.
BOOK-ENTRY; DELIVERY AND FORM
The registered debentures will initially be issued in the form of one or
more registered debentures in global form without coupons (collectively, the
"global debentures"). The global debentures will be deposited on the date of the
closing of the exchange of the registered debentures for outstanding debentures
with, or on behalf of, The Depository Trust Company and registered in the name
of The Depository Trust Company or its nominee, in each case, for credit to an
account of a direct or indirect participant as described below.
Except as set forth below, the global debentures may be transferred, in
whole and not in part, only to another nominee of The Depository Trust Company
or to a successor or The Depository Trust Company or its nominee. Beneficial
interests in the global debentures may not be exchange for debentures in
certificated form except in the limited circumstances described below. In
addition, transfers of beneficial interests in the global debentures will be
subject to the applicable rules and procedures of The Depository Trust Company
and its direct or indirect participants, which may change from time to time.
The debentures may be presented for registration of transfer and exchange at
the offices of the Registrar.
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DEPOSITARY PROCEDURES
The Depository Trust Company has advised us that it is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "direct participants") and to facilitate the clearance and
settlement of transactions in those securities between direct participants
through electronic book-entry changes in accounts of participants. The direct
participants include securities brokers and dealers banks, trust companies,
clearing corporations and certain other organizations. Access to The Depository
Trust Company's system is also available to other entities that clear through or
maintain a direct or indirect, custodial relationship with a direct participant
(collectively, the "indirect participants"). The Depository Trust Company may
hold securities beneficially owned by other persons only through the direct
participants or indirect participants and such other persons' ownership interest
and transfer of ownership interest will be recorded only on the records of the
Direct Participant and/or Indirect Participant, and not on the records
maintained by The Depository Trust Company.
The Depository Trust Company has also advised us that, pursuant to The
Depository Trust Company's procedures,
(1) upon deposit of the global debentures, The Depository Trust Company
will credit the accounts of the direct participants with an interest in the
global debentures, and
(2) The Depository Trust Company will maintain records of the ownership
interests of such direct participants in the global debentures and the
transfer of ownership interests by and between direct participants.
The Depository Trust Company will not maintain records of the ownership
interests of, or the transfer of ownership interests by and between, direct
participants or other owners of beneficial interests in the global debentures.
Direct participants and direct participants must maintain their own records of
the ownership interests of, and the transfer of ownership interests by and
between, direct participants and other owners of beneficial interests in the
global debentures.
Grove Investors in the global debentures may hold their interests therein
directly through The Depository Trust Company if they are direct participants in
The Depository Trust Company or indirectly through organizations that are direct
participants in The Depository Trust Company. All ownership interests in any
global debentures may be subject to the procedures and requirements of The
Depository Trust Company.
The laws of some states require that certain persons take physical delivery
in definitive, certificated form of securities that they own. This may limit or
curtail the ability to transfer beneficial interests in a Global Debenture to
such persons. Because The Depository Trust Company can act only on behalf of
direct participants, which in turn act on behalf of direct participants and
others, the ability of a person having a beneficial interest in a Global
Debenture to pledge such interest to persons or entities that are not direct
participants in The Depository Trust Company, or to otherwise take actions in
respect of such interests, may be affected by the lack of physical certificates
evidencing such interests. For certain other restrictions on the transferability
of the debentures.
Except as described in "Transfers of Interests in global debentures for
Certificated Debentures," owners of beneficial interests in the global
debentures will not have debentures registered in their names, will not receive
physical delivery of debentures in certificated form and will not be considered
the registered owners or holders thereof under the indenture for any purpose.
Under the terms of the indenture, the United States Trust Company will treat
the persons in whose names the debentures are registered, including debentures
represented by global debentures, as the owners of such debentures for the
purpose of receiving payments and for any and all other purposes. Payments in
respect of the principal, premium, Liquidated Damages, if any, and interest on
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global debentures registered in the name of The Depository Trust Company or its
nominee will be payable by the United States Trust Company to The Depository
Trust Company or its nominee as the registered holder under the indenture.
Consequently, neither us, the United States Trust Company nor any agent of ours
or the United States Trust Company has or will have any responsibility or
liability for:
(1) any aspect of The Depository Trust Company's records or any Direct
Participant's or Indirect Participant's records relating to or payments made
on account of beneficial ownership interests in the global debentures or for
maintaining, supervising or reviewing any of The Depository Trust Company's
records or any Direct Participant's or Indirect Participant's records
relating to the beneficial ownership interests in any Global Debenture; or
(2) any other matter relating to the actions and practices of The
Depository Trust Company or any of its direct participants or direct
participants.
The Depository Trust Company has advised us that its current payment
practice (for payments of principal, interest and the like) with respect to
securities such as the debentures is to credit the accounts of the relevant
direct participants with such payment on the payment date in amounts
proportionate to such Direct Participant's respective ownership interests in the
global debentures as shown on The Depository Trust Company's records. Payments
by direct participants and direct participants to the beneficial owners of the
debentures will be governed by standing instructions and customary practices
between them and will not be the responsibility of The Depository Trust Company,
the United States Trust Company or us. Neither we nor the United States Trust
Company will be liable for any delay by The Depository Trust Company or its
direct participants or direct participants in identifying the beneficial owners
of the debentures, and both we and the United States Trust Company may
conclusively rely on and will be protected in relying on instructions from The
Depository Trust Company or its nominee as the registered owner of the
debentures for all purposes.
Interests in the global debentures are expected to be eligible to trade in
The Depository Trust Company's Same-Day Funds Settlement System and, therefore,
transfers between direct participants in The Depository Trust Company will be
effected in accordance with The Depository Trust Company's procedures, and will
be settled in immediately available funds. Transfers between direct participants
who hold an interest through a Direct Participant will be effected in accordance
with the procedures of such Direct Participant but generally will settle in
immediately available funds.
The Depository Trust Company has advised us that it will take any action
permitted to be taken by a holder of debentures only at the direction of one or
more direct participants to whose account interests in the global debentures are
credited and only in respect of such portion of the aggregate principal amount
of the debentures as to which such Direct Participant or direct participants has
or have given direction. However, if there is an Event of Default under the
debentures, The Depository Trust Company reserves the right to exchange global
debentures (without the direction of one or more of its direct participants) for
legended debentures in certificated form, and to distribute such certificated
forms of debentures to its direct participants. See "--Transfers of Interests in
Global Debentures for Certificated Debentures."
Although The Depository Trust Company has agreed to the foregoing procedures
to facilitate transfers of interests in the global debentures among direct
participants, they are under no obligation to perform or to continue to perform
such procedures, and such procedures may be discontinued at any time. Neither we
nor the United States Trust Company will have any responsibility for the
performance by The Depository Trust Company, Direct and direct participants of
their respective obligations under the rules and procedures governing any of
their operations.
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The information in this section concerning The Depository Trust Company, and
its book-entry system has been obtained from sources that we believe to be
reliable, but we take no responsibility for the accuracy thereof.
TRANSFERS OF INTERESTS IN GLOBAL DEBENTURES FOR CERTIFICATED DEBENTURES
An entire Global Debenture may be exchanged for definitive debentures in
registered, certificated form without interest coupons ("Certificated
Debentures") if:
(1) The Depository Trust Company (x) notifies us that it is unwilling or
unable to continue as depositary for the global debentures and we thereupon
fail to appoint a successor depositary within 90 days or (y) has ceased to
be a clearing agency registered under the Exchange Act,
(2) at our option, we notify the United States Trust Company in writing
that they elect to cause the issuance of Certificated Debentures or
(3) there shall have occurred and be continuing a Default or an Event of
Default with respect to the debentures.
In any such case, we will notify the United States Trust Company in writing
that, upon surrender by the Direct and direct participants of their interest in
such Global Debenture, Certificated Debentures will be issued to each person
that such Direct and direct participants and The Depository Trust Company
identify as being the beneficial owner of the related debentures.
Beneficial interests in global debentures held by any Direct or Indirect
Participant may be exchanged for Certificated Debentures upon request to The
Depository Trust Company, by such Direct Participant (for itself or on behalf of
an Indirect Participant), but only upon at least 20 days' prior written notice
given to the United States Trust Company by or on behalf of The Depository Trust
Company in accordance with customary The Depository Trust Company procedures.
Certificated Debentures delivered in exchange for any beneficial interest in any
Global Debenture will be registered in the names, and issued in any approved
denominations, requested by The Depository Trust Company on behalf of such
Direct or direct participants (in accordance with The Depository Trust Company's
customary procedures).
Neither us nor the United States Trust Company will be liable for any delay
by the holder of the global debentures or The Depository Trust Company in
identifying the beneficial owners of debentures, and both us and the United
States Trust Company may conclusively rely on, and will be protected in relying
on, instructions from the holder of the Global Debenture or The Depository Trust
Company for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
The indenture requires that payments in respect of the debentures
represented by the global debentures (including principal, premium, if any,
interest and Liquidated Damages, if any) be made by wire transfer of immediately
available funds to the accounts specified by the holder of such Global
Debenture. With respect to Certificated Debentures, we will make all payments of
principal, premium, if any, interest and Liquidated Damages, if any, by wire
transfer of immediately available funds to the accounts specified by the holders
thereof or, if no such account is specified, by mailing a check to each such
holder's registered address. We expect that secondary trading in the
Certificated Debentures will also be settled in immediately available funds.
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REGISTRATION RIGHTS; LIQUIDATED DAMAGES
We entered into the registration rights agreement on April 29, 1998 with
Donaldson, Lufkin & Jenrette. Pursuant to the registration rights agreement, we
agreed to file with the Securities and Exchange Commission this Registration
Statement under the Securities Act with respect to the debentures. As required
by the registration rights agreement, upon the effectiveness of the Registration
Statement, we will offer to the Holders of Transfer Restricted Securities (as
defined) that are able to make certain representations the opportunity to
exchange their Transfer Restricted Securities for registered debentures. If (1)
we are not required to file the Registration Statement or permitted to
consummate the exchange offer because the exchange offer is not permitted by
applicable law or Securities and Exchange Commission policy; or (2) any Holder
of Transfer Restricted Securities notifies us before the 20th day following
completion of the exchange offer that (A) such Holder is prohibited by law or
Securities and Exchange Commission policy from participating in the exchange
offer or (B) that it may not resell the registered debentures acquired by it in
the exchange offer to the public without delivering a prospectus and the
prospectus contained in the Registration Statement is not appropriate or
available for such resales or (C) that it is a broker-dealer and owns debentures
acquired directly from us or an affiliate of ours, we will file with the
Securities and Exchange Commission a shelf registration statement to cover
resales of the Transfer Restricted Securities by the Holders thereof who satisfy
certain conditions relating to the provision of information in connection with
the shelf registration statement. We will use our best efforts to cause the
applicable registration statement to be declared effective as promptly as
possible by the Securities and Exchange Commission.
For purposes of the foregoing, "Transfer Restricted Securities" means each
outstanding debenture until the date on which such outstanding debenture:
(1) is exchanged in the exchange offer for an registered debenture which
is entitled to be resold to the public by the holder thereof without
complying with prospectus delivery requirements of the Securities Act,
(2) has been disposed of in accordance with a shelf registration
statement (and the purchasers thereof have been issued registered
debentures), or
(3) is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities
Act and each registered debenture until the date on which such registered
debenture is disposed of by a broker-dealer pursuant to the "Plan of
Distribution" contemplated by this Registration Statement.
Pursuant to the registration rights agreement, we were obligated to file
this Registration Statement with the Securities and Exchange Commission on or
before April 29, 1999 (365 days after the Closing Date). In addition, the
registration rights agreement provides that:
(1) we will use our best efforts to have the Registration Statement
declared effective by the Securities and Exchange Commission on or before
August [27], 1999 (485 days after the Closing Date),
(2) unless the exchange offer would not be permitted by applicable law
or Securities and Exchange Commission policy, we will commence the exchange
offer and use our best efforts to issue on or before 30 business days after
the date on which the Registration Statement is declared effective by the
Securities and Exchange Commission, registered debentures in exchange for
all debentures tendered prior thereto in the exchange offer and
(3) if obligated to file a shelf registration statement, we will use our
best efforts to file the shelf registration statement with the Securities
and Exchange Commission on or before 60 days after such filing obligation
arises and to cause the shelf registration statement to be declared
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effective by the Securities and Exchange Commission on or before 120 days
after such obligation arises.
If (a) we fail to file any of the registration statements required by the
registration rights agreement on or before the date specified for such filing,
(b) any of such registration statements is not declared effective by the
Securities and Exchange Commission on or before the date specified for such
effectiveness (the "Effectiveness Target Date"), (c) we fail to consummate the
exchange offer within 30 business days of the Effectiveness Target Date with
respect to the Registration Statement, or (d) this Registration Statement or a
shelf registration statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the registration rights agreement (each such
event referred to in clauses (a) through (d) above a "Registration Default"),
then we will pay Liquidated Damages to each Holder of debentures, with respect
to the first 90-day period immediately following the occurrence of the first
Registration Default in an amount equal to $.05 per week per $1,000 principal
amount of debentures held by such Holder. The amount of the Liquidated Damages
will increase by an additional $.05 per week per $1,000 principal amount of
debentures with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of Liquidated Damages for all
Registration Defaults of $.50 per week per $1,000 principal amount of
debentures. All accrued Liquidated Damages will be paid by us on each Damages
Payment Date to the Global Debenture Holder by wire transfer of immediately
available funds or by federal funds check and to Holders of Certificated
Securities by wire transfer to the accounts specified by them or by mailing
checks to their registered addresses if no such accounts have been specified.
Following the cure of all Registration Defaults, the accrual of Liquidated
Damages will cease.
Holders of debentures are required to make certain representations to us (as
described in the registration rights agreement) to participate in the exchange
offer and are required to deliver certain information to be used in connection
with a shelf registration statement and to provide comments on the shelf
registration statement within the time periods set forth in the registration
rights agreement to have their debentures included in the shelf registration
statement and benefit from the provisions regarding Liquidated Damages set forth
above. See "The Exchange Offer."
The foregoing description of the registration rights agreement is a summary
only and does not purport to be complete. This summary is qualified in its
entirety by reference to all provisions of the registration rights agreement
which as been filed as an exhibit to the Registration Statement of which this
prospectus forms a part.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used in this prospectus for which no definition is
provided.
"Accounts Receivable Subsidiary" means a Wholly Owned Subsidiary of Grove
Investors:
(1) which is formed solely for the purpose of, and which engages in no
activities other than activities in connection with, financing accounts
receivable and/or notes receivable and related assets of Grove Investors
and/or its Restricted Subsidiaries,
(2) which is designated by the Management Committee of Grove Investors
as an Accounts Receivables Subsidiary pursuant to a Management Committee
resolution set forth in an Officers' Certificate and delivered to the United
States Trust Company,
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(3) that has total assets at the time of such designation with a book
value not exceeding $100,000 plus the reasonable fees and expenses required
to establish such Accounts Receivable Subsidiary and any accounts receivable
financing,
(4) no portion of Indebtedness or any other obligation (contingent or
otherwise) of which (a) is at any time recourse to or obligates Grove
Investors or any Restricted Subsidiary of Grove Investors in any way, other
than pursuant to (1) representations and covenants entered into in the
ordinary course of business in connection with the sale of accounts
receivable and/or notes receivable to such Accounts Receivable Subsidiary or
(2) any guarantee of any such accounts receivable financing by Grove
Investors that is permitted to be incurred pursuant to the covenant
described under the caption entitled "--Certain Covenants--Incurrence of
Indebtedness and Issuance of Disqualified Stock," or (b) subjects any
property or asset of Grove Investors or any Restricted Subsidiary of Grove
Investors, directly or indirectly, contingently or otherwise, to the
satisfaction thereof, other than pursuant to (1) representations and
covenants entered into in the ordinary course of business in connection with
sales of accounts receivable and/or notes receivable or (2) any guarantee of
any such accounts receivable financing by Grove Investors that is permitted
to be incurred pursuant to the covenant described under the caption entitled
"--Certain Covenants--Incurrence of Indebtedness and Issuance of
Disqualified Stock,"
(5) with which neither Grove Investors nor any Restricted Subsidiary of
Grove Investors has any contract, agreement, arrangement or understanding
other than contracts, agreements, arrangements and understandings entered
into in the ordinary course of business in connection with sales of accounts
receivable and/or notes receivable in accordance with the covenant described
under the caption "--Certain Covenants--Sales of Accounts Receivable" and
fees payable in the ordinary course of business in connection with servicing
accounts receivable and/or notes receivable and
(6) with respect to which neither Grove Worldwide nor any Restricted
Subsidiary of Grove Worldwide has any obligation (a) to subscribe for
additional shares of Capital Stock or other Equity Interests therein or make
any additional capital contribution or similar payment or transfer thereto
other than in connection with the sale of accounts receivable and/or notes
receivable to such Accounts Receivable Subsidiary in accordance with the
covenant described under "--Certain Covenants--Sales of Accounts Receivable"
or (b) to maintain or preserve solvency or any balance sheet item, financial
condition, level of income or results of operations thereof.
"Acquired Debt" means, with respect to any specified Person,
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, including, without limitation, Indebtedness incurred in connection
with, or in contemplation of, such other Person merging with or into or
becoming a Subsidiary of such specified Person, and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
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"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights (including, without limitation, by way of a sale and leaseback) other
than (A) in the ordinary course of business or (B) sales or other
dispositions of accounts receivable and/or notes receivable and related
assets to (x) the Accounts Receivable Subsidiary in accordance with the
covenant described under the caption "--Certain Covenants--Sale of Accounts
Receivable" and (y) one or more financial institutions in connection with a
Dealer Financing Program or factoring arrangements as in existence on the
date of the indenture (provided that, in each case, the sale, lease,
conveyance or other disposition of all or substantially all of the assets of
Grove Investors and its Subsidiaries (determined on a consolidated basis)
are governed by the provisions of the indenture described above under the
caption "--Change of Control" and/or the provisions described above under
the caption "--Limitation on Leases"), and
(2) the issue or sale by Grove Investors or any of its Subsidiaries of
Equity Interests of any of the Grove Investors' Subsidiaries,
in the case of either clause (1) or (2), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess of
$2.5 million or (b) for net proceeds in excess of $2.5 million.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales:
(1) a transfer of assets by us to a Wholly Owned Restricted Subsidiary
or by a Wholly Owned Restricted Subsidiary to us or to another Wholly Owned
Restricted Subsidiary,
(2) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to us or to another Wholly Owned Restricted Subsidiary,
(3) a Restricted Payment that is permitted by the covenant described
above under the caption "--Restricted Payments,"
(4) the sale and leaseback of any assets within 90 days of the
acquisition of such assets; provided that such sale and leaseback complies
with the covenant described above under the caption "--Sale and Leaseback
Transactions",
(5) foreclosures of assets, and
(6) the sale at fair market value of property or equipment that has
become worn out, obsolete or damaged or otherwise unsuitable for use in
connection with the business of Grove Investors or any Restricted
Subsidiary, as the case may be, in the ordinary course of business.
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of interest
implicit in such transaction, determined in accordance with GAAP) of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction (including any period
for which such lease has been extended or may, at the option of the lessor, be
extended).
"Borrowing Base" means, as of any date, an amount equal to the sum of 85% of
the face amount of all accounts receivable and notes receivable owned by Grove
Investors and its Restricted Subsidiaries as of such date that are not more than
90 days past due, as calculated on a consolidated basis and in accordance with
GAAP. To the extent that information is not available as to the amount of
accounts receivable and notes receivable as of a specific date, Grove Investors
may use the most recent available information for purposes of calculating the
Borrowing Base.
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"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means
(1) in the case of a corporation, corporate stock,
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock,
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means
(1) United States dollars,
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than one year from the date of
acquisition,
(3) certificates of deposit and Eurodollar time deposits with maturities
of one year or less from the date of acquisition, bankers' acceptances with
maturities not exceeding one-year and overnight bank deposits, in each case
with any domestic commercial bank having capital and surplus in excess of
$500 million,
(4) repurchase obligations with a term of not more than thirty days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above,
(5) obligations issued or fully guaranteed by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or
Moody's Grove Investors Service, Inc.,
(6) commercial paper having the highest rating obtainable from Moody's
Grove Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within one year after the date of acquisition and
(7) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (7) of this
definition.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus
(1) an amount equal to any extraordinary or nonrecurring loss plus any
net loss realized in connection with an Asset Sale or the extinguishment of
any Indebtedness (to the extent such losses were deducted in computing such
Consolidated Net Income), plus
(2) provision for taxes based on income or profits or the Tax Amount of
such Person and its Subsidiaries for such period or, following the
reorganization of Grove Investors as a corporation, any tax sharing payment
made pursuant to a tax sharing agreement executed in connection
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therewith, in each case, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus
(3) consolidated interest expense of such Person and its Subsidiaries
for such period, whether paid or accrued and whether or not capitalized
(including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
and net payments (if any) pursuant to Hedging Obligations), to the extent
that any such expense was deducted in computing such Consolidated Net
Income, plus
(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any such
non-cash expense to the extent that it represents an accrual of or reserve
for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its Subsidiaries
for such period to the extent that such depreciation, amortization and other
non-cash expenses were deducted in computing such Consolidated Net Income,
plus
(5) any interest expense on Indebtedness of another person that is
guaranteed by such person or a Subsidiary of such person or secured by a
Lien on the assets of such person or one of its Subsidiaries (to the extent
that such interest expense was deducted in computing Consolidated Net Income
in such period), plus
(6) any charges of up to $30.0 million relating to a facility closing,
plus
(7) any charges of up to $16.0 million resulting from fees payable to
the George Group in connection with the consulting arrangements with Grove
Investors or its Restricted Subsidiaries, plus
(8) one-time expenses associated with inventory, research and
development and other write-ups resulting from purchase accounting
adjustments at the time of the Transactions or any other permitted
acquisition (to the extent such expenses were deducted in computing
Consolidated Net Income in such period), plus
(9) any expenses or charges related to any Equity offering, Permitted
Investment or Indebtedness permitted to be incurred by the indenture
(including such expenses or charges related to the Transactions) and
deducted in such period in computing Consolidated Net Income, minus
(10) non-cash items increasing such Consolidated Net Income for such
period, in each case, on a consolidated basis and determined in accordance
with GAAP.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation and amortization and other non-cash charges of,
a Subsidiary of a Person shall be added to Consolidated Net Income to compute
Consolidated Cash Flow only to the extent (and in the same proportion) that the
Net Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to Grove Investors by such Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
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"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
that
(1) the Net Income (but not loss) of any Person that is not a Subsidiary
(other than Grove Investors) or that is accounted for by the equity method
of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash (or converted into cash) to the
referent Person or a Wholly Owned Restricted Subsidiary thereof,
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar distributions
by that Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the terms of its
charter or any judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders, unless such
restriction with respect to the payment of dividends or in similar
distributions has been legally waived, provided that Consolidated Net Income
of Grove Investors shall be increased by the amount of dividends or other
distributions or other payments paid in cash (or to the extent converted
into cash) to the referent person or a Wholly Owned Restricted Subsidiary
thereof in respect of such period,
(3) the Net Income of any Person acquired in a pooling of interests
transaction for any period before the date of such acquisition shall be
excluded,
(4) the cumulative effect of a change in accounting principles shall be
excluded and
(5) the Net Income (but not loss) of any Unrestricted Subsidiary shall
be excluded, whether or not distributed to Grove Investors or one of its
Subsidiaries.
"Credit Facilities" means, with respect to us or their Restricted
Subsidiaries, one or more debt facilities (including, without limitation, the
credit facility) or commercial paper facilities with banks or other
institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale or factoring of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Dealer Financing Program" means
(x) that certain financing program pursuant to which (1) distributors of
Grove Investors and its Restricted Subsidiaries can obtain up to 366-day
inventory financing for the purchase of the Grove Investors' Subsidiaries'
products, (2) units financed will generate secured notes receivable,
accounts receivable, chattel paper, instruments or other intangibles
(collectively, "Receivables"), which Grove Investors or its Restricted
Subsidiaries may sell, from time to time, to financial institutions at 100%
of face value and (3) Grove Investors or its Restricted Subsidiaries will
insure (with a nationally recognized insurance company with at least $100.0
million in assets) at least 85% of the payment obligations relating to such
Receivables and
(y) factoring or discounting arrangements as in effect on the date of
the indenture or entered into in the ordinary course of business consistent
with past practice.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Discount Debenture Indenture" means the indenture relating to the senior
discount debentures.
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"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or before the date that is 91 days after the date on which
the debentures mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require us to repurchase such Capital Stock upon the occurrence of a change
of control or an Asset Sale shall not constitute Disqualified Stock if the terms
of such Capital Stock provide that we may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with the covenant described above under the caption "--Certain
Covenants--Restricted Payments"; and provided further, that Capital Stock issued
to any plan for the benefit of employees of Grove Investors or its subsidiaries
or by any such plan to such employees shall not constitute Disqualified Stock
solely because it may be required to be repurchased by Grove Investors to
satisfy applicable statutory or regulatory obligations.
"Equipment Financing Guarantees" means guarantees (including but not limited
to repurchase or remarketing obligations, residual value guarantees, conditional
loss guarantees or first loss guarantees) by Grove Investors or a Restricted
Subsidiary incurred in the ordinary course of business consistent with past
practice of Indebtedness incurred by a distributor, or other purchaser or
lessor, for the purchase of inventory manufactured or sold by Grove Investors or
a Restricted Subsidiary, the proceeds of which Indebtedness is used solely to
pay the purchase price of such inventory to such distributor or other purchaser
or lessor and any related reasonable fees and expenses (including financing
fees); provided, however, that
(1) to the extent commercially practicable, the Indebtedness so
guaranteed is secured by a Lien on such inventory in favor of the holder of
such Indebtedness, and
(2) if Grove Investors or such Restricted Subsidiary is required to make
payment with respect to such guarantee, Grove Investors or such Restricted
Subsidiary will have the right to receive either (q) title to such
inventory, (r) a valid assignment of a Lien in such inventory or (s) the net
proceeds of any resale of such inventory.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means up to $15.0 million in aggregate principal
amount of Indebtedness of Grove Investors and its Subsidiaries (other than
Indebtedness under the New Credit Agreement) in existence on the date of the
indenture, until such amounts are permanently repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. If the referent Person or
any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues or redeems
preferred equity after the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but before the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee or redemption
of Indebtedness, or such issuance or redemption of preferred equity, as if the
same had occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred to above,
(1) acquisitions that have been made by Grove Investors or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or after such reference period and on or before the
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Calculation Date shall be deemed to have occurred on the first day of the
four-quarter reference period and Consolidated Cash Flow for such reference
period shall be calculated without giving effect to clause (3) of the
proviso set forth in the definition of Consolidated Net Income and shall
reflect any pro forma adjustments for expenses and cost reductions
attributable to such acquisitions (to the extent such adjustments are (x)
realizable within twelve months of the date of the acquisition and (y) based
on pro forma financial statements reviewed by Grove Investors' accountants),
(2) the Consolidated Cash Flow attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed
of before the Calculation Date, shall be excluded,
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
before the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of
the referent Person or any of its Restricted Subsidiaries following the
Calculation Date, and
(4) the amount of interest expense attributable to financings pursuant
to the Dealer Financing Program shall be subtracted from the numerator and
excluded from the denominator in calculating the Fixed Charge Coverage Ratio
provided that the interest income from such financings exceeds interest
expense.
"Fixed Charges" means, with respect to any Person for any period, the sum,
without duplication, of
(1) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of debt issuance costs and original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net payments (if
any) pursuant to Hedging Obligations; provided, however, that in no event
shall any amortization of deferred financing costs incurred in connection
with the Transactions be included in fixed charges) and
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period, and
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured
by a Lien on assets of such Person or one of its Subsidiaries (whether or
not such Guarantee or Lien is called upon) excluding, however, guarantees
incurred in connection with (a) any Equipment Financing Guarantee or (b)
residual value guarantees, conditional loss guarantees and similar
financings allowed to be incurred pursuant to the covenant described above
under the caption "Incurrence of Indebtedness and Issuance of Preferred
Stock" and
(4) if and for so long as such Person is taxed as a partnership for
federal income tax purposes, all cash dividend payments or other
distributions of property on any series of preferred stock of such Person
or, if such Person is taxed as a corporation for federal income tax
purposes, the product of (a) all cash dividend payments or other
distributions of property (and non-cash dividend payments in the case of a
Person that is a Subsidiary) on any series of preferred equity of such
Person times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP.
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the indenture.
"George Group" means The George Group, Inc. a Texas corporation, and its
successors.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under
(1) interest rate or currency swap agreements, interest rate cap
agreements and interest rate collar agreements,
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest or currency exchange rates and
(3) commodities purchase and sale agreements and other similar
agreements designed to protect such Person against fluctuations in the price
of raw materials used by Grove Investors or its Restricted Subsidiaries in
the ordinary course of business.
"Senior Discount Debentures" means the 11 5/8% Senior Discount Debentures
due 2009 of Grove Holdings LLC and Grove Holdings Capital, Inc.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness (other than Hedging Obligations and guarantees) outstanding as of
any date shall be
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount, and
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
"Investment Grade Securities" means
(1) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof (other
than Cash Equivalents),
(2) debt securities or debt instruments with a rating of BBB- or higher
by Standard and Poor's Corporation or Baa3 or higher by Moody's Grove
Investors Services, Inc. or the equivalent of such rating by such rating
organization, or, if no rating of Standard and Poor's Corporation or Moody's
Grove Investors Services, Inc. then exists, the equivalent of such rating by
any other nationally recognized securities rating agency, but excluding any
debt securities or instruments constituting loans or advances among Grove
Investors and its Subsidiaries, and
(3) investments in any fund that invests exclusively in investments of
the type described in clauses (1) and (2) which fund may also hold
immaterial amounts of cash pending investment and/or distribution.
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"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
us or any of their Restricted Subsidiaries for consideration consisting solely
of Equity Interests (other than Disqualified Stock) of Grove Investors shall not
be deemed to be an Investment. If Grove Investors or any Restricted Subsidiary
of Grove Investors sells or otherwise disposes of any Equity Interests of any
direct or indirect Restricted Subsidiary of Grove Investors such that, after
giving effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary of Grove Investors, Grove Investors shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of the
covenant described above under the caption "--Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction).
"Management Committee" means
(1) for so long as Grove Investors is a limited liability company, the
Management Committee of Grove Investors and
(2) otherwise the Board of Directors of Grove Investors.
"Net Income" means, with respect to any Person for any period,
(1) the net income (loss) of such Person, determined in accordance with
GAAP and before any reduction in respect of dividends on preferred
interests, excluding, however, (a) any gain (but not loss), together with
any related provision for taxes or Tax Distributions on such gain (but not
loss), realized in connection with (x) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (y)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any
of its Restricted Subsidiaries and (b) any extraordinary or nonrecurring
gain (but not loss), together with any related provision for taxes or Tax
Distributions on such extraordinary or nonrecurring gain (but not loss) less
(2) in the case of any Person that is a partnership or limited liability
company, the Tax Amount of such person for such period.
"New Credit Agreement" means that certain Credit Agreement, dated as of the
date of the indenture by and among Grove, Grove Capital and Chase Bank of Texas,
National Association, as administrative agent, BankBoston N.A., as syndication
agent and Donaldson, Lufkin & Jenrette, as documentation agent, and certain
other lenders party thereto, providing for up to $125 million of revolving
credit borrowings and $200 million of term borrowings, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time.
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"Credit Facility" means, with respect to us and the Restricted Subsidiaries,
one or more debt facilities (including, without limitation, the New Credit
Agreement) or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
of credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time.
"Non-Recourse Debt" means Indebtedness
(1) as to which neither Grove Investors nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable (as a guarantor or otherwise), or (c)
constitutes the lender; and
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness (other than the q being offered hereby) of Grove
Investors or any of its Restricted Subsidiaries to declare a default on such
other Indebtedness or cause the payment thereof to be accelerated or payable
before its stated maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of Grove Investors or any of
its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities and obligations
payable under the documentation governing any Indebtedness.
"Permitted Business" means any of the businesses and any other businesses
related to the businesses engaged in by Grove Investors and its respective
Restricted Subsidiaries on the date of the indenture.
"Permitted George Group Transactions" means, for purposes of the covenant
described above under the caption "--Transactions with Affiliates," consulting
arrangements with the George Group and its affiliates and any payments for fees
and expenses thereunder made, provided that such payments shall not exceed $8.0
million in any fiscal year (with such amount being subject to reasonable
adjustments in connection with advisory and consulting services rendered in
connection with Permitted Investments).
"Permitted Investments" means
(1) any Investment in Grove Investors or in a Restricted Subsidiary of
Grove Investors and is engaged in a Permitted Business;
(2) any Investment in Cash Equivalents and Investment Grade Securities;
(3) any Investment by Grove Investors or any Restricted Subsidiary of
Grove Worldwide in a Person, if as a result of such Investment (a) such
Person becomes a Wholly Owned Restricted Subsidiary of Grove Worldwide and
is engaged in a Permitted Business 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, Grove Worldwide
or a Wholly Owned Restricted Subsidiary of Grove Worldwide that is engaged
in Permitted Business;
(4) any Investment made as a result of the receipt of assets not
constituting Cash Equivalents from an Asset Sale that was made pursuant to
and in compliance with the covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales";
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(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of Grove Investors;
(6) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause that are at the time outstanding,
not to exceed $10 million;
(7) Investments in securities of customers received in settlement of
obligations or pursuant to a plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers;
(8) Investments existing on the date of the indenture or made in
connection with the Transactions;
(9) Investments consisting of receivables owing to Grove Investors and
its Restricted Subsidiaries and advances or loans to or the receipt of notes
or drafts from, distributors and customers, in each case, in connection with
the sale or lease of inventory in the ordinary course of business and
consistent with past practices, including such Investments made in
connection with or pursuant to a Dealer Financing Program;
(10) loans and advances to officers, directors, members and employees
for business-related travel expenses, moving expenses and other similar
expenses, in each case, incurred in the ordinary course of business and
consistent with past practices not to exceed $1.0 million;
(11) any Hedging Obligation;
(12) Investments in an Accounts Receivable Subsidiary made in connection
with the formation of an Accounts Receivable Subsidiary or received in
consideration of sales of accounts receivable, in each case, in accordance
with the covenant described above under the caption entitled "--Certain
Covenants--Sales of Accounts Receivable,"
(13) Investments consisting of intercompany loans from Grove Investors
and its Restricted Subsidiaries to Restricted Subsidiaries;
(14) Investments consisting of capital contributions from Grove
Investors or any Restricted Subsidiaries to Restricted Subsidiaries in an
aggregate amount at any one time outstanding not to exceed $25.0 million;
(15) Equipment Financing Guarantees permitted by the terms of clause
(15) of the covenant described above under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" and
(16) loans to and promissory notes or other instruments of managers and
officers of Grove Investors or its Restricted Subsidiaries issued in
connection with the purchase of Equity Interests of Grove Investors.
"Permitted Liens" means
(1) Liens securing Senior Debt (as defined in the senior subordinated
note indenture) and Liens on assets of Restricted Subsidiaries securing
Senior Debt permitted by the terms of the senior subordinated note indenture
to be incurred;
(2) Liens in favor of us or a Restricted Subsidiary;
(3) Liens on property of a Person existing at the time such Person
becomes a Restricted Subsidiary of Grove Investors or is merged into or
consolidated with one of Grove Investors or any Subsidiary of Grove
Investors; provided that such Liens were in existence before the
contemplation
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of such merger or consolidation and do not extend to any assets other than
those of the Person merged into or consolidated with Grove Investors or any
Subsidiary of Grove Investors;
(4) Liens on property existing at the time of acquisition thereof by
Grove Investors or any Subsidiary of Grove Investors, provided that such
Liens were in existence before the contemplation of such acquisition;
(5) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (5) of the second paragraph of the covenant entitled
"Incurrence of Indebtedness and Issuance of Disqualified Stock" covering
only the assets acquired, constructed or improved with such Indebtedness;
(6) Liens existing on the date of the indenture;
(7) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(8) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries;
(9) Liens incurred in the ordinary course of business of ours or any
Subsidiary of ours with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or
credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by us or such
Subsidiary;
(10) liens on assets of the Subsidiary Guarantors (as defined in the
senior subordinated note indenture) to secure Senior Debt of such Subsidiary
Guarantors that was permitted to be incurred under the senior subordinated
note indenture;
(11) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business;
(12) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security or similar obligations, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations (exclusive of obligations for the payment of
borrowed money);
(13) judgment or attachment Liens not giving rise to an Event of
Default;
(14) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary course of the business of Grove Investors
or any of its Restricted Subsidiaries;
(15) any interest or title of a lessor under any lease, whether or not
characterized as capital or operating; provided that such Liens do not
extend to any property or assets which is not leased property subject to
such lease;
(16) Liens upon specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods;
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(17) Liens securing reimbursement obligations with respect to letters of
credit and products and proceeds thereof;
(18) Liens securing Hedging Obligations which Hedging Obligations relate
to Indebtedness that is otherwise permitted under the indenture;
(19) Liens arising out of consignment, conditional purchase or similar
arrangements for the sale of goods entered into by Grove Investors or any
Restricted Subsidiary in the ordinary course of business;
(20) Liens securing Permitted Refinancing Indebtedness which is incurred
to refinance any Indebtedness which has been secured by a Lien permitted
under the indenture and which has been incurred in accordance with the
provisions of the indenture;
(21) Liens with respect to Equipment Financing Guarantees and related
inventory and equipment;
(22) Liens incurred in connection with the Equipment Financing Program
and
(23) Liens incurred in the ordinary course of business on equipment and
inventory held for lease by Grove Worldwide or any of its Restricted
Subsidiaries.
"Permitted Refinancing Indebtedness" means any Indebtedness of ours or any
of their Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used within 60 days after the incurrence thereof to extend, refinance,
renew, replace, defease or refund other Indebtedness of ours or any of their
Restricted Subsidiaries (other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of reasonable expenses, premiums, penalties, fees
and interest incurred in connection therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the debentures,
such Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and is subordinated in right of payment to, the
debentures on terms at least as favorable to the Holders of debentures as
those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by us or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Receivables Fees" means distributions or payments made directly or by means
of discounts with respect to any participation interests issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any receivables financing permitted pursuant to
the covenant entitled "Sales of Accounts Receivable."
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
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"Senior Subordinated Note Indenture" means the indenture relating to the
senior subordinated notes.
"Senior Subordinated Notes" means the 9 1/4 Senior Subordinated Notes due
2008 of Grove Worldwide LLC and Grove Capital, Inc.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal before the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person,
(1) any corporation, association or other business entity of which more
than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof) and
(2) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the
only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Tax Amount" means, with respect to Grove Investors for any period, the
product of (1) the taxable income of such Person for such period and (2) the
maximum combined Federal, state and local income tax rates applicable to an
individual resident in New York City or California, whichever is higher;
provided, however, that in determining the Tax Amount, the effect thereon of any
net operating loss carry forwards or other carry forwards or tax attributes,
such as alternative minimum tax carry forwards shall be taken into account, and
adjusted to take into account any applicable credits, deductions or other
adjustments allowed under both New York and California law to a direct or
indirect owner of an interest in Grove Investors for state and local income tax
purposes. Notwithstanding anything to the contrary, Tax Amount shall not include
taxes resulting from such Person's reorganization as or change in the status to
a corporation.
"Tax Distribution" means a distribution in respect of taxes to the members
of Grove Investors pursuant to clause (6) of the second paragraph of the
covenant described above under the caption "Certain Covenants--Restricted
Payments."
"Transactions" means each of
(1) the acquisition by Grove Investors through certain of its
subsidiaries of the mobile hydraulic crane, aerial work platform and
truck-mounted crane businesses of Hanson Funding (G) PLC and certain of its
subsidiaries, for aggregate cash consideration of approximately $583.0
million plus certain assumed liabilities (the "Acquisition");
(2) approximately $203.0 million of borrowings under the credit
facility;
(3) approximately $225.0 million of estimated gross proceeds from the
offering of the Senior Subordinated Notes; and
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(4) an approximately $168.0 million equity contribution to Grove
Worldwide by Grove Investors (the "Equity Contribution"), a portion of which
is being financed with approximately $50.0 million in gross proceeds from
the offering of the senior discount debentures.
"Unrestricted Subsidiary" means any Subsidiary (other than Grove Investors
Capital) or any successor to any of them that is designated by the Management
Committee as an Unrestricted Subsidiary pursuant to a resolution of the
Management Committee; but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with Grove Investors or any Restricted Subsidiary of Grove
Investors unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to Grove Investors or such Restricted
Subsidiary than those that might be obtained at the time from Persons who
are not affiliates of Grove Investors;
(3) is a Person with respect to which neither Grove Investors nor any of
its Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of Grove Investors or any of its
Restricted Subsidiaries; and
(5) has at least one director on its board of directors that is not a
director or executive officer of Grove Investors or any of its Restricted
Subsidiaries and has at least one executive officer that is not a director
or executive officer of Grove Investors or any of its Restricted
Subsidiaries. Any such designation by the Management Committee shall be
evidenced to the United States Trust Company by filing with the United
States Trust Company a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by the
covenant described above under the caption "Certain Covenants--Restricted
Payments."
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
Grove Investors as of such date (and, if such Indebtedness is not permitted to
be incurred as of such date under the covenant described under the caption
"Incurrence of Indebtedness and Issuance of Disqualified Stock," we shall be in
default of such covenant). The Management Committee of Grove Investors may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of Grove Investors of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if
(1) such Indebtedness is permitted under the covenant described under
the caption "Certain Covenants--Incurrence of Indebtedness and Issuance of
Disqualified Stock," calculated on a pro forma basis as if such designation
had occurred at the beginning of the four-quarter reference period, and
(2) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Management
Committee of such Person.
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"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing
(1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment, by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than (x) directors' qualifying shares and
(y) shares required to be held by a second shareholder pursuant to the laws of
France in an amount not to exceed one-tenth of one percent of the outstanding
shares) shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
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FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of our counsel, Paul, Weiss, Rifkind, Wharton & Garrison, the
following discussion is an accurate general description of the material
anticipated Federal income tax consequences of the purchase, ownership and
disposition of the debentures. This summary is based on laws, regulations,
rulings and decisions now in effect, all of which are subject to change,
possibly retroactively. This summary deals only with holders that will hold
debentures as capital assets and does not address tax considerations applicable
to investors that may be subject to special tax rules such as banks, insurance
companies, tax-exempt organizations, dealers in securities or currencies,
persons that will hold debentures as part of an integrated investment, including
a straddle, comprised of debentures and one or more other positions, persons
that have a functional currency other than the United States dollar or holders
of debentures that did not acquire the debentures in the initial distribution
thereof at their original issue price. In addition, this discussion does not
consider the effect of any state, local, estate, gift or other tax laws.
Investors considering the purchase of debentures should consult their own tax
advisors with respect to the application of the Federal income tax laws to their
particular situations as well as any tax consequences arising under the laws of
any state, local or foreign taxing jurisdiction.
UNITED STATES HOLDERS
As used in this prospectus, the term "United States Holder" means the
beneficial owner of debentures that is, for United States Federal income tax
purposes, (1) a citizen or resident of the United States, (2) a domestic
corporation or other entity taxable as a corporation, (3) an estate the income
of which is subject to United States Federal income taxation regardless of its
source, (4) a trust if (A) a United States court is able to exercise supervision
over the administration of the trust and (B) one or more United States
fiduciaries have authority to control all substantial decisions of the trust, or
(5) otherwise subject to United States Federal income taxation with respect to
its worldwide income on a net income basis.
TAXATION OF UNITED STATES HOLDERS ON EXCHANGE
In the opinion of our counsel, Paul, Weiss, Rifkind, Wharton & Garrison, the
exchange of an outstanding debenture for an registered debenture will not be a
taxable event to a United States Holder of an outstanding debenture, and a
United States Holder will not recognize any taxable gain or loss as a result of
such an exchange. Accordingly, a United States Holder will have the same
adjusted basis and holding period in an registered debenture as it had in a
outstanding debenture immediately before the exchange. Further, the tax
consequences of ownership and disposition of any registered debenture will be
the same as the tax consequences of ownership and disposition of a outstanding
debenture.
ORIGINAL ISSUE DISCOUNT
United States Holders of debentures generally will be subject to the special
tax accounting rules for original issue discount obligations provided by the
Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, as
described in more detail below, United States Holders of the debentures will be
required to include original issue discount in gross income as ordinary income
as it accrues, in advance of the receipt of cash attributable to that income.
In general, a debt obligation that is issued for an amount less than its
"stated redemption price at maturity" (as defined below) will be considered to
have been issued with original issue discount for United States Federal income
tax purposes. Under the applicable regulations, the stated redemption price at
maturity will equal the sum of all payments to be made on a debenture, whether
denominated as interest or principal, other than certain interest payments based
on a fixed rate payable unconditionally at fixed periodic intervals of one year
or less during the entire term of the instrument.
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<PAGE>
Because of our option to issue additional debentures in lieu of paying interest
in cash, none of the interest payable on the debentures is excluded from the
determination of the stated redemption price at maturity of the debentures.
Each United States Holder of a debenture, whether such holder uses the cash
or the accrual method of tax accounting, will be required to include in gross
income the sum of the "daily portions" of original issue discount on that
debenture for all days during the taxable year that the United States Holder
owns the debentures. The daily portions of original issue discount on a
debenture are determined by allocating to each day in any "accrual period" a
ratable portion of the original issue discount allocable to that accrual period.
At the election of each United States Holder, accrual periods may be of any
length and may vary in length over the term of the debentures, provided that
each accrual period is no longer than one year and each scheduled payment occurs
either on the final or first day of an accrual period. The amount of original
issue discount allocable to each accrual period is determined by multiplying the
"adjusted issue price" (as defined below) at the beginning of the accrual period
by the annual yield to maturity of the debentures. The "adjusted issue price" of
a debenture at the beginning of any accrual period will be the sum of its issue
price (generally, the first price at which a substantial amount of debentures
are sold, disregarding sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers) and the amount of original issue discount allocable to all prior
accrual periods, reduced by the amount of all payments previously received on
the debenture.
EXERCISE OF ELECTION TO ISSUE ADDITIONAL DEBENTURES
In the event that we elect to issue additional debentures, such issuance of
additional debentures will not be treated, for United States Federal income tax
purposes, as a payment of interest, and the debentures will be deemed to be
"reissued" solely for purposes for computing the amount of original issue
discount includible in income during the then remaining term of the debentures.
Under these rules, the debentures will be deemed to be reissued at their then
adjusted issue price. The amount of original issue discount includible in
ordinary income over the remaining term of the debentures, determined on the
basis of a constant yield method as described above, will be equal to the excess
of (i) the sum of the principal amount due at maturity, the additional
debentures issued in lieu of cash payments, plus all remaining cash payments of
stated interest on the debentures and the additional debentures over (ii) the
adjusted issue price of the debentures.
MARKET DISCOUNT
The market discount rules generally provide that if a United States Holder
of a debenture purchased the debenture, subsequent to the original offering, for
an amount that is less than its "revised issue price" (the sum of the issue
price of the debenture and the aggregate amount of original interest discount
includible in the gross income of all holders for periods before the acquisition
of the debenture by such holder, which probably should be reduced by, although
it is not expressly stated in the Code, the amount of all payments previously
received on the debenture) of the debenture, the amount of the difference will
be treated as "market discount" for Federal income tax purposes, unless such
difference is less than a specified de minimis amount. Such a United States
Holder will be required to treat any principal payment on, or any gain on the
sale, exchange, retirement or other disposition of, a debenture as ordinary
income to the extent of the market discount which has not previously been
included in income and is treated as having accrued on such debenture at the
time of such payment or disposition. In addition, the United States Holder may
be required to defer, until the maturity of the debenture or its earlier
disposition in a taxable transaction, the deduction of all or a portion of the
interest expense on any indebtedness incurred or continued to purchase or carry
such debenture.
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<PAGE>
Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the debenture, unless the
United States Holder elects to accrue on a constant interest method. A United
States Holder of a debenture may elect to include market discount in income
currently as it accrues (on either a ratable or constant interest method), in
which case the rule described above regarding deferral of interest deductions
will not apply. This election to include market discount in income currently,
once made, applies to all market discount obligations acquired on or after the
first taxable year to which the election applies and may not be revoked without
the consent of the Internal Revenue Service.
ACQUISITION PREMIUM
The acquisition premium rules generally provide that if a United States
Holder of a debenture purchased the debenture, subsequent to the original
offering, for an amount that is greater than the adjusted issue price of the
debenture, the amount of such excess will be treated as "acquisition premium"
for Federal income tax purposes, and the amount of original issue discount that
the United States Holder includes in gross income is reduced to reflect such
acquisition premium. Acquisition premium is allocated on a pro rata basis to
each accrual of original issue discount reducing original issue discount by a
constant fraction, the numerator of which is the excess of the adjusted basis of
the debenture over its adjusted issue price, and the denominator of which is the
excess of the sum of all amounts payable on the debenture after the purchase
date over its adjusted issue price.
SALE, EXCHANGE OR RETIREMENT OF DEBENTURES
Upon the sale, exchange or retirement of a debenture, a United States Holder
generally will recognize capital gain or loss equal to the difference between
the amount realized on the sale, exchange or retirement and such holder's
adjusted tax basis in the debentures. A United States Holder's adjusted tax
basis in a debenture will generally be equal to the amount paid for the
debentures by such holder, increased by any original issue discount included in
income by the holder, and reduced by the amount of all payments previously
received on the debenture. Such capital gain or loss will be long-term capital
gain or loss if the United States Holder's holding period in the debenture is
more than one year at the time of disposition. The distinction between capital
gain or loss and ordinary income or loss is important for purposes of the
limitations on a United States Holder's ability to offset capital losses against
ordinary income and because United States Holders that are individuals may be
entitled to a preferential rate on long-term capital gains.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest (including original issue discount) on
a debenture, and payment of the proceeds of the sale of a debenture to certain
non-corporate, not otherwise exempt, United States Holders, and a 31% backup
withholding tax may apply to such payments if the United States Holder (1) fails
to furnish or certify its correct taxpayer identification number to the payor in
the manner required, (2) is notified by the Internal Revenue Service that it has
failed to report payments of interest and dividends properly, or (3) under
certain circumstances, fails to certify that it has not been notified by the
Internal Revenue Service that it is subject to backup withholding for failure to
report interest and dividend payments. Any amounts withheld under the backup
withholding rules from a payment to a United States Holder will be allowed as a
credit against such holder's United States Federal income tax liability and may
entitle the United States Holder to a refund.
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<PAGE>
REPORTING REQUIREMENTS
Grove Holdings will provide annual information statements to holders of the
debentures and to the Internal Revenue Service, setting forth the amount of
original issue discount determined to be attributable to the debentures for that
year.
NON-UNITED STATES HOLDERS
As used in this prospectus, the term "Non-United States Holder" means a
beneficial owner of debentures that, for United States Federal income tax
purposes, is not a United States Holder.
TAXATION OF NON-UNITED STATES HOLDERS ON EXCHANGE
The exchange of a outstanding debenture for an registered debenture will not
be a taxable event to a Non-United States Holder of a outstanding debenture, and
a Non-United States Holder will not recognize any taxable gain or loss as a
result of such an exchange. Accordingly, a Non-United States Holder will have
the same adjusted basis and holding period in an registered debenture as it had
in a outstanding debenture immediately before the exchange. Further, the tax
consequences of ownership and disposition of any registered debenture will be
the same as the tax consequences of ownership and disposition of a outstanding
debenture.
INTEREST
Subject to the discussion of information reporting and backup withholding
below, payments of interest (including original issue discount) on the
debentures to or on behalf of any Non-United States Holder will not be subject
to United States Federal income or withholding tax if such interest is not
effectively connected with the conduct of a trade or business within the United
States by such Non-United States Holder, provided that (1) such Non-United
States Holder is not a bank for United States Federal income tax purposes, (2)
such Non-United States Holder is not a "10-percent shareholder" within the
meaning of section 871(h)(3)(B) of the Internal Revenue Code of 1986, (3) such
Non-United States Holder is not a controlled foreign corporation for United
States Federal income tax purposes that is related to Grove Holdings through
stock ownership, and (4) certain certification requirements are met. A
Non-United States Holder that is not exempt from tax under these rules generally
will be subject to United States Federal income tax withholding at a rate of 30%
(or lower applicable treaty rate) on interest payments.
If the interest is effectively connected with the conduct of a trade or
business within the United States of such Non-United States Holder, such
interest will be subject to the United States Federal income tax on net income
that applies to United States persons generally (and with respect to corporate
holders under certain circumstances, the branch profits tax).
GAIN ON DISPOSITION
Any capital gain realized upon a sale, exchange or retirement of a debenture
by or on behalf of a Non-United States Holder generally will not be subject to
United States Federal withholding or income tax, unless (1) such gain is
effectively connected with a United States trade or business of such Non-United
States Holder, (2) the Non-United States Holder is an individual that is present
in the United States for 183 days or more during the taxable year of the sale,
exchange or retirement and certain other requirements are met, or (3) the
Non-United States Holder is subject to tax pursuant to provisions of the United
States Federal tax law applicable to certain United States expatriates.
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<PAGE>
INFORMATION REPORTING AND BACKUP WITHHOLDING
Under temporary Treasury Regulations now in effect, information reporting
and backup withholding will not apply to payments by us or any middleman to a
Non-United States Holder, provided that the holder (and, in certain cases the
custodian, nominee or other agent of such holder) meets certain certification
requirements as to the status of the holder as a Non-United States Holder
(provided that the payor lacks actual knowledge that the holder is a United
States person or that the conditions of any other exemption are not in fact
satisfied).
Recently published final Treasury Regulations (the "Final Withholding
Regulations") make a number of important changes to the procedures for income
tax withholding and certification of eligibility for the portfolio interest
exemption or for a reduced rate of income tax withholding based on an applicable
income tax treaty. In general, the Final Withholding Regulations do not
significantly alter substantive withholding requirements but unify certification
procedures and clarify reliance standards. The Final Withholding Regulations are
scheduled to be effective for payments made on or after January 1, 2000, subject
to certain transition rules.
Initial Non-United States Holders will be required to submit certification
complying with the temporary Treasury Regulations upon purchase of the
debentures. Certification that complies with the procedures in the Final
Withholding Regulations, where required, must be provided not later than the
earlier of (1) the date after December 31, 1999 on which such Non-United States
Holders' certification is no longer accurate or has expired, and (2) December
31, 2000 by initial Non-United States Holders that remain holders on such date,
unless such Non-United States Holders receive payments on the debentures through
a qualified intermediary (as defined in the Final Withholding Regulations) that
has certified on such Non-United States Holders' behalf. Non-United States
Holders claiming under an income tax treaty (and not relying on the portfolio
interest exemption) should be aware that they may be required to obtain taxpayer
identification numbers and to certify their eligibility under the applicable
treaty's limitations on benefits article to comply with the Final Withholding
Regulations' certification requirements. The final withholding regulations are
quite complex. Non-United States holders are strongly urged to consult their own
tax advisors regarding potential application of the final withholding
regulations to payments on the debentures in light of their particular
circumstances.
Backup withholding is not an additional tax; any amounts so withheld may be
refunded or credited against a Non-United States Holder's United States Federal
income tax liability, provided the required information is furnished to the
Internal Revenue Service.
The foregoing summary does not discuss all aspects of Federal income
taxation that may be relevant to a particular holder of debentures in light of
his particular circumstances and income tax situation. Each holder of debentures
should consult his own advisor as to the specific tax consequences to such
holder of the ownership and disposition of the debentures, including the
application and effect of state, local, foreign and other tax laws, or
subsequent versions of such laws.
ERISA CONSIDERATIONS
Sections 406 and 407 of the Employee Retirement Income Security Act of 1974,
as amended, and Section 4975 of the Internal Revenue Code of 1986 prohibit
certain employee benefit plans, individual retirement accounts, individual
retirement annuities, and employee annuity plans ("Plans") from engaging in
certain transactions with persons who, with respect to such Plan, are "parties
in interest" under the Employee Retirement Income Security Act or "disqualified
persons" under the Internal Revenue Code of 1986. A violation of these
"prohibited transactions" rules may generate excise taxes under the Internal
Revenue Code of 1986 and other liabilities under the Employee Retirement Income
Security Act for such persons. Possible violations of the prohibited transaction
rules occur if the debentures are purchased with the assets of any Plan if we or
any of our affiliates is a party in interest
116
<PAGE>
or disqualified person with respect to such Plan, unless such acquisition is
subject to a statutory or administrative exemption.
The foregoing discussion is general in nature and is not intended to be
all-inclusive. Any fiduciary of a Plan considering the purchase of the
debentures should consult its legal advisors regarding the consequences of such
purchases under the Employee Retirement Income Security Act and the Internal
Revenue Code of 1986. If the Plan is not subject to the Employee Retirement
Income Security Act, the fiduciary should consult its legal advisors regarding
the consequences of any state law or Internal Revenue Code of 1986
considerations.
PLAN OF DISTRIBUTION
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, we believe that a holder, other than a person that is an
affiliate of ours within the meaning of Rule 405 under the Securities Act or a
broker dealer registered under the Exchange Act that purchases debentures from
us to resell pursuant to Rule 144A under the Securities Act or any other
exemption, that exchanges outstanding debentures for registered debentures in
the ordinary course of business and that is not participating, does not intend
to participate, and has no arrangement or understanding with any person to
participate, in the distribution of the registered debentures will be allowed to
resell the registered debentures to the public without further registration
under the Securities Act and without delivering to the purchasers of the
registered debentures a prospectus that satisfies the requirements of Section 10
of the Securities Act. However, if any holder acquires registered debentures in
the exchange offer for the purpose of distributing or participating in a
distribution of the registered debentures, such holder cannot rely on the
position of the Staff enunciated in Exxon Capital Holdings Corporation or
similar no-action or interpretive letters and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction, and such secondary resale transaction must be
covered by an effective registration statement containing the selling security
holder information required by Item 507 or 508, as applicable, of Regulation S-K
if the resales are of registered debentures obtained by such holder in exchange
for outstanding debentures acquired by such holder directly from us or an
affiliate thereof, unless an exemption from registration is otherwise available.
As contemplated by the above no-action letters and the registration rights
agreement, each holder accepting the exchange offer is required to represent to
us in the letter of transmittal that they:
- are not an affiliate of ours;
- are not participating in, and do not intend to participate in, and has no
arrangement or understanding with any person to participate in, a
distribution of the outstanding debentures or the registered debentures;
- are acquiring the registered debentures in the ordinary course of
business; and
- if they are a broker dealer, they will receive the registered debentures
for their own account in exchange for the outstanding debentures that were
acquired as a result of market-making activities or other trading
activities. Each broker dealer must acknowledge that it will deliver a
prospectus in connection with any resale of such registered debentures.
Any broker dealer registered under the Exchange Act who holds outstanding
debentures that were acquired for its own account as a result of market-making
activities or other trading activities, other than outstanding debentures
acquired directly from us or any affiliate of ours, may exchange such
outstanding debentures for registered debentures pursuant to the exchange offer;
however, such broker dealer may be deemed an underwriter within the meaning of
the Securities Act and, therefore, must deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the
registered debentures received by it in the exchange offer, which prospectus
delivery requirement
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<PAGE>
may be satisfied by the delivery by such broker dealer of this prospectus, as it
may be amended or supplemented from time to time. We have agreed to use our
reasonable best efforts to cause the registration statement, of which this
prospectus is a part, to remain continuously effective for a period of one year
from the exchange date, and to make this prospectus, as amended or supplemented,
available to any such broker dealer for use in connection with resales. Any
broker dealer participating in the exchange offer will be required to
acknowledge that it will deliver a prospectus in connection with any resales of
registered debentures received by it in the exchange offer. The letter of
transmittal states that, by acknowledging that it will deliver and by delivering
a prospectus meeting the requirements of the Securities Act, a broker dealer
will not be deemed to admit that it is an underwriter within the meaning of the
Securities Act.
We will not receive any proceeds from any sale of registered debentures by a
broker dealer. Registered debentures 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 registered debentures 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 negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker dealers and/or the purchasers of any such registered debentures. Any
broker dealer that resells registered debentures that were received by it for
its own account pursuant to the exchange offer and any broker dealer that
participates in a distribution of such registered debentures may be deemed to be
an underwriter within the meaning of the Securities Act and any profit on any
such resale of registered debentures and any commission or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act.
We have agreed to pay all expenses incident to the exchange offer, including
the reasonable expenses of one counsel for holders of the outstanding
debentures, other than commissions and concessions of broker dealers, and will
indemnify the holders of the outstanding debentures, including any broker
dealers, against certain liabilities, including liabilities under the Securities
Act.
LEGAL MATTERS
Paul, Weiss, Rifkind, Wharton & Garrison, New York, New York, will pass upon
certain legal matters, including certain tax matters on our behalf, with respect
to the registered debentures.
EXPERTS
The consolidated financial statements of Grove Investors LLC as of October
3, 1998, and the combined financial statements of Grove Investors LLC for the
seven months ended April 28, 1998 and the consolidated financial statements for
the five months ended October 3, 1998, have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
The financial statements of the Grove Companies as of September 27, 1997,
and for each of the years in the two-year period ended September 27, 1997, have
been included herein and in the registration statement in reliance upon the
report of Ernst & Young LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
CHANGE IN ACCOUNTANTS
Until July 1998, Ernst & Young LLP was the independent accountant of Grove
Worldwide. In July 1998, Ernst & Young LLP was replaced by KPMG LLP as the
independent accountant of Grove
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Worldwide. Ernst & Young LLP did not resign nor was it dismissed under adverse
circumstances. Ernst & Young LLP's report on the financial statements for the
past two years did not contain an adverse opinion or a disclaimer of opinion,
nor was it qualified or modified as to uncertainty, audit scope, or accounting
principles. The decision to change accountants was recommended by the parent of
Grove Worldwide. In addition, during the two most recent fiscal years, and the
subsequent interim periods, before Grove Worldwide's change in accountants,
there were no disagreements with Ernst & Young LLP on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Ernst &
Young LLP, would have caused Ernst & Young LLP to make reference to the subject
matter of the disagreements in connection with its report.
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INDEX TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS
GROVE INVESTORS LLC AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
ANNUAL FINANCIAL STATEMENTS
Independent Auditors' Reports.............................................................................. F-2
Combined Balance Sheet as of September 27, 1997 and Consolidated Balance Sheet as of October 3, 1998....... F-4
Combined Statements of Operations for the years ended September 28, 1996 and September 27, 1997 and for the
seven months ended April 28, 1998 and Consolidated Statement of Operations for the five months ended
October 3, 1998.......................................................................................... F-5
Combined Statements of Predecessor Capital for the years ended September 28, 1996 and September 27, 1997
and for the seven months ended April 28, 1998 and Consolidated Statement of Members' Equity for the five
months ended October 3, 1998............................................................................. F-6
Combined Statements of Cash Flows for the years ended September 28, 1996 and September 27, 1997 and for the
seven months ended April 28, 1998 and Consolidated Statement of Cash Flows for the five months ended
October 3, 1998.......................................................................................... F-7
Notes to Combined and Consolidated Financial Statements.................................................... F-8
QUARTERLY FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheet as of January 2, 1999....................................... F-33
Unaudited Condensed Combined Statement of Operations and Comprehensive Income for the three months ended
December 27, 1997 and Condensed Consolidated Statement of Operations and Comprehensive Loss for the three
months ended January 2, 1999............................................................................. F-34
Unaudited Condensed Combined Statement of Cash Flow the three months ended December 27, 1997 and condensed
consolidated statement of cash flow for the three months ended January 2, 1999........................... F-35
Notes to Unaudited Condensed Combined and Consolidated Financial Statements................................ F-36
</TABLE>
Grove Investors LLC and Grove Investors Capital, Inc. were formed in
December 1997 and March 1998, respectively, with nominal capital contributions
and had no operations prior to the acquisition. Accordingly, the Company (as
defined) has not provided herein any Financial Statements for such entities for
any period prior to the acquisition.
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Management Committee of
Grove Investors LLC:
We have audited the accompanying consolidated balance sheet of Grove
Investors LLC and subsidiaries as of October 3, 1998 and the related
consolidated statements of operations, members' equity and cash flows for the
five months ended October 3, 1998 (Successor Period) and the combined statements
of operations, predecessor capital and cash flows for the seven months ended
April 28, 1998 (Predecessor Period). These consolidated and combined financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated and combined
financial statements based on our audit.
We conducted our audit 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 audit provides 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 Grove
Investors LLC and subsidiaries as of October 3, 1998, and the results of their
operations and their cash flows for the Successor Period, in conformity with
generally accepted accounting principles. Furthermore, in our opinion, the
aforementioned combined financial statements present fairly, in all material
respects, the results of operations and cash flows of The Grove Companies for
the Predecessor Period, in conformity with generally accepted accounting
principles.
As discussed in note 2 to the combined and consolidated financial
statements, on April 28, 1998 Grove Investors LLC acquired The Grove Companies
in a business combination accounted for as a purchase. As a result of the
acquisition, the consolidated information as of October 3, 1998 and for the five
months then ended is presented on a different cost basis than that for the
periods before the acquisition and, therefore is not comparable.
KPMG LLP
December 1, 1998
Baltimore, Maryland
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholder of
The Grove Companies:
We have audited the accompanying combined balance sheet as of September 27,
1997 of the Grove Companies, and the related combined statements of operations,
predecessor capital, and cash flows for each of the two years in the period
ended September 27, 1997. Our audits also included the financial statement
schedules listed in the Index at Item 21(b). These financial statements and
schedules are the responsibility of the Companies' management. Our
responsibility is to express an opinion on the financial statements and
schedules 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 financial statements referred to above present fairly,
in all material respects, the combined financial position as September 27, 1997,
of the Grove Companies, and the combined results of their operations and their
cash flows for each of the two years in the period ended September 27, 1997, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedules, when considered in relation to the
basis financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
ERNST & YOUNG LLP
December 15, 1997
Baltimore, Maryland
F-3
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
COMBINED BALANCE SHEET AS OF SEPTEMBER 27, 1997 AND
CONSOLIDATED BALANCE SHEET AS OF OCTOBER 3, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1997 1998
----------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 5,024 $ 34,289
Trade receivables, net............................................... 149,164 129,833
Due from Hanson PLC.................................................. -- 10,500
Notes receivable..................................................... 68,450 5,887
Inventories (note 5)................................................. 215,332 207,248
Prepaid expenses and other current assets............................ 22,569 8,893
----------- ---------
Total current assets................................................... 460,539 396,650
Property, plant and equipment, net (note 6)............................ 147,588 207,175
Goodwill, net (note 7)................................................. 254,728 288,499
Other assets........................................................... 18,641 22,919
----------- ---------
$ 881,496 $ 915,243
----------- ---------
----------- ---------
LIABILITIES AND MEMBERS' EQUITY/PREDECESSOR CAPITAL
Current liabilities:
Current maturities of long-term debt (note 10)....................... $ -- $ 7,000
Short-term borrowings (note 8)....................................... 7,265 15,027
Accounts payable..................................................... 70,327 79,470
Accrued expenses and other current liabilities (note 9).............. 90,734 106,211
----------- ---------
Total current liabilities.............................................. 168,326 207,708
Deferred revenue (note 3).............................................. 46,509 67,306
Long-term debt (note 10)............................................... -- 509,665
Other liabilities (note 11)............................................ 38,169 82,729
----------- ---------
Total liabilities...................................................... 253,004 867,408
----------- ---------
Members' equity/predecessor capital:
Predecessor capital.................................................. 628,492 --
Invested capital..................................................... -- 75,000
Notes receivable from members........................................ -- (2,783)
Accumulated deficit.................................................. -- (29,664)
Minimum pension liability (note 12).................................. -- (2,059)
Cumulative translation adjustment.................................... -- 7,341
----------- ---------
Total members' equity/predecessor capital.............................. 628,492 47,835
----------- ---------
Commitments and contingencies (notes 16, 17, 18 and 19)
$ 881,496 $ 915,243
----------- ---------
----------- ---------
</TABLE>
See accompanying notes to combined and consolidated financial statements.
F-4
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
COMBINED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED SEPTEMBER 28, 1996
AND SEPTEMBER 27, 1997 AND THE SEVEN MONTHS ENDED APRIL 28, 1998 AND
CONSOLIDATED STATEMENT OF OPERATIONS FOR THE FIVE MONTHS ENDED OCTOBER 3, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------------------------------- ---------
SEPTEMBER SEPTEMBER OCTOBER
28, 27, APRIL 28, 3,
1996 1997 1998 1998
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Net sales...................................... $ 794,209 $ 856,812 $ 476,200 $ 393,779
Cost of goods sold (note 5).................... 609,130 653,539 377,337 335,764
----------- ----------- --------- ---------
Gross profit................................... 185,079 203,273 98,863 58,015
Selling, engineering, general and
administrative expenses...................... 119,619 122,192 73,664 58,118
Amortization of goodwill....................... 9,185 9,054 5,215 3,091
Management fees paid to Hanson PLC (note 19)... 5,655 2,176 162 --
Restructuring charges (note 15)................ -- 1,960 -- --
----------- ----------- --------- ---------
Income (loss) from operations.................. 50,620 67,891 19,822 (3,194)
Interest income (expense), net (note 10)....... (2,791) 43 1,048 (21,579)
Other income (expense), net.................... (193) 535 (9,524) (554)
----------- ----------- --------- ---------
Income (loss) before income taxes.............. 47,636 68,469 11,346 (25,327)
Income taxes (note 14)......................... 22,188 26,249 11,741 4,337
----------- ----------- --------- ---------
Net income (loss).............................. $ 25,448 $ 42,220 $ (395) $ (29,664)
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
See accompanying notes to combined and consolidated financial statements.
F-5
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
COMBINED STATEMENTS OF PREDECESSOR CAPITAL FOR THE YEARS ENDED SEPTEMBER 28,
1996
AND SEPTEMBER 27, 1997 AND FOR THE SEVEN MONTHS ENDED APRIL 28, 1998 AND
CONSOLIDATED STATEMENT OF MEMBERS' EQUITY FOR THE FIVE MONTHS ENDED OCTOBER 3,
1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMPANY
------------------------------------------------------------------
NOTES
RECEIVABLE MINIMUM CUMULATIVE
PREDECESSOR INVESTED FROM ACCUMULATED PENSION TRANSLATION
CAPITAL CAPITAL MEMBERS DEFICIT LIABILITY ADJUSTMENT
----------- ----------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1995 $ 467,306 $ -- $ -- $ -- $ -- $ --
Net income............................. 25,448 -- -- -- -- --
Dividends paid to parent............... (30,057) -- -- -- -- --
Net transactions with affiliates....... 42,394 -- -- -- -- --
Change in minimum pension liability.... (162) -- -- -- -- --
Change in foreign currency
translation.......................... (2,375) -- -- -- -- --
----------- ----------- ----------- ------------ ----------- ------
Balance, September 28, 1996 502,554 -- -- -- -- --
Net income............................. 42,220 -- -- -- -- --
Net transactions with affiliates....... 88,524 -- -- -- -- --
Change in minimum pension liability.... 601 -- -- -- -- --
Change in foreign currency
translation.......................... (5,407) -- -- -- -- --
----------- ----------- ----------- ------------ ----------- ------
Balance, September 27, 1997 628,492 -- -- -- --
Net loss............................... (395) -- -- -- -- --
Net transactions with affiliates....... (111,216) -- -- -- -- --
Change in minimum pension liability.... (1,371) -- -- -- -- --
Change in foreign currency
translation.......................... (5,764) -- -- -- -- --
----------- ----------- ----------- ------------ ----------- ------
Balance, April 28, 1998 509,746 -- -- -- --
Elimination of predecessor capital..... (509,746) -- -- -- -- --
Initial capitalization................. -- 75,000 -- -- -- --
Advances to members (note 19).......... -- -- (2,719) -- -- --
Net loss............................... -- -- -- (29,664) -- --
Accrued interest on member notes....... -- -- (64) -- -- --
Minimum pension liability.............. -- -- -- -- (2,059) --
Cumulative translation adjustment...... -- -- -- -- -- 7,341
----------- ----------- ----------- ------------ ----------- ------
Balance, October 3, 1998 $ -- $ 75,000 $ (2,783) $ (29,664) $ (2,059) $ 7,341
----------- ----------- ----------- ------------ ----------- ------
----------- ----------- ----------- ------------ ----------- ------
<CAPTION>
TOTAL
MEMBER'S
EQUITY
-----------
<S> <C>
Balance, September 30, 1995 $ --
Net income............................. --
Dividends paid to parent............... --
Net transactions with affiliates....... --
Change in minimum pension liability.... --
Change in foreign currency
translation.......................... --
-----------
Balance, September 28, 1996 --
Net income............................. --
Net transactions with affiliates....... --
Change in minimum pension liability.... --
Change in foreign currency
translation.......................... --
-----------
Balance, September 27, 1997 --
Net loss............................... --
Net transactions with affiliates....... --
Change in minimum pension liability.... --
Change in foreign currency
translation.......................... --
-----------
Balance, April 28, 1998
Elimination of predecessor capital..... --
Initial capitalization................. 75,000
Advances to members (note 19).......... (2,719)
Net loss............................... (29,664)
Accrued interest on member notes....... (64)
Minimum pension liability.............. (2,059)
Cumulative translation adjustment...... 7,341
-----------
Balance, October 3, 1998 $ 47,835
-----------
-----------
</TABLE>
See accompanying notes to combined and consolidated financial statements.
F-6
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
COMBINED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED SEPTEMBER 28, 1996
AND SEPTEMBER 27, 1997 AND FOR THE SEVEN MONTHS ENDED APRIL 28, 1998 AND
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FIVE MONTHS ENDED OCTOBER 3, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
----------------------------------- ---------
SEPTEMBER SEPTEMBER OCTOBER
28, 27, APRIL 28, 3,
1996 1997 1998 1998
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................. $ 25,448 $ 42,220 $ (395) $ (29,664)
Adjustments to reconcile to net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization............. 17,313 17,985 11,399 8,233
Depreciation of equipment held for rent... 3,805 8,352 5,501 7,400
Amortization of deferred financing
costs................................... -- -- -- 884
Accretion of interest on senior discount
notes................................... -- -- -- 2,550
Write-off of amount assigned to inventory
in purchase accounting.................. -- -- -- 27,707
Gain (loss) on sales of property, plant
and equipment........................... 5 (600) 6,256 --
Deferred income tax expense............... 126 1,969 2,358 1,249
Changes in operating assets and
liabilities:
Trade receivables, net.................. (48,405) (23,266) 32,096 (6,790)
Notes receivable........................ -- (68,450) 28,409 (3,607)
Inventories............................. (27,528) (162) (8,828) 17,936
Accounts payable and accrued expenses... 21,559 564 7,542 5,504
Other assets and liabilities, net....... 17,503 33,383 8,759 25,898
----------- ----------- --------- ---------
Net cash provided by operating activities....... 9,826 11,995 93,097 57,300
----------- ----------- --------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment.... (19,443) (32,491) (19,521) (7,230)
Investment in equipment held for rent......... (22,527) (37,904) (16,380) (20,751)
Acquisition of businesses from Hanson, PLC
including transaction costs of $5,783 net of
cash acquired of $9,242 and post-closing
adjustment received of $16,818.............. -- -- -- (562,723)
Other investing activities.................... (3,271) 1,603 2,071 1,302
----------- ----------- --------- ---------
Net cash used in investing activities........... (45,241) (68,792) (33,830) (589,402)
----------- ----------- --------- ---------
Cash flows from financing activities:
Net proceeds from short-term borrowings....... 7,443 204 6,821 941
Proceeds from issuance of long-term debt...... -- -- -- 547,560
Repayments of long-term debt.................. -- -- -- (35,200)
Equity investment............................. -- -- -- 75,000
Advances to members........................... -- -- -- (2,720)
Deferred financing costs...................... -- -- -- (19,533)
Other financing activities.................... 18,309 54,145 (62,087) --
----------- ----------- --------- ---------
Net cash provided by (used in) financing
activities.................................... 25,752 54,349 (55,266) 566,048
----------- ----------- --------- ---------
Effect of exchange rate changes on cash......... (838) (712) 217 343
----------- ----------- --------- ---------
Net increase (decrease) in cash and cash
equivalents................................... (10,501) (3,160) 4,218 34,289
Cash and cash equivalents, beginning of
period........................................ 18,685 8,184 5,024 --
----------- ----------- --------- ---------
Cash and cash equivalents, end of period........ $ 8,184 $ 5,024 $ 9,242 $ 34,289
----------- ----------- --------- ---------
----------- ----------- --------- ---------
</TABLE>
See accompanying notes to combined and consolidated financial statements.
F-7
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(1) ORGANIZATION, DESCRIPTION OF BUSINESS, AND BASIS OF PRESENTATION
Grove Investors LLC ("Grove" or the "Company"), through its wholly owned
subsidiaries, is primarily engaged in the design, production, sale, and
after-sale support of mobile hydraulic cranes, aerial work platforms and
truck-mounted cranes. The Company's domestic manufacturing plants and related
facilities are located in Shady Grove and Chambersburg, Pennsylvania and
Waverly, Nebraska. The Company's foreign manufacturing plants and related
facilities are located in Sunderland, United Kingdom; Wilhelmshaven and
Langenfeld, Germany; and Tonneins and Cergy, France. The majority of the
Company's sales are to independent distributors, rental companies, and end users
which serve the heavy industrial and construction industries in the United
States and Europe.
The Company was formed as a limited liability company in December 1997
pursuant to the provisions of the Delaware Limited Liability Company Act. The
Company had no substantive operations prior to its initial capitalization and
the acquisition of The Grove Companies on April 29, 1998 (see note 2). The
Company issued 75,000 Class B units for $75,000 to equity members in connection
with the initial capitalization of the Company. During the five months ended
October 3, 1998 the Company issued 3,912 Class A units to management for cash of
$1,192 and notes of $2,720 bearing interest at the prime rate (8.5% at October
3, 1998). Such notes are recourse obligations generally secured by the members'
interest. In connection with the issuance of the Class A units the Company
redeemed 3,912 of the Class B units for their initial purchase price. Class A
and Class B members have identical rights and obligations. As of October 3,
1998, 3,912 Class A units and 71,088 Class B units are outstanding.
The Company is operated and controlled by a management committee (the
"Management Committee") constituted by a majority of the Company's equity
members. Equity members vote in relation to their percentage ownership. Net
income of the company is allocated to equity members first to the extent of any
deficit in their capital account; second, to the maximum extent possible, to
cause their capital account to equal their respective percentage interest in the
total members' equity of the Company; and third, in accordance with their
respective percentage interest in the Company. Net losses of the Company are
allocated to equity members first to the maximum extent possible, to cause their
capital account to equal their respective percentage interest in the total
member's equity of the Company; second, to the extent of any positive amount in
their capital account; and third, in accordance with their respective percentage
interest in the Company.
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
Combined financial statements for the periods prior to April 29, 1998
consist of the combined operations and substantially all of the assets and
liabilities of Kidde Industries, Inc. and the following legal entities: Grove
Europe Ltd., Crane Holdings, Inc., Delta Manlift SAS, Grove France SA, Deutsche
Grove GmbH, and Grove Manlift Pty. Ltd. (together "The Grove Companies" or
"Predecessor"). All of the Grove companies were either directly or indirectly
owned by Hanson PLC, a United Kingdom company.
(2) ACQUISITION
On April 29, 1998, the Company acquired (the "Acquisition") from Hanson PLC
("Hanson") and certain of its subsidiaries, substantially all of the assets of
Hanson's U.S. mobile hydraulic crane and aerial work platform operations, the
capital stock of Hanson's U.S. truck-mounted crane operation and
F-8
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(2) ACQUISITION (CONTINUED)
the capital stock of Hanson's British, French, German, and Australian crane and
aerial work platform subsidiaries for an aggregate purchase price of $583
million. The purchase price was subject to a post closing adjustment for which
the Company received $16.8 million in fiscal 1998 and an additional $10.5
million in November 1998. Funds required by the Company to consummate the
Acquisition, including the payment of related fees and expenses, were as
follows:
<TABLE>
<S> <C>
Sources:
Issuance of the Senior Subordinated Notes....................................... $ 225,000
Borrowings under Revolving Credit Facility...................................... 10,106
Borrowings under Term Loan Facility............................................. 200,000
Issuance of the Senior Discount Debentures...................................... 49,958
Issuance of the Senior Debentures............................................... 47,375
Equity investment............................................................... 75,000
---------
$ 607,439
---------
---------
Uses:
Acquisition price............................................................... $ 583,000
Transaction costs............................................................... 5,783
---------
Aggregate purchase price........................................................ 588,783
Debt financing costs............................................................ 18,656
---------
$ 607,439
---------
---------
</TABLE>
The Acquisition was accounted for using the purchase method. The estimated
total purchase price of $583 million and related acquisition fees and expenses
of approximately $5.8 million have been allocated to the assets and liabilities
of the Company based upon an estimate of their respective fair values, with the
remainder being allocated to goodwill. The Company intends to amortize goodwill
over a 40 year period based on the strong brand name of the Company and the
longevity of the business and the industry in which it operates. The estimated
fair values of the assets acquired and liabilities assumed in the Acquisition
are summarized as follows:
<TABLE>
<S> <C>
Cash and cash equivalents........................................................ $ 9,241
Due from Hanson for post-closing adjustment...................................... 27,300
Trade receivables................................................................ 122,616
Notes receivable................................................................. 2,280
Inventories...................................................................... 248,381
Other current assets............................................................. 10,602
Property, plant and equipment.................................................... 189,703
Goodwill......................................................................... 294,877
Other non-current assets......................................................... 2,966
Short-term borrowings............................................................ (14,086)
Trade accounts payable........................................................... (79,493)
Accrued expenses and other current liabilities................................... (103,664)
Other non-current liabilities.................................................... (121,940)
---------
Aggregate purchase price......................................................... $ 588,783
---------
---------
</TABLE>
F-9
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(2) ACQUISITION (CONTINUED)
As a result of the Acquisition, the carrying value of assets and liabilities
of the Company are not comparable to the carrying value of such assets and
liabilities by the Predecessor. The allocation of the purchase price to certain
property, plant and equipment is based on fair market value appraisals which
have not been finalized.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company defines cash equivalents as highly liquid investments with
initial maturities of three months or less.
TRADE RECEIVABLES AND NOTES RECEIVABLE
Trade receivables are net of allowance for doubtful accounts of $2,717 and
$3,075 as of September 27, 1997 and October 3, 1998, respectively.
Notes receivable relate to sales of new equipment to North American
distributors on terms of up to one year. Payment of interest and principal are
due at the maturity of the note unless the dealer sells the equipment prior to
maturity in which case the notes must be repaid immediately along with any
interest accrued thereon.
INVENTORIES
Inventories are valued at the lower of cost or market, as determined
primarily under the first-in, first-out method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment are stated at cost. Maintenance and repairs
are charged to operations when incurred, while expenditures having the effect of
extending the useful life of an asset are capitalized. Depreciation is computed
primarily using the straight-line method. The useful lives by asset category are
as follows:
<TABLE>
<S> <C>
Land improvements............................................... 3-20 years
10-30
Buildings and improvements...................................... years
Machinery and equipment......................................... 3-12 years
Equipment held for rent......................................... Lease term
Furniture and fixtures.......................................... 3-10 years
</TABLE>
GOODWILL
The excess of the purchase price of the Company and its subsidiaries over
the fair value of the net assets acquired was recorded as goodwill. Amortization
expense is recorded on the straight-line method over 40 years. The Company
assesses the recovery of goodwill by determining whether amortization of the
goodwill over its remaining life can be recovered through undiscounted cash
flows of the acquired operations. Goodwill impairment, if any, is measured by
determining the amount by which the carrying value of the goodwill exceeds its
fair value based upon discounting of future cash flows.
F-10
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
IMPAIRMENT OF LONG-LIVED ASSETS
The Company records impairment losses on long-lived assets when events and
circumstances indicate that the assets might be impaired. No such losses have
been recorded in the accompanying financial statements.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are utilized by the Company to reduce
interest and foreign currency exchange risks and consist primarily of interest
rate collars and forward foreign exchange contracts. The Company does not hold
or issue derivative financial instruments for trading purposes. Gains and losses
on foreign currency transaction hedges are recognized in income and offset the
foreign exchange gains and losses of the underlying transactions. Gains and
losses on foreign currency firm commitment hedges are deferred and included in
the basis of the transactions underlying the commitments.
The Company has an interest rate collar contract to manage its exposure to
fluctuations in interest rates. The interest rate differential on the interest
rate contract is reflected as an adjustment to interest expense over the life of
the contract. Upon early termination of an interest rate contract, the gains or
losses on termination are deferred and amortized as an adjustment to the
interest expense on the related debt instrument over the remaining period
originally covered by the contract.
REVENUE RECOGNITION
Revenue is generally recognized as products are shipped to customers.
However, for certain transactions, the Company provides guarantees of the
residual value of the equipment to third party leasing companies. Such
guarantees generally, given for periods of up to five years, take the form of
end-of-term residual value guarantees or reducing residual value guarantees that
decline with the passage of time. The Company records these transactions in
accordance with the lease principles established by Statement of Financial
Accounting Standards (SFAS) No. 13. If the transaction qualifies as an operating
lease, the Company records deferred revenue for the amount of the net proceeds
received upon the equipment's initial transfer to the customer. The liability is
then subsequently reduced on a pro rata basis over the period to the first
exercise date of the guarantee, to the amount of the guaranteed residual value
at that date, with corresponding credits to revenue in the Company's statement
of operations. Any further reduction in the guaranteed residual value resulting
from the purchaser's decision to continue to use the equipment is recognized in
a similar manner. Depreciation of equipment held for rent is recognized in a
similar manner over the term of the lease agreement. As of September 27, 1997
and October 3, 1998, the amount of deferred revenue relating to transactions
involving residual value guarantees which is included in other current or
noncurrent liabilities was $53,150 and $80,658, respectively.
PRODUCT WARRANTIES
Product warranty expenses are provided for estimated normal warranty costs
at the time of sale. Additional warranty expense is provided for specific
performance issues when identified. Specific performance issues relate to
situations in which the Company issues a part replacement notice for models that
are experiencing a particular problem.
F-11
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSLATION
The financial statements of subsidiaries located outside the United States
are measured using the local currency as the functional currency. Assets,
including goodwill, and liabilities are translated at the rates of exchange at
the balance sheet date. The resulting translation gains and losses are included
as a separate component of members' equity. Income and expense items are
translated at average monthly rates of exchange. Gains and losses from foreign
currency transactions of these subsidiaries are included in net income.
Aggregate gains (losses) on foreign currency transactions are not material.
RESEARCH AND DEVELOPMENT
Research and development expenditures are charged to operations as incurred.
Research and development costs were $14,976, $15,427, $8,242 and $5,878 for the
years ended September 28, 1996 and September 27, 1997, the seven months ended
April 28, 1998 and the five months ended October 3, 1998, respectively.
ADVERTISING
All costs associated with advertising and promoting products are expensed
when incurred. Advertising expense amounted to $3,887, $4,802, $2,324 and $1,568
for the years ended September 28, 1996 and September 27, 1997, the seven months
ended April 28, 1998 and the five months ended October 3, 1998, respectively.
STOCK-BASED COMPENSATION
The Company has elected to follow Accounting Principles Board Opinion No.
25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related interpretations in
accounting for its stock-based employee compensation arrangements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than a forced sale or liquidation. Significant differences can arise
between the fair value and carrying amount of financial instruments that are
recognized at historical cost amounts.
The following methods and assumptions were used by the Company in estimating
fair value disclosures for financial instruments:
Cash, trade receivables, notes receivable, trade accounts payable and
short-term borrowings: The amounts reported in the consolidated balance
sheets approximate fair value.
Foreign currency contracts: The fair value of forward exchange contracts is
estimated using prices established by financial institutions for comparable
instruments. (See note 17)
Long-term debt: For bank borrowings, the amount reported in the consolidated
balance sheet approximates fair value. The fair values of the Senior
Subordinated Notes, Senior Discount Debentures and Senior Debentures are
based on quoted market prices. (See note 10)
F-12
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADOPTION OF NEW ACCOUNTING STANDARDS
In 1997, the Financial Accounting Standards Board (FASB) issued Statement
No. 130, REPORTING OF COMPREHENSIVE INCOME. This Statement requires the
reporting of comprehensive income in interim and annual financial statements.
Net income together with periodic adjustments with respect to foreign currency
translation and minimum pension liabilities will result in comprehensive income.
The Company intends to adopt the pronouncement in the first quarter of fiscal
year 1999.
In 1997, the FASB issued Statement No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. This Statement requires that public business
enterprises disclose information about their products and services, operating
segments, the geographic areas in which they operate, and their major customers.
The Company intends to adopt the pronouncement in fiscal year 1999.
In 1998, the FASB issued Statement No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES. This statement establishes accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities measured at fair value. Management has not yet evaluated this
statement's impact on the Company's financial condition or results of
operations. The Company intends to adopt the pronouncement in fiscal year 2000.
USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period to
prepare these consolidated financial statements in conformity with generally
accepted accounting principles. Actual results could differ significantly from
those estimates.
RECLASSIFICATION
Certain amounts in the 1996 and 1997 combined financial statements have been
reclassified to conform to the presentation in the October 3, 1998 consolidated
financial statements.
(4) ACCOUNTS AND NOTES RECEIVABLE
Trade receivables subject the Company to a concentration of credit risk,
because they are concentrated in distributors and rental companies that serve
the heavy industrial and construction industries, which are subject to business
cycle variations. For the years ended September 28, 1996 and September 27, 1997,
revenues generated from six major customers were approximately 20% and 19% of
net sales, respectively, with no one customer accounting for more than 5% of
total revenue. Approximately 31% of the outstanding trade and notes receivable
balance as of September 27, 1997 were due from these customers. For the seven
months ended April 28, 1998 and the five months ended October 3, 1998, revenues
generated from five major customers were approximately 23% and 24%,
respectively, with no one customer accounting for more than 10% of total
revenue. Approximately, 11% of the outstanding trade and notes receivable
balance as of October 3, 1998 were due from these customers.
The Company generally offers terms of up to 30 days to its customers and
generally obtains a security interest in the underlying machinery sold. In
addition, the Company offered a special financing
F-13
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(4) ACCOUNTS AND NOTES RECEIVABLE (CONTINUED)
program primarily to its U.S. distributors which provides credit terms of
periods up to one year in exchange for an interest-bearing note. The Company
generally retains a security interest in the machinery sold.
Prior to the Acquisition, Hanson entered into an agreement to sell certain
notes receivable to a third-party bank on a 90% non-recourse basis. In addition,
substantially all notes receivable outstanding at the date of the Acquisition
that had not been sold to the third party bank were retained by Hanson.
Following the Acquisition, the Company is responsible for administrative and
collection activities with respect to such receivables but Hanson is responsible
for all remaining credit risk. The cost of providing administrative support is
immaterial.
Following the Acquisition, the Company entered into an agreement with a
third-party bank to sell up to $50 million of notes receivable generated from
sales of mobile hydraulic cranes and aerial work platforms on credit terms of up
to one year on a revolving basis. The third-party bank purchases the notes
receivable at face value on a 90% non-recourse basis. The agreement provides
that the Company purchase credit insurance on behalf of the third-party bank to
insure the 90% risk assumed by the third-party bank. The Company retains 10% of
the credit risk on a first loss basis.
The Company is responsible for administrative and collection activities. The
cost of administrative and collection activities is immaterial. Cash collections
on the notes are deposited directly into an account for the benefit of the
third-party bank. The third-party bank has the power to sell or pledge the notes
receivable purchased at any time and the Company has no rights of repurchase of
the notes receivable.
Notes receivable sold under this arrangement meet the criteria for sale
under FASB Statement No. 125 and, accordingly, are removed from the Company's
balance sheet upon sale. At October 3, 1998, the Company had credit risk of up
to $3.8 million with respect to notes receivable that had been sold under the
arrangement.
(5) INVENTORIES
Inventories consist of the following as of September 27, 1997 and October 3,
1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1997 1998
----------- ---------
<S> <C> <C>
Raw materials and supplies......................................... $ 76,573 $ 61,910
Work in process.................................................... 78,993 72,299
Finished goods..................................................... 59,766 73,039
----------- ---------
$ 215,332 $ 207,248
----------- ---------
----------- ---------
</TABLE>
In connection with the Acquisition, the Company assigned $27.7 million of
the purchase price to work in process and finished goods inventories in excess
of their historical carrying value. Such amounts were charged to costs of goods
sold in the five month period ended October 3, 1998.
F-14
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(6) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following as of September 27,
1997 and October 3, 1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1997 1998
----------- ---------
<S> <C> <C>
Land and improvements.................................................. $ 12,765 $ 7,446
Buildings and improvements............................................. 63,052 62,709
Machinery and equipment................................................ 71,864 55,276
Equipment held for rent................................................ 58,455 79,997
Furniture and fixtures................................................. 17,016 5,264
Construction in progress............................................... 20,329 9,078
----------- ---------
243,481 219,770
Less accumulated depreciation and amortization......................... 95,893 12,595
----------- ---------
$ 147,588 $ 207,175
----------- ---------
----------- ---------
</TABLE>
Depreciation expense (including depreciation expense on equipment held for
rent) for the years ended September 28, 1996, September 27, 1997, the seven
months ended April 28, 1998 and the five months ended October 3, 1998 was
$11,933, $17,283, $11,685 and $12,522, respectively.
(7) GOODWILL
Goodwill consists of the following as of September 27, 1997 and October 3,
1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1997 1998
----------- ---------
<S> <C> <C>
Goodwill........................................................... $ 337,443 $ 291,590
Less accumulated amortization...................................... 82,715 3,091
----------- ---------
$ 254,728 $ 288,499
----------- ---------
----------- ---------
</TABLE>
(8) SHORT-TERM BORROWINGS
The Company's German operation maintains a DM33 million (approximately $20
million) credit facility available for discounting certain accounts receivable.
As of September 27, 1997 and October 3, 1998, $7,265 and $15,027 were drawn
against this facility. The interest rate charged on the outstanding borrowings
was 3.0% and 4.5% at September 27, 1997 and October 3, 1998, respectively. This
arrangement does not have a termination date and is reviewed periodically. No
material commitment fees are required to be paid on the undrawn portion of the
credit facility.
F-15
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(9) ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following as
of September 27, 1997 and October 3, 1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1997 1998
----------- ---------
<S> <C> <C>
Salaries and wages..................................................... $ 21,036 $ 20,413
Employee benefits...................................................... 8,603 1,092
Accrued warranty....................................................... 18,044 16,522
Deferred revenue associated with equipment held for rent............... 6,641 13,352
Product, workers' compensation and general liability................... 12,757 4,125
Accrued interest....................................................... -- 11,167
Sunderland, U.K. shut-down costs (note 15)............................. -- 18,500
Other.................................................................. 23,653 21,040
----------- ---------
$ 90,734 $ 106,211
----------- ---------
----------- ---------
</TABLE>
(10) LONG-TERM DEBT
Long-term debt consists of the following at October 3, 1998:
<TABLE>
<S> <C>
Term loan facility................................................................ $ 190,000
Senior subordinated notes......................................................... 225,000
Senior discount debentures........................................................ 52,535
Senior debentures................................................................. 49,130
---------
516,665
Less current maturities........................................................... 7,000
---------
Long-term debt.................................................................... $ 509,665
---------
---------
</TABLE>
BANK CREDIT FACILITY--The Company entered into a bank credit facility (the
"Bank Credit Facility") on April 29, 1998, which consists of a $200,000 term
loan facility ("Term Loan Facility") and a $125,000 revolving credit facility
("Revolving Credit Facility"). To consummate the Acquisition, the Company
borrowed $200,000 under the Term Loan Facility and approximately $10,106 under
the Revolving Credit Facility. The Revolving Credit Facility enables the Company
to obtain revolving credit loans and to issue letters of credit for working
capital, acquisitions and general corporate purposes. A portion of the Revolving
Credit Facility is available for borrowings by the Company in the Eurocurrency
markets of British pounds sterling, German marks, French francs and certain
other currencies.
At the Company's option, loans under the Bank Credit Facility bear interest
(a) in the case of loans in U.S. dollars, at the highest of (x) 1/2 of 1% in
excess of the Federal Funds Effective Rate (as defined in the Bank Credit
Facility), (y) 1.0% in excess of a certificate of deposit rate and (z) the
bank's prime rate, plus the applicable margin (as defined in the Bank Credit
Facility), or (b) in the case of all loans, the relevant Eurocurrency Rate (as
defined in the Bank Credit Facility) as determined by the Lender, plus the
applicable margin. The applicable margin will vary based upon the Company's
operating results and will range between 1.25% and 2.25% for borrowings under
the Revolving Credit Facility and between 2.0% and 2.5% for borrowings under the
Term Loan Facility. The interest rate on borrowings under the Term Loan Facility
at October 3, 1998 is based on LIBOR plus an applicable
F-16
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(10) LONG-TERM DEBT (CONTINUED)
margin of 2.5% (8.04% at October 3, 1998). The Company will also pay a 0.375%
fee on the unused portion of the Bank Credit Facility. There were no borrowings
outstanding at October 3, 1998 under the revolving credit facility.
The Term Loan Facility has a term of eight years and must be repaid in
semi-annual installments in April and October of each year in an aggregate
amount of (i) $2,000 for the first six years, (ii) $88,000 during the seventh
year and (iii) $100,000 during the eighth year. The Revolving Credit Facility
has a term of seven years. Commencing with the fiscal year ended September 30,
1999, the Company will be required to make annual payments, in excess of the
schedule principal payments, on the Term Loan Facility of up to 75% of the
Company's "excess cash flow" as defined in the Bank Credit Facility. In
addition, the Bank Credit Facility requires mandatory prepayments upon the
occurrence of certain events including a change of control of the Company. At
October 3, 1998, the Company had outstanding letters of credit of $938 and
available borrowings of $124,062 under the Revolving Credit Facility.
The obligations of the Company under the Bank Credit Facility are guaranteed
by each of the Company's domestic subsidiaries (the "Guarantors"). The
obligations of the Company under the Bank Credit Facility are secured by a first
priority lien (subject to permitted encumbrances) on substantially all of the
Company's and each Guarantor's real, personal, and intellectual property and on
the capital stock of the Company and all of the capital stock of the Company's
domestic and certain of its foreign subsidiaries.
In addition, the Bank Credit Facility contains various covenants that
restrict the Company's subsidiaries from taking various actions and that require
the Company to achieve and maintain certain financial ratios.
SENIOR SUBORDINATED NOTES--The Senior Subordinated Notes bear interest at a
rate of 9 1/4% per annum payable semi-annually on May 1 and November 1 of each
year commencing November 1, 1998. The Senior Subordinated Notes are general
unsecured obligations of the Company and its co-issuer, Grove Capital, Inc., and
are guaranteed by substantially all of the Company's domestic subsidiaries. The
Senior Subordinated Notes are redeemable at the option of the Company, in whole
or in part, at any time on or after, May 1, 2003, at a declining redemption
price and mature on May 1, 2008.
In addition, at any time prior to May 1, 2001, the Company may redeem up to
35% of the originally issued aggregate principal amount of the Senior
Subordinated Notes at 109.25% of the principal amount thereof, plus accrued and
unpaid interest and liquidated damages, if any, with net proceeds of one or more
public offerings of the Company's equity (or that of Investors), provided at
least 65% of the principal amount of the originally issued Senior Subordinated
Notes remain outstanding. Upon the occurrence of a change of control, as defined
in the Indenture governing the Senior Subordinated Notes (the "Indenture"), each
holder of the Senior Subordinated Notes will have the right to require the
Company to repurchase such holder's notes at an offer price in cash equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest
and liquidated damages, if any, thereon to the date of purchase.
The Indenture contains certain covenants that limit, among other things, the
ability of the Company's subsidiaries to (i) pay dividends, redeem capital stock
or make certain other restricted payments, (ii) incur additional indebtedness or
issue certain preferred equity interests, (iii) merge into
F-17
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(10) LONG-TERM DEBT (CONTINUED)
or consolidate with certain other entities or sell all or substantially all of
its assets, (iv) create liens on assets and (v) enter into certain transactions
with affiliates or related persons.
The Company expects that cash flows from foreign operations will be required
to meet its domestic debt service requirements. Such cash flows are expected to
be generated from intercompany interest expense on loans the Company has made to
certain of its foreign subsidiaries to consummate the acquisition of Hanson's
crane and aerial work platform subsidiaries in the U.K., Germany and France and
for working capital requirements. The loans have been established with amounts
and interest rates to allow for repatriation without restriction or additional
tax burden. However, there is no assurance that the foreign subsidiaries will
generate the cash flow required to service the loans or that the laws in the
foreign jurisdictions will not change to limit repatriation or increase the tax
burden of repatriation.
SENIOR DISCOUNT DEBENTURES--The Senior Discount Debentures were issued
pursuant to an Indenture dated April 29, 1998 (the "Holdings Indenture") at a
discount from their principal amount. The Senior Discount Debentures are general
unsecured obligations of the Company and its co-issuer, Grove Holdings Capital,
Inc. The Senior Discount Debentures accrete interest at a rate of 11 5/8% per
annum, compounded semi-annually, to an aggregate principal amount of $88 million
at May 1, 2003. Thereafter, the Senior Discount Debentures will accrue cash
interest at a rate of 11 5/8% per annum, payable semi-annually on May 1 and
November 1 of each year, commencing on November 1, 2003. The Senior Discount
Debentures are redeemable at the option of Holdings, in whole or in part, at any
time after May 1, 2003, at a declining redemption price and mature on May 1,
2009.
In addition, at any time prior to May 1, 2001, the Company may redeem up to
35% of the originally issued aggregate principal amount of the Senior Discount
Debentures at 111.625% of the accreted value (as defined by the Holdings
Indenture) thereof plus liquidated damages (as defined by the Holdings
Indenture) thereon, if any, with the net proceeds of one or more public
offerings of the Company's or Investors' equity, provided that at least 65% of
the originally issued aggregate principal amount of the Senior Discount
Debentures remain outstanding thereafter.
Upon the occurrence of a change of control (as defined by the Holdings
Indenture), each holder of the Senior Discount Debentures will have the right to
require Holdings to repurchase such holders' notes at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and liquidated damages, if any, thereon to the date of purchase.
The Holdings Indenture contains certain covenants that limit, among other
things, the ability of the Company and its subsidiaries to (i) pay dividends,
redeem capital stock or make certain other restricted payments, (ii) incur
additional indebtedness or issue certain preferred equity interests, (iii) merge
into or consolidate with certain other entities or sell all or substantially all
of its assets, (iv) create liens on assets and (v) enter into certain
transactions with affiliates or related persons.
SENIOR DEBENTURES--The Senior Debentures were issued pursuant to an
Indenture dated April 29, 1998 (the "Investors Indenture"). The Senior
Debentures are general unsecured obligations of the Company and its co-issuer,
Grove Investors Capital, Inc. The Senior Debentures accrue interest at a rate of
14 1/2% per annum, payable quarterly on February 1, May 1, August 1 and November
1 of each year, commencing on August 1, 1998. Interest is payable, at the option
of the Company, in cash or by issuance of additional Senior Debentures. The
Senior Debentures are redeemable at the option of the
F-18
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(10) LONG-TERM DEBT (CONTINUED)
Company, in whole or in part, at any time after May 1, 2003, at a declining
redemption price and mature on May 1, 2010.
In addition, at any time prior to May 1, 2001, the Company may redeem all,
but not less than all the aggregate principal amount of the Senior Debentures
issued at a redemption price of 114.5% of the principal amount thereof, plus
accrued and unpaid interest and liquidated damages (as defined by the Investors
Indenture) thereon, if any, in each case determined as of the date of such
repurchase.
The Investors Indenture contains certain covenants that limit, among other
things, the ability of the Company and its subsidiaries to (i) pay dividends,
redeem capital stock or make certain other restricted payments, (ii) incur
additional indebtedness or issue certain preferred equity interest, (iii) merge
into or consolidate with certain other entities or sell all or substantially all
of its assets, (iv) create liens on assets and (v) enter into certain
transactions with affiliates or related persons.
The estimated fair value of the Company's long-term debt at October 3, 1998
was $456,198.
Aggregate annual scheduled maturities of long-term debt at October 3, 1998
are $2,000 during each of the next five fiscal years. In November 1998, the
Company made an optional prepayment of $5 million on the Term Loan Facility.
The Company's ability to meet cash payment obligations under the Senior
Discount Notes and Senior Debentures will be based upon the receipts of
distributions from the Company's operating subsidiaries. The Bank Credit
Facility and the indentures place significant restrictions on the amount of such
distributions. The Senior Discount Notes and the Senior Debentures require no
cash payments prior to November 2003 except in certain limited circumstances.
INTEREST EXPENSE--Interest income (expense), net consists of the following
for the years ended September 26, 1996, September 27, 1997, the seven months
ended April 28, 1998 and the five months ended October 3, 1998.
<TABLE>
<CAPTION>
PRESDECESSOR COMPANY
------------------------------- -----------
APRIL 28, OCTOBER 3,
1996 1997 1998 1998
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
Interest expense........................................ $ (716) $ (638) $ (263) $ (20,454)
Interest expense paid to Hanson......................... (2,610) (1,404) (2,174) --
Amortization of deferred financing costs................ -- -- -- (790)
Accretion of interest on senior discount notes.......... -- -- -- (2,550)
Interest income......................................... 535 2,085 3,485 2,215
--------- --------- --------- -----------
$ (2,791) $ 43 $ 1,048 $ (21,579)
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>
The Company paid interest of $7,503 for the five months ended October 3,
1998.
In July 1998, the Company entered into an interest rate agreement with a
commercial bank to collar the interest rate on approximately $100 million of the
Company's floating rate borrowings for the three years ended September 2001. The
contract does not require collateral. If the contract were terminated at October
3, 1998, the Company would have had a loss of approximately $1.9 million.
F-19
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(11) OTHER LIABILITIES
Other liabilities consist of the following as of September 27, 1997 and
October 3, 1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1997 1998
----------- -----------
<S> <C> <C>
Accrued liability for defined benefit pension plans................. $ 11,068 $ 29,278
Accrued liability for postretirement benefit plan................... 18,859 28,293
Other............................................................... 8,242 25,158
----------- -----------
$ 38,169 $ 82,729
----------- -----------
----------- -----------
</TABLE>
F-20
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(12) EMPLOYEE BENEFIT PLANS
The Company has several defined benefit pension plans covering substantially
all of its employees. Plans covering salaried employees provide pension benefits
that are based on the participant's final average salary and credited service.
Plans covering hourly employees provide benefits based on the participant's
career earnings and service with the Company. The Company's funding policy for
all plans is to make the minimum annual contributions required by applicable
regulations, plus such additional amounts as the Company may determine to be
appropriate from time to time.
The components of the net periodic pension costs for all U.S. defined
benefit plans for the fiscal years ended September 28, 1996 and September 27,
1997, for the seven months ended April 28, 1998 and for the five months ended
October 3, 1998 are summarized below:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
--------------------------------- -----------
APRIL 28, OCTOBER 3,
1996 1997 1998 1998
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Service cost.............................................. $ 1,787 $ 2,172 $ 1,542 $ 1,322
Interest cost............................................. 2,482 3,128 2,163 1,621
Actual return on assets................................... (1,895) (2,748) (1,898) (1,528)
Net amortization and deferral............................. 341 539 465 --
--------- --------- ----------- -----------
Net periodic pension costs................................ $ 2,715 $ 3,091 $ 2,272 $ 1,415
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
F-21
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(12) EMPLOYEE BENEFIT PLANS (CONTINUED)
The following tables set forth the U.S. plans' funded status at September
27, 1997 and October 3, 1998:
<TABLE>
<CAPTION>
PLANS WHOSE PLANS WHOSE
ASSETS ACCUMULATED
EXCEED BENEFITS
ACCUMULATED EXCEED
BENEFITS ASSETS
------------ --------------
<S> <C> <C>
As of September 27, 1997:
Actuarial present value of accumulated benefit obligation, including vested
benefits of $18,574 and $16,776, respectively................................... $ 18,859 $ 17,259
------------ --------------
------------ --------------
Projected benefit obligation for service rendered to date......................... $ (29,550) $ (17,259)
Plan assets at fair value, primarily marketable securities........................ 22,519 15,523
------------ --------------
Underfunded projected benefit obligation.......................................... (7,031) (1,736)
Unrecognized net loss............................................................. 933 2,520
Unrecognized prior service cost................................................... 3,128 4,312
Adjustment to recognize the required minimum pension liability.................... -- (6,832)
------------ --------------
Pension liability recognized in the balance sheets................................ $ (2,970) $ (1,736)
------------ --------------
------------ --------------
As of October 3, 1998:
Actuarial present value of accumulated benefit obligation, including vested
benefits of $46,812............................................................. $ -- $ 47,932
------------ --------------
------------ --------------
Projected benefit obligation for service rendered to date......................... $ -- $ (62,062)
Plan assets at fair value, primarily marketable securities........................ -- 44,641
------------ --------------
Underfunded projected benefit obligation.......................................... -- (17,421)
Unrecognized net loss............................................................. -- 4,159
Adjustment to recognize the required minimum pension liability.................... -- (2,051)
------------ --------------
Pension liability recognized in the balance sheets................................ $ -- $ (15,313)
------------ --------------
------------ --------------
</TABLE>
The components of the net periodic pension costs for all foreign defined
benefit plans for the years ended September 28, 1996 and September 27, 1997, for
the seven months ended April 28, 1998 and for the five months ended October 3,
1998 are summarized below:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
--------------------------------- -----------
APRIL 28, OCTOBER 3,
1996 1997 1998 1998
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Service cost.............................................. $ 1,804 $ 1,978 $ 1,169 $ 927
Interest cost............................................. 1,481 1,782 1,289 933
Actual return on assets................................... (2,176) (3,038) (904) (667)
Net amortization and deferral............................. 80 802 536 --
--------- --------- ----------- -----------
Net periodic pension costs................................ $ 1,189 $ 1,524 $ 2,090 $ 1,193
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
F-22
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(12) EMPLOYEE BENEFIT PLANS (CONTINUED)
The following table sets forth the foreign plans' unfunded status at
September 27, 1997 and October 3, 1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1997 1998
----------- ---------
<S> <C> <C>
Actuarial present value of accumulated benefit obligation, including
vested benefits of $22,792 and $38,637, respectively................. $ 23,449 $ 39,247
----------- ---------
----------- ---------
Projected benefit obligation for service rendered to date.............. $ (25,906) $ (38,128)
Plan assets at fair value, primarily marketable securities............. 19,911 23,886
----------- ---------
Underfunded projected benefit obligation............................... (5,995) (14,242)
Unrecognized net loss (gain)........................................... (367) 277
----------- ---------
Pension liability recognized in the balance sheets..................... $ (6,362) $ (13,965)
----------- ---------
----------- ---------
</TABLE>
Assumptions used in determining the actuarial present value of projected
pension obligations at September 27, 1997 and October 3, 1998 are as follows:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
-------------- --------------
<S> <C> <C>
Domestic Pension Plans:
Return on plan assets.................................... 9.00% 9.00%
Weighted average discount rate........................... 7.50% 6.50%
Rate of increase in future compensation level............ 4.25% 4.25%
Foreign Pension Plans:
Return on plan assets.................................... 9.00% N/A
Weighted average discount rate........................... 6.50% to 8.00% 6.00% to 6.50%
Rate of increase in future compensation level............ 6.00% 2.25% to 4.5%
</TABLE>
Assets of domestic and foreign defined benefit plans consist principally of
investments in equity securities, debt securities, and cash equivalents.
The Company also has several defined contribution plans covering
substantially all of its U.S. employees. Eligible employees may contribute a
portion of their base compensation to the plan and their contributions are
matched by the Company at rates specified in the plan documents. Contributions
by the Company for the years ended September 28, 1996 and September 27, 1997,
for the seven months ended April 28, 1998 and for the five months ended October
3, 1998 were approximately $1,797, $1,902, $1,169 and $835, respectively.
In addition to providing pension benefits, the Company provides certain
health care and prescription drug benefits to certain retirees. Substantially
all of the Company's domestic eligible employees may qualify for benefits if
they reach normal retirement age while working for the Company. The Company
funds benefits on a pay-as-you-go basis, while retirees pay monthly premiums.
These benefits are subject to deductibles, co-payment provisions and other
limitations.
F-23
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(12) EMPLOYEE BENEFIT PLANS (CONTINUED)
Net periodic postretirement benefit expense included the following
components as of September 28, 1996 and September 27, 1997, and the seven months
ended April 28, 1998 and the five months ended October 3, 1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
--------------------------------- -----------
APRIL 28, OCTOBER 3,
1996 1997 1998 1998
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Service expense........................................... $ 797 $ 833 $ 622 $ 511
Interest expense.......................................... 1,423 1,464 1,096 725
Net amortization and deferral............................. 550 458 74 --
--------- --------- ----------- -----------
Net periodic postretirement benefit cost.................. $ 2,770 $ 2,755 $ 1,792 $ 1,236
--------- --------- ----------- -----------
--------- --------- ----------- -----------
</TABLE>
The reconciliation of the accumulated postretirement benefit obligation to
the liability recognized in the consolidated balance sheet at September 27, 1997
and October 3, 1998 is as follows:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1997 1998
----------- -----------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.............................................................. $ 5,542 $ 5,178
Fully eligible active participants.................................... 5,214 5,474
Other active participants............................................. 14,503 17,715
----------- -----------
Total................................................................... 25,259 28,367
Unrecognized prior service benefit...................................... 3,407 --
Unrecognized net loss................................................... (9,807) (74)
----------- -----------
Net postretirement benefit liability recognized in the balance sheets... $ 18,859 $ 28,293
----------- -----------
----------- -----------
</TABLE>
The discount rate used in determining the accumulated postretirement benefit
obligation was 7.5% and 6.5% for 1997 and 1998, respectively. The assumed health
care cost trend rate used in measuring the accumulated postretirement benefit
obligation was 9.0% for 1997 and 1998, with subsequent annual decrements of 0.5%
to an ultimate trend rate of 5.5%. A one percentage point increase in the
assumed health care cost trend rate for each year would increase the accumulated
postretirement benefit obligation by approximately 13% as of October 3, 1998 and
the net postretirement benefit cost by approximately 15% for the five months
ended October 3, 1998.
(13) MANAGEMENT OPTION PLAN
In connection with the Acquisition, the Company established a management
option plan whereby the Investors' Management Committee can grant options to
purchase equity units of the Company to key employees of the Company at fair
market value. The options generally vest over a five-year period only upon the
achievement of certain earning targets. As of October 3, 1998, Grove had granted
options to employees to purchase 2,700 of its Class A units with an exercise
price of 1,000 dollars per unit which will expire in 2008. No amounts were
vested at October 3, 1998. The estimated weighted average fair value of options
granted during the five months ended October 3, 1998 was 275 dollars per unit
assuming an option life of six years, a risk free interest rate of 5.5% and no
dividend or volatility rates. Had the Company accounted for the options in
accordance with the provisions of FASB
F-24
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(13) MANAGEMENT OPTION PLAN (CONTINUED)
Statement No. 123 compensation expense with respect to options granted in the
five months ended October 3, 1998 would have been immaterial.
(14) INCOME TAXES
As a result of the Acquisition, a significant portion of the Company's
business is operated as a limited liability company organized under the laws of
Delaware. Accordingly, earnings of the Company's U.S. mobile hydraulic crane and
aerial work platform businesses, as well as earnings from its foreign
subsidiaries will not be directly subject to U.S. income taxes. Such taxable
income will be allocated to the Company's equity members and they will be
responsible for U.S. income taxes on such taxable income. The Company intends to
make distributions, in the form of dividends, to enable the equity members to
meet their tax obligations with respect to income allocated to them by the
Company.
The provision for income taxes following the Acquisition, will be limited to
foreign taxes with respect to earnings of the Company's foreign subsidiaries and
U.S. state and local taxes with respect to the earnings of the Company's
truck-mounted crane business.
For periods prior to the Acquisition, each of the Grove Companies filed
their own income tax returns or were part of a consolidated group return with
other Hanson entities. Income tax expense for such periods was determined as if
the Grove Companies were a stand alone entity. In connection with the
Acquisition, Hanson has indemnified the Company with respect to certain tax
obligations arising from activities occurring prior to the Acquisition.
Domestic and foreign income (loss) before income taxes were as follows for
the fiscal years ended September 28, 1996 and September 27, 1997, for the seven
months ended April 28, 1998 and for the five months ended October 3, 1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
------------------------------- -----------
APRIL 28, OCTOBER 3,
1996 1997 1998 1998
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
United States.......................................... $ 47,535 $ 66,721 $ 30,446 $ (13,054)
Other countries........................................ 101 1,748 (19,100) (12,273)
--------- --------- --------- -----------
$ 47,636 $ 68,469 $ 11,346 $ (25,327)
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>
F-25
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(14) INCOME TAXES (CONTINUED)
The provision for income taxes consisted of the following for the fiscal
years ended September 28, 1996 and September 27, 1997, for the seven months
ended April 28, 1998 and for the five months ended October 3, 1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
------------------------------- -----------
APRIL 28, OCTOBER 3,
1996 1997 1998 1998
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
Current:
United States........................................ $ 21,623 $ 23,979 $ 8,780 $ 2,958
Other countries...................................... 439 301 -- 130
--------- --------- --------- -----------
22,062 24,280 8,780 3,088
--------- --------- --------- -----------
Deferred:
United States........................................ 126 1,969 2,961 (1,551)
Other countries...................................... -- -- -- 2,800
--------- --------- --------- -----------
126 1,969 2,961 1,249
--------- --------- --------- -----------
$ 22,188 $ 26,249 $ 11,741 $ 4,337
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>
The company paid income taxes of $272 for the five months ended October 3,
1998.
Significant components of the Company's deferred tax liabilities and assets
are as follows as of September 27, 1997 and October 3, 1998:
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
1997 1998
----------- -----------
<S> <C> <C>
Allowance for doubtful accounts......................................... $ -- $ 106
Inventory obsolescence reserve.......................................... 1,881 100
Inventory capitalization................................................ -- 220
Tax deductible goodwill................................................. 5,074 --
Accrued general liability............................................... -- 1,847
Accrued product liability............................................... -- 1,105
Other accrued expenses.................................................. 12,221 1,290
Foreign net operating losses and AMT credits............................ 6,323 --
Other................................................................... 7,755 --
Intercompany basis differences.......................................... (7,557) --
Depreciation expense.................................................... 6,977 (2,240)
----------- -----------
Total deferred tax asset................................................ 32,674 2,428
Valuation allowance..................................................... 6,323 --
----------- -----------
Net deferred tax asset included in other assets......................... $ 26,351 $ 2,428
----------- -----------
----------- -----------
</TABLE>
Deferred taxes at October 3, 1998 relate to the Company's National Crane
Corporation subsidiary which is incorporated as a C-Corporation and the
Company's foreign subsidiaries.
At October 3, 1998 the Company's foreign subsidiaries have net operating
loss carryforwards of $7,300 which expire in various amounts through 2013. The
benefit from future utilization, if any, of such amounts will be credited to
goodwill as realized. In the five months ended October 3, 1998, the
F-26
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(14) INCOME TAXES (CONTINUED)
Company's German subsidiary utilized net operation losses of approximately
$4,600. The tax benefit of such utilization of $2,800 was credited to goodwill.
The reasons for the differences between applicable income taxes and the
amount computed by applying the statutory federal income tax rate of 35% to
income before taxes were as follows for the fiscal years ended September 28,
1996 and September 27, 1997:
<TABLE>
<CAPTION>
PREDECESOR
--------------------
<S> <C> <C>
1996 1997
--------- ---------
Applicable income taxes based on federal statutory tax rate................................. $ 16,673 $ 23,964
State taxes, net of federal tax benefit..................................................... 1,130 2,520
Goodwill amortization....................................................................... 2,955 333
Foreign operating loss benefits not previously recognized................................... (1,020) (1,409)
Foreign operating loss valuation allowances................................................. 2,182 1,405
Other....................................................................................... 268 (564)
--------- ---------
$ 22,188 $ 26,249
--------- ---------
--------- ---------
</TABLE>
The income tax rate reconciliation for the seven months ended April 28, 1998
was not presented since the information was deemed not meaningful. The income
tax provision for the seven months ended April 28, 1998 includes no benefit for
approximately $19,100 of losses incurred by the Company's foreign subsidiaries.
Income taxes for the five months ended October 3, 1998 relate principally to the
Company's subsidiary in Waverly, Nebraska, which is incorporated as a
C-corporation, and the Company's German subsidiary.
(15) RESTRUCTURING AND PLANT SHUTDOWN
In 1997 the Company recorded a restructuring charge of approximately $1,960
related to the gradual phase-out of crane production at its Sunderland, United
Kingdom location. All amounts have been expended as of October 3, 1998.
The Company plans to close its Sunderland UK manufacturing facility as the
result of recurring operating losses. Management believes closing the facility
will improve operating earnings as well as provide the opportunity for
additional cost reductions through product rationalization, reduced selling,
general and administrative expenses and reduced manufacturing costs. Management
has estimated total closure costs to be approximately $18.5 million, consisting
of approximately $11.5 million of employee severance and $7 million of plant
shut-down costs (asset disposal and plant clean-up costs), all of which are
expected to be expended in the next twelve months.
(16) LEASES
The Company and its subsidiaries lease office space, machinery and other
equipment under noncancelable operating leases with varying terms, some of which
contain renewal and/or purchase options.
F-27
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(16) LEASES (CONTINUED)
The following is a schedule of future minimum lease payments required under
operating leases that have initial or remaining noncancelable lease terms in
excess of one year:
<TABLE>
<S> <C>
1999............................................................... $ 5,466
2000............................................................... 4,034
2001............................................................... 764
2002............................................................... 173
2003............................................................... 58
Thereafter......................................................... 270
---------
$ 10,765
---------
---------
</TABLE>
Rental expense associated with operating leases was approximately $2,809,
$3,489, $2,496 and $1,795 for the years ended September 28, 1996 and September
27, 1997 and the seven months ended April 28, 1998 and the five months ended
October 3, 1998, respectively. It is expected that, in the normal course of
business, leases that expire will be renewed or replaced by leases on other
property and equipment.
(17) FOREIGN EXCHANGE RISK
Through its foreign currency hedging activities, the Company seeks to
minimize the risk that cash flows resulting from the sales of products
manufactured in a currency different from that of the selling company will be
affected by changes in exchange rates. Management responds to foreign exchange
movements through various means, such as pricing actions, changes in cost
structure, and changes in hedging strategies.
The Company may hedge its foreign currency transactions and firm sales
commitment exposures, based on management's judgment, through forward exchange
contracts. These forward exchange contracts are purchased from local banks. Some
of the contracts involve the exchange of two foreign currencies according to the
local needs of the companies.
The following table summarizes the contractual amounts of the Company's
forward exchange contracts as of September 27, 1997 and October 3, 1998,
including details by major currency as of October 3, 1998. Foreign currency
amounts were translated at the current rate as of the reporting date. The "sell"
amounts represent the U.S. dollar equivalent of commitments to sell foreign
currencies, and the "buy" amounts represent the U.S. dollar equivalent of
commitments to purchase foreign currencies.
<TABLE>
<CAPTION>
BUY SELL
--------- ----------
<S> <C> <C>
As of September 27, 1997............................................... $ 20,117 $ (20,393)
--------- ----------
--------- ----------
As of October 3, 1998:
United States Dollars................................................ $ 2,000 $ --
Australian Dollars................................................... -- (339)
Pounds Sterling...................................................... 244 (4,105)
--------- ----------
$ 2,244 $ (4,444)
--------- ----------
--------- ----------
</TABLE>
F-28
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(17) FOREIGN EXCHANGE RISK (CONTINUED)
The Company's credit exposure on its foreign currency derivatives was $259
and $192 as of September 27, 1997 and October 3, 1998, respectively. Gross
deferred realized gains and losses on firm commitments were not significant as
of September 27, 1997 and October 3, 1998. Substantially all of the amounts
deferred at October 3, 1998 are expected to be recognized in income during
fiscal year 1999, when the gains or losses on the underlying transactions will
also be recognized.
(18) OTHER COMMITMENTS AND CONTINGENCIES
The Company is involved in various lawsuits and administrative proceedings
arising in the ordinary course of business. These matters primarily involve
claims for damages arising out of the use of the Company's products as well as
employment matters and commercial disputes. Some of these lawsuits include
claims for punitive as well as compensatory damages. The Company is insured for
product liability and workers' compensation claims for amounts in excess of
established deductibles and accrues for the estimated liability up to the limits
of the deductibles. The Company accrues for all other claims and lawsuits on a
case-by-case basis. The Company's estimate of the undiscounted costs associated
with legal and environmental exposures is accrued if, in management's judgment,
the likelihood of a loss is probable. The Company's policy is to also accrue the
probable legal costs to be incurred in defending the Company against such
claims. The Company has followed this policy during each of the periods in the
three-year period ended October 3, 1998, with respect to all investigations,
claims and litigation. Insurance recoveries for environmental and certain
general liability claims are not recognized until realized.
In the opinion of management, while the ultimate results of lawsuits or
other proceedings against the Company cannot be predicted with certainty, the
amounts accrued for awards or assessments in connection with these matters are
adequate and, accordingly, management believes that the ultimate resolution of
these matters will not have a material effect on the Company. As of October 3,
1998, the Company had no known probable but inestimable exposures that could
have a material effect on the Company.
PRODUCT LIABILITY AND WORKERS' COMPENSATION--Hanson, on behalf of the
Company, purchased an insurance policy which effectively indemnifies the Company
against North American product liability and workers' compensation claims
arising prior to October 1, 1997 up to an aggregate loss limit of $85,000.
Losses in excess of that amount, if any, are the responsibility of the Company.
For product liability claims arising on or after October 1, 1997, the Company is
self-insured for losses up to $2,000 per occurrence, with a $15,000 annual
aggregate loss limit. For workers' compensation claims arising on or after such
date, the Company is self-insured for losses up to $250 per occurrence with a
$1,000 annual aggregate loss limit. Losses over the loss limits are covered by
umbrella insurance coverage up to $100,000. The Company accrues a reserve for
the estimated amount of claims which will be self-insured. The estimates are
provided by a third party actuary based upon historical trends. The reserve for
claims includes estimates of legal and administrative costs to be incurred.
ENVIRONMENTAL MATTERS--The Company is also involved in lawsuits and
administrative proceedings with respect to claims involving the discharge of
hazardous substances into the environment. Certain of these claims assert
damages and liability for remedial investigations and cleanup costs with respect
to sites at which the Company has been identified as a potentially responsible
party under federal and state environmental laws and regulations (off-site).
Other matters involve sites that the Company currently owns and operates or has
previously sold (on-site). For off-site claims, the Company makes an
F-29
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(18) OTHER COMMITMENTS AND CONTINGENCIES (CONTINUED)
assessment of the costs involved based on environmental studies, prior
experience at similar sites, and the experience of other named parties. The
Company also considers the ability of other parties to share costs, the
percentage of the Company's exposure relative to all other parties, and the
effects of inflation on these estimated costs. For on-site matters associated
with properties currently owned, the Company makes an assessment as to whether
an investigation and remediation effort is necessary and estimates other
potential costs associated with the site.
OTHER--The Company provides conditional loss guarantees to certain financing
companies on behalf of their customers. As of October 3, 1998, the Company had
outstanding guarantees of approximately $3,900. These guarantees mature at
various dates ranging from April, 1999 through August, 2002. The Company has not
and does not expect to incur losses as a result of these guarantees.
In addition, the Company provides guarantees of residual value to third
party financing companies in support of certain customers' financing
arrangements. These guarantees are only exercisable should the Company's
customer default on their financing agreements. The Company has not and does not
expect to incur losses under these guarantees. Exercises of these guarantees
have not been significant for the periods in the three years ended October 3,
1998. Aggregate residual value guarantees were approximately $81 million at
October 3, 1998.
(19) TRANSACTIONS WITH RELATED PARTIES
Prior to the Acquisition, the Company received certain services provided by
Hanson PLC and its affiliates, including cash management, tax reporting, and
risk management and was charged a management fee for such services. The
allocation of these management fees was based on percentage of total group sales
in 1996 and on total group operating profits in 1997. In the opinion of
management, these methods of allocation were reasonable.
The amount of predecessor capital included in the combined balance sheet
represents a net balance as the result of various transactions between the
Company and its parent, Hanson PLC. There were no terms of settlement associated
with the account balance and generally, there were no interest charges
associated with these balances. The balance is primarily the result of various
equity transactions, as well as the Company's participation in Hanson's central
cash management program, wherein all the Company's cash receipts were remitted
to Hanson and all cash disbursements are funded by Hanson. Other transactions
included in predecessor capital are management fees, taxes, insurance, employee
benefits, and miscellaneous other administrative expenses incurred by Hanson on
behalf of the Company.
Intercompany interest expense for the fiscal years ended September 28, 1996
and September 27, 1997 and for the seven months ended April 28, 1998 was $2,610,
$1,404, and $2,174, respectively. Substantially all of the interest expense
related to borrowings by one of the Company's subsidiaries from Hanson which are
classified as invested capital in the combined balance sheet. Such borrowings
averaged $24,540, $19,000, and $19,000 for the years ended September 28, 1996
and September 27, 1997 and for the seven months ended April 28, 1998.
In 1996, the Company had an arrangement with a Hanson PLC affiliated
company, whereby the affiliated company acted as a sales agent on behalf of the
Company. The Company recorded commission expense in the amount of $3,209 for the
fiscal year ended September 28, 1996.
F-30
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(19) TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
The Company has engaged a consulting group, controlled by one of Investors'
minority owners, to help the Company during the next four years develop and
achieve its business plan. For such services the consulting group is expected to
be paid $14 million plus out-of-pocket expenses. As of October 3, 1998, the
consulting group had been paid $2.7 million for services rendered. In addition,
if the Company achieves certain defined levels of performance in fiscal 1999,
2000, 2001 and 2002, the consulting group will be entitled to receive additional
ownership interests in the Company for each year the defined levels of
performance are achieved. The Company will recognize as expense the fair value
of each equity award when earned.
(20) BUSINESS SEGMENT AND GEOGRAPHIC AREAS
The Company markets to heavy industrial and construction industries,
primarily in the United States and Europe through the production and support of
mobile hydraulic cranes, aerial work platforms and truck-mounted cranes. For
financial reporting purposes, the Company considers the heavy industrial and
construction industries as one segment. Transfers between geographic areas
primarily represent intercompany export sales and are accounted for based on
established sales prices between the related companies. In computing income from
operations, no allocations of general corporate expenses have been made.
Identifiable assets are those assets identified with the operation of legal
entities domiciled within the geographic area. General corporate assets were not
material at September 27, 1997 and October 3, 1998.
Information relating to operations by geographic area is as follows as of
and for the fiscal years ended September 28, 1996, September 27, 1997, and the
seven months ended April 28, 1998 and the five months ended October 3, 1998:
<TABLE>
<CAPTION>
CORPORATE
UNITED AND
STATES EUROPE ELIMINATIONS CONSOLIDATED
---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
1996
Sales to unaffiliated customers............................... $ 562,331 $ 231,878 $ -- $ 794,209
Transfers between geographic areas............................ 37,685 83,330 (121,015) --
---------- ---------- ----------- ------------
Net sales..................................................... $ 600,016 $ 315,208 $(121,015) $ 794,209
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
Operating profit.............................................. $ 58,653 $ 72 $ (8,105) $ 50,620
---------- ---------- ----------- ------------
---------- ---------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
CORPORATE
UNITED OTHER AND
STATES EUROPE COUNTRIES ELIMINATIONS CONSOLIDATED
------------ ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
1997
Sales to unaffiliated customers................ $ 606,003 $ 248,532 $ 2,277 $ -- $ 856,812
Transfers between geographic areas............. 35,225 63,834 -- (99,059) --
------------ ---------- ----------- ------------- ------------
Net sales...................................... $ 641,228 $ 312,366 $ 2,277 $ (99,059) $ 856,812
------------ ---------- ----------- ------------- ------------
------------ ---------- ----------- ------------- ------------
Operating profit............................... $ 69,284 $ 670 $ (100) $ (1,963) $ 67,891
Identifiable assets............................ $ 648,578 $ 261,768 $ 3,548 $ (32,398) $ 881,496
------------ ---------- ----------- ------------- ------------
------------ ---------- ----------- ------------- ------------
APRIL 28, 1998
Sales to unaffiliated customers................ $ 339,151 $ 135,793 $ 1,256 $ -- $ 476,200
</TABLE>
F-31
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
NOTES TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS)
(CONTINUED)
(20) BUSINESS SEGMENT AND GEOGRAPHIC AREAS (CONTINUED)
<TABLE>
<CAPTION>
CORPORATE
UNITED OTHER AND
STATES EUROPE COUNTRIES ELIMINATIONS CONSOLIDATED
------------ ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Transfers between geographic areas............. 15,722 29,731 -- (45,453) --
------------ ---------- ----------- ------------- ------------
Net sales...................................... $ 354,873 $ 165,524 $ 1,256 $ (45,453) $ 476,200
------------ ---------- ----------- ------------- ------------
------------ ---------- ----------- ------------- ------------
Operating profit............................... $ 31,671 $ (11,505) $ (344) $ -- $ 19,822
------------ ---------- ----------- ------------- ------------
------------ ---------- ----------- ------------- ------------
OCTOBER 3, 1998
Sales to unaffiliated customers................ $ 290,696 $ 101,801 $ 1,282 $ -- $ 393,779
Transfers between geographic areas............. 17,901 21,741 -- (39,642) --
------------ ---------- ----------- ------------- ------------
Net sales...................................... $ 308,597 $ 123,542 $ 1,282 $ (39,642) $ 393,779
------------ ---------- ----------- ------------- ------------
------------ ---------- ----------- ------------- ------------
Operating profit............................... $ 6,602 $ (9,532) $ (264) $ -- $ (3,194)
Identifiable assets............................ $ 1,798,704 $ 298,266 $ 4,840 $ (1,186,567) $ 915,243
------------ ---------- ----------- ------------- ------------
------------ ---------- ----------- ------------- ------------
</TABLE>
Information with respect to Europe includes Africa and the Middle East. Net
sales to customers in Africa and the Middle East were less than 5% of the
consolidated net sales of the Company during each of the years in the three year
period ended October 3, 1998.
Net sales by the Company's U.S. operations to foreign customers were less
than 10% of the consolidated net sales of the Company during each of the periods
presented in the three year period ended October 3, 1998.
F-32
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
JANUARY 2, 1999
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................................... $ 21,155
Trade receivables, net.......................................................... 108,140
Notes receivable................................................................ 8,801
Inventories..................................................................... 211,348
Prepaid expenses and other current assets....................................... 6,807
---------
Total current assets.............................................................. 356,251
Property, plant and equipment, net................................................ 211,987
Goodwill, net..................................................................... 284,139
Other assets...................................................................... 22,343
---------
$ 874,720
---------
---------
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Current maturities of long-term debt............................................ $ 2,000
Short term borrowings........................................................... 13,542
Accounts payable................................................................ 68,822
Accrued expenses and other current liabilities.................................. 90,769
---------
Total current liabilities......................................................... 175,133
Deferred revenue.................................................................. 73,948
Long-term debt.................................................................... 511,916
Other liabilities................................................................. 87,252
---------
Total liabilities................................................................. 848,249
---------
Members' equity:
Invested capital................................................................ 75,000
Notes receivable from members................................................... (3,683)
Accumulated deficit............................................................. (47,419)
Accumulated other comprehensive income.......................................... 2,573
---------
Total members' equity............................................................. 26,471
---------
$ 874,720
---------
---------
</TABLE>
See accompanying notes to condensed combined and consolidated financial
statements
F-33
<PAGE>
GROVE INVESTORS LLC AND SUBSIDIARIES
CONDENSED COMBINED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED DECEMBER 27, 1997
AND CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED JANUARY 2, 1999
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR COMPANY
DECEMBER JANUARY
27, 2,
1997 1999
----------- ---------
<S> <C> <C>
Net sales............................................................. $ 204,958 $ 164,325
Cost of goods sold.................................................... 161,386 137,242
----------- ---------
Gross profit.......................................................... 43,572 27,083
Selling, engineering, general and administrative expenses............. 31,827 29,707
Amortization of goodwill.............................................. 2,260 1,823
Management fees paid to Hanson........................................ 162 --
----------- ---------
Income (loss) from operations......................................... 9,323 (4,447)
Interest income (expense), net........................................ 1,095 (12,334)
Other income (expense), net........................................... 35 (41)
----------- ---------
Income (loss) before income taxes..................................... 10,453 (16,822)
Income taxes.......................................................... 5,046 933
----------- ---------
Net income (loss)..................................................... 5,407 (17,755)
Change in foreign currency translation adjustment..................... 1,718 2,709
----------- ---------
Comprehensive income (loss)........................................... $ 7,125 $ (15,046)
----------- ---------
----------- ---------
</TABLE>
See accompanying notes to condensed combined and consolidated financial
statements.
F-34
<PAGE>
GROVE INVESORS LLC AND SUBSIDIARIES
CONDENSED COMBINED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 27, 1997
AND CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
FOR THE THREE MONTHS ENDED JANUARY 2, 1999
(UNAUDITED AND IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR
DECEMBER COMPANY
27, JANUARY 2,
1997 1999
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss).................................................. $ 5,407 $ (17,755)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization.................................... 4,694 5,192
Depreciation of equipment held for rent.......................... 2,658 4,324
Amortization of deferred financing costs......................... -- 652
Accretion of interest on senior discount notes................... -- 1,470
Accrued interest on senior debentures............................ -- 1,846
Gain (loss) on sales of property, plant and equipment............ 113 --
Deferred income tax expense...................................... 1,062 26
Changes in operating assets and liabilities:
Trade receivables, net......................................... (1,519) 20,485
Notes receivable............................................... 44,040 (2,914)
Inventories.................................................... 599 (5,124)
Accounts payable and accrued expenses.......................... 5,733 (22,909)
Other assets and liabilities, net.............................. 4,204 9,219
----------- -----------
Net cash provided by (used in) operating activities................ 66,991 (5,488)
----------- -----------
INVESTING ACTIVITIES
Capital expenditures............................................... (9,629) (950)
Investment in equipment held for rent.............................. (8,879) (9,958)
Cash received from Hanson PLC...................................... -- 10,500
----------- -----------
Net cash used in investing activities.............................. (18,508) (408)
----------- -----------
FINANCING ACTIVITIES
Net proceeds from short-term borrowings............................ 2,854 (1,485)
Principal payments on long-term debt............................... -- (6,000)
Advances to members................................................ -- (838)
Other financing activities......................................... (49,797) --
----------- -----------
Net cash used in financing activities.............................. (46,943) (8,323)
----------- -----------
Effect of exchange rate changes on cash............................ 800 (139)
----------- -----------
Net increase (decrease) in cash and cash equivalents............... 2,340 (14,358)
Cash and cash equivalents, beginning of period..................... 5,024 34,289
----------- -----------
Cash and cash equivalents, end of period........................... $ 7,364 $ 19,931
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to condensed combined and consolidated financial
statements.
F-35
<PAGE>
GROVE INVESOTRS LLC AND SUBSIDIARIES
NOTES TO CONDENSED COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED AND IN THOUSANDS)
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, these financial statements do not include
all the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, the
unaudited consolidated financial statements include all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation of
the financial position and results of operations.
On April 29, 1998, Grove Investors LLC ("Company"), through its wholly owned
subsidiaries Grove Holdings LLC ("Holdings") and Grove Worldwide LLC ("Grove"),
acquired (the "Acquisition") from Hanson PLC ("Hanson") and certain of its
subsidiaries substantially all of the assets of Hanson's U.S. mobile hydraulic
crane and aerial work platform operations, the capital stock of Hanson's U.S.
truck-mounted crane operation and the capital stock of Hanson's British, French,
German, and Australian crane and aerial work platform subsidiaries for an
aggregate purchase price of $583.0 million. The purchase price was subject to a
post closing adjustment for which Grove received $27.3 million from Hanson.
Grove is a wholly owned subsidiary Holdings. Holdings is a wholly owned
subsidiary of Investors. Grove is still in the process of finalizing it's
allocation of the purchase price. Such allocation will be completed by April 28,
1999.
Information prior to April 29, 1998 relates to the Company prior to the
Acquisition ("Predecessor"). Information subsequent to April 29, 1998 relates to
the Company following the Acquisition. Following the Acquisition, the Company
has a new basis of accounting and a different capital structure, and,
accordingly, the results for the Predecessor and for the Company are not
directly comparable.
Interim results for the three month period ended January 2, 1999 are not
necessarily indicative of the results that may be expected for a full fiscal
year. For further information, refer to the consolidated financial statements
and notes for the year ended October 3, 1998.
(2) INVENTORY
Inventories consist of the following as of January 2, 1999:
<TABLE>
<CAPTION>
1999
----------
<S> <C>
Raw materials.................................................................................... $ 58,635
Work in process.................................................................................. 76,249
Finished goods................................................................................... 76,464
----------
$ 211,348
----------
</TABLE>
Inventories are valued at the lower of cost or market, as determined
primarily under the first-in, first-out method.
(3) INCOME TAXES
Following the Acquisition, a significant portion of the Company's business
is operated as a Delaware limited liability company, whereby the limited
liability company is not itself subject to income tax. The taxable income of the
limited liability company in the United States will be allocated to the
F-36
<PAGE>
GROVE INVESOTRS LLC AND SUBSIDIARIES
NOTES TO CONDENSED COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED AND IN THOUSANDS)
(3) INCOME TAXES (CONTINUED)
equity members and such members will be responsible for income taxes on such
taxable income. The Company expects to make distributions in the form of
dividends to the members to enable them to meet their tax obligations with
respect to income allocated to them by the Company. Foreign and domestic taxes
payable on taxable income generated by the Company's foreign subsidiaries and
its truck-mounted crane business will continue to be the responsibility of the
Company.
The difference between the Company's reported tax provision for the three
months ended January 2, 1999 and the tax provision computed based on U.S.
statutory rates is primarily attributed to the Company's structure as a limited
liability company and losses generated in foreign operations for which a tax
benefit will not be recognized until realization is deemed to be more likely
than not.
(4) CLOSURE OF SUNDERLAND MANUFACTURING FACILITY
As the result of recurring operating losses, the Company closed its
Sunderland UK manufacturing facility on November 27, 1998. Management believes
closing the facility will eventually improve operating earnings as well as
provide the opportunity for additional cost reductions through product
rationalization, reduced selling, general and administrative expenses and
reduced manufacturing costs. Management has estimated total closure costs to be
approximately $18.5 million, consisting of approximately $11.5 million of
employee severance and $7.0 million of plant shut-down costs (asset disposal and
plant clean-up costs), all of which are expected to be expended in the next
twelve months. During the fiscal 1999 three months (as defined), the Company
paid approximately $7.4 million in employee severance costs related to the
closure of its Sunderland, U.K. manufacturing facility.
(5) ADOPTION OF NEW ACCOUNTING STANDARDS
On October 4, 1998, the Company adopted SFAS No. 130, REPORTING
COMPREHENSIVE INCOME. SFAS No. 130 establishes standards for reporting and
presentation of comprehensive income and its components in a full set of
financial statements. Comprehensive income consists of net income, foreign
currency translation adjustments, and changes in the minimum pension liability
and is presented in the condensed consolidated statement of operations and
comprehensive income. This Statement requires only additional disclosures in the
condensed consolidated financial statements; it does not affect the Company's
financial position or results of operations. Prior year financial statements
have been reclassified to conform to the presentation of SFAS No. 130.
F-37
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY GROVE INVESTORS OR GROVE INVESTORS CAPITAL. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF GROVE INVESTORS OR GROVE INVESTORS CAPITAL SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY, THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
UNTIL , 1999 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE EXCHANGE DEBENTURES, 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 ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENT.
$56,652,000
GROVE INVESTORS LLC
GROVE INVESTORS CAPITAL, INC.
OFFER TO EXCHANGE $56,652,000 OF OUR 14 1/2% SENIOR DEBENTURES DUE 2010
---------------------
PROSPECTUS
---------------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 18-108 of the Delaware Limited Liability Company Act, as amended
(the "Act"), grants a Delaware limited liability company the power, subject to
such standards and restrictions, if any, as are set forth in its limited
liability company agreement to indemnify and hold harmless any member or manager
or other person from and against any and all claims and demands whatsoever.
Section 8.1 of the Grove Investors LLC Second Amended and Restated Limited
Liability Company Agreement (the "Operating Agreement") provides that a member
shall not be personally liable for any debt, obligation or other liability of
Grove Investors, whether arising in contract, tort or otherwise, except that a
member shall remain personally liable for the payment of any capital
contributions required by Article III regarding distributions to the members,
and as otherwise provided in the Operating Agreement, the Act and any other
applicable law. Section 8.2 of the Operating Agreement provides that any
affiliate of a member, and any officer, director, shareholder, partner, member,
employee or agent of a member or any affiliate thereof, and any officer,
employee or expressly authorized agent of Grove Investors or its affiliates is a
"Covered Person." No Covered Person shall be liable to Grove Investors or any
other Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Covered Person in good faith on behalf
of Grove Investors and in a manner reasonably believed to be within the scope of
authority conferred on such Covered Person by the Operating Agreement, except
that a Covered Person shall be liable for any such loss, damage or claim
incurred by reason of such Covered Person's gross negligence or willful
misconduct. A Covered Person shall be fully protected in relying in good faith
upon the records of Grove Investors and upon such information, opinions, reports
or statements presented to Grove Investors by any person as to matters the
Covered Person reasonably believes are within such other person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of Grove Investors, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which distributions to s might properly be paid.
Section 145 of the Delaware General Corporation Law (the "DGCL") grants a
Delaware corporation the power to indemnify any director, officer, employee or
agent against reasonable expenses (including attorneys' fees) incurred by him in
connection with any proceeding brought by or on behalf of the corporation and
against judgments, fines, settlements and reasonable expenses (including
attorneys' fees) incurred by him in connection with any other proceeding, if (a)
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 (b) in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Except as ordered by a court, however, no indemnification is to be
made in connection with any proceeding brought by or in the right of the
corporation where the person involved is adjudged to be liable to the
corporation.
Section 8 of the Grove Investors Capital, Inc. certificate of incorporation
and Article 8 of Grove Investors Capital's by-laws provide that Grove Investors
Capital shall to the extent not prohibited by law, indemnify any person who is
or was made, or threatened to be made, a party to any threatened, pending or
completed action, suit or proceeding (a "Proceeding"), whether civil, criminal,
administrative or investigative, including, without limitation, an action by or
in the right of Grove Investors Capital to procure a judgment in its favor, by
reason of the fact that such person, or a person of whom such person is the
legal representative, is or was a director or officer of Grove Investors
Capital, or, at the request of Grove Investors Capital, is or was serving as a
director or officer of any other corporation or in a capacity with comparable
authority or responsibilities for any partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Other Entity"), against
judgments,
II-1
<PAGE>
fines, penalties, excise taxes, amounts paid in settlement and costs, charges
and expenses (including attorneys' fees, disbursements and other charges).
Persons who are not directors or officers of Grove Investors Capital (or
otherwise entitled to indemnification pursuant to the preceding sentence) may be
similarly indemnified in respect of service to Grove Investors Capital or to an
Other Entity at the request of Grove Investors Capital to the extent the board
of directors of Grove Investors Capital at any time specifies that such persons
are entitled to the benefits of this Article 8.
Section 102(b)(7) of the DGCL permits the elimination or limitation of
directors' personal liability to the corporation or its stockholders for
monetary damages for breach of fiduciary duties as a director except for (1) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(2) acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of the law, (3) breaches under section 174 of the DGCL,
which relate to unlawful payments of dividends or unlawful stock repurchase or
redemptions, and (4) any transaction from which the director derived an improper
personal benefit.
Section 7 of Grove Investors Capital's certificate of incorporation limits
the personal liability of directors of Grove Worldwide to the fullest extent
permitted by paragraph (7) of subsection (b) of section 102 of the DGCL.
The Directors' and Officers' Liability and Reimbursement Insurance Policy
covering Grove Investors and Grove Investors Capital is designed to reimburse
Grove Investors and Grove Investors Capital for any payments made by them
pursuant to the foregoing indemnification. Such policy has aggregate coverage of
$10.0 million.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Grove Investors
and Grove Investors Capital pursuant to the foregoing provisions, Grove
Investors and Grove Investors Capital have been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
Pursuant to Section 8 of the registration rights agreement dated April 29,
1998 between the Grove Investors, Grove Investors Capital and Donaldson, Lufkin
& Jenrette, the holders of the debentures have agreed to indemnify Grove
Investors and Grove Investors Capital and their directors and controlling
persons against any losses, claims, damages, liabilities or expenses that may
arise out of an untrue statement or alleged untrue statement of or omission to
state a material fact, contained in the registration statement or prospectus,
but only with reference to information relating to such holder furnished in
writing to Grove Investors and Grove Investors Capital.
The Purchase Agreement dated as of April 29, 1998, by and among Grove
Investors, Grove Investors Capital and Donaldson, Lufkin & Jenrette, contains
provisions by which Donaldson, Lufkin & Jenrette agrees to indemnify Grove
Investors and Grove Investors Capital and their respective directors, officers
and controlling persons against any losses, claims, damages, liabilities or
expenses that may arise out of an untrue statement or alleged untrue statement
of or omission to state a material fact, contained in the registration statement
or prospectus, but only with reference to information relating to such holder
furnished in writing to Grove Investors and Grove Investors Capital.
Section 10.07 of the indenture dated as of April 29, 1998, by and among
Grove Investors, Grove Investors Capital and the United States Trust Company of
New York provides that the holders of the debentures have agreed to waive all
liability for any obligations incurred by Grove Investors and Grove Investors
Capital under the debentures or the indenture or for any claim based on, in
respect of, or by reason of such obligations or their creation, against any
incorporator, member, director, officer, employee or stockholder, as such, of
Grove Investors and Grove Investors Capital, and have agreed to the release of
such persons from any such liability.
II-2
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 The Purchase Agreement dated as of April 29, 1998, by and among Grove Investors and Grove Investors
Capital and Donaldson, Lufkin & Jenrette Securities Corporation.
3.1 Second Amended and Restated Limited Liability Company Agreement of Grove Investors.
3.2 Amendment No. 1, Dated as of October 27, 1998, to the Second Amended and Restated Limited Liability
Company Agreement of Grove Investors.
3.3 Amendment No. 2, Dated as of March 1, 1999, to the Second Amended and Restated Limited Liability
Company Agreement of Grove Investors.
3.4 Amendment No. 3, Dated as of April 7, 1999, to the Second Amended and Restated Limited Liability
Company Agreement of Grove Investors.
3.5 Articles of Incorporation of Grove Investors Capital.
3.6 By-laws of Grove Investors Capital.
4.1 The Indenture dated as of April 29, 1998, by and among Grove Investors and Grove Investors Capital
and the United States Trust Company of New York (the "Indenture").
4.2 Form of 14 1/2% outstanding debentures due 2010 (see Exhibit A of the Indenture).
4.3 Form of new 14 1/2% outstanding debentures due 2010.
4.4 The Registration Rights Agreement dated as of April 29, 1998, by and among Grove Investors and Grove
Investors Capital and Donaldson, Lufkin & Jenrette Securities Corporation.
4.5 The Credit Agreement dated April 29, 1998, by and among Grove Worldwide LLC, Grove Capital, Inc. and
Chase Bank of Texas, National Association, as administrative agent, Donaldson, Lufkin & Jenrette
Securities Corporation, as documentation agent, and BankBoston, N.A., as syndication agent.
5.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to validity of the debentures.
8.1 Opinion of Paul, Weiss, Rifkind, Wharton & Garrison as to federal income tax matters.
10.1 Stock and Asset Purchase Agreement, dated March 10, 1998 (the "Acquisition Agreement"), by and among
Grove Worldwide LLC and Hanson Funding (G) Limited, Deutsche Grove Corporation, Hanson America Grove
Holdings (4) Ltd., Grove France SA, Kidde Industries, Inc. and Hanson Finance PLC (collectively, the
"Sellers").
10.2 Amendment to the Acquisition Agreement, dated April 29, 1998, by and among the Grove Worldwide LLC
and the Sellers.
10.3 George Group Consulting Agreement dated as of April 29, 1998 by and between Grove Worldwide LLC and
George Group Inc.
10.4 Employment Agreement dated as of March 5, 1998 by and between Grove Worldwide LLC and Salvatore J.
Bonanno.
10.5 Change of Control Agreement dated July 24, 1997 by and between Grove Worldwide LLC and James A.
Kolinski.
10.6 Change of Control Agreement dated July 24, 1997 by and between Grove Worldwide LLC and Joseph A.
Shull.
10.7 Change of Control Agreement dated July 24, 1997 by and between Grove Worldwide LLC and Robert Stift.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.8 Change of Control Agreement dated July 24, 1997 by and between Grove Worldwide LLC and Keith R.
Simmons.
10.9 Change of Control Agreement dated July 24, 1997 by and between Grove Worldwide LLC and Theodore J.
Urbanek.
10.10 Change of Control Agreement dated July 24, 1997 by and between Grove Worldwide LLC and G. Fred
Heidinger.
10.11 Grove Investors LLC Management Option Plan.
10.12 Grove Worldwide LLC Short-Term Incentive Plan.
10.13 Guarantee and Collateral Agreement by Grove Holdings LLC, Grove Worldwide LLC, Grove Capital, Inc.
and certain of their subsidiaries in favor of Chase Bank of Texas, National Association, as
administrative agent.
10.14 Software License and Support Agreement, dated June 29, 1996, between Baan U.S.A. Inc. and Grove North
America, Division of Kidde Industries, Inc., and amended by Addendum No. One, dated June 29, 1996.
10.15 Professional Services Agreement, dated June 26, 1996, between Baan U.S.A. Inc. and Grove North
America, Division of Kidde Industries, Inc., and amended by Addendum No. One, dated June 29, 1996.
10.16 Consent Letter, dated April 27, 1998 from Grove to Baan U.S.A. Inc.
10.17 Form of Grove Investors LLC Option Agreement.
10.18 First Amendment, dated June 23, 1998, to Employment Agreement of Salvatore J. Bonanno.
10.19 Promissory Note dated June 27, 1998 by and between Grove Worldwide LLC and Salvatore J. Bonanno.
10.20 Promissory Note dated June 27, 1998 by and between Grove Worldwide LLC and Salvatore J. Bonanno.
10.21 Promissory Note dated June 27, 1998 by and between Grove Worldwide LLC and Jeffrey D. Bust.
10.22 Promissory Note dated June 27, 1998 by and between Grove Worldwide LLC and James A. Kolinski.
10.23 Promissory Note dated June 27, 1998 by and between Grove Worldwide LLC and John Wheeler.
10.24 Promissory Note dated October 27, 1998 by and between Grove Worldwide LLC and Stephen L. Cripe.
10.25 Promissory Note dated October 27, 1998 by and between Grove Worldwide LLC and Stephen L. Cripe.
10.26 Promissory Note dated October 27, 1998 by and between Grove Worldwide LLC and Donald Mallo.
10.27 Promissory Note dated October 27, 1998 by and between Grove Worldwide LLC and Donald Mallo.
10.28 Promissory Note dated March 1, 1999 by and between Grove Worldwide LLC and Donald Manvel.
12.1 Statement of Computation of Ratios of Earnings to Fixed Charges.
21.1 Subsidiaries of Grove Investors.
23.1 Consent of Ernst & Young LLP.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
23.2 Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in the opinion filed as Exhibit 5.1 of
this Registration Statement).
23.3 Consent of KPMG LLP.
24.1 Powers of Attorney (contained on signature pages).
25.1 Form T-1 Statement of Eligibility of the United States Trust Company of New York to act as trustee
under the Indenture.
27.1 Financial Data Schedule
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Guidelines for Certification of Taxpayer Identification Number of Substitute Form W-9
99.4 Form of Securities Dealers, Commercial Banks, Trust Companies and Other Nominees Letter
99.5 Form of Client Letter.
</TABLE>
(B) FINANCIAL STATEMENT SCHEDULES
I Condensed Financial Information
II Valuation and Qualifying Accounts
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officers 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 registrants 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 Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement;
(A) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(B) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
II-5
<PAGE>
(C) To include any material information with respect to the not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act, 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;
(3) To remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering;
(4). That before 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 Issuers undertake that such reoffering prospectus
will contain the 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;
(5) That every prospectus (1) that is filed pursuant to paragraph (4)
immediately preceding, or (2) 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 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;
(6) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 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 equally prompt means. This includes information
contained in documents filed after the effective date of this Registration
Statement through the date of responding to the request; and
(7) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Grove Investors LLC has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on April 27, 1999.
<TABLE>
<S> <C> <C>
GROVE INVESTORS LLC
By: /s/ SALVATORE J. BONANNO
-----------------------------------------
Salvatore J. Bonanno
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Salvatore
J. Bonanno and Keith R. Simmons, or any one of them, with full power to act
without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
Registration Statement and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in- fact and agents, or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
II-7
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons on behalf
of the registrant and in the capacities indicated, on April 27, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------------------ ------------------------------------------------------
<C> <S>
/s/ SALVATORE J. BONANNO
------------------------------------------- Chairman and Chief Executive Officer and Member
Salvatore J. Bonanno (Principal Executive Officer)
/s/ STEPHEN L. CRIPE
------------------------------------------- Chief Financial Officer (Principal Financial and
Stephen L. Cripe Accounting Officer)
/s/ J TAYLOR CRANDALL
------------------------------------------- Member
J Taylor Crandall
/s/ MICHAEL L. GEORGE
------------------------------------------- Member
Michael L. George
/s/ GERALD GRINSTEIN
------------------------------------------- Member
Gerald Grinstein
/s/ STEVEN B. GRUBER
------------------------------------------- Member
Steven B. Gruber
/s/ ROBERT B. HENSKE
------------------------------------------- Member
Robert B. Henske
/s/ GERARD E. HOLTHAUS
------------------------------------------- Member
Gerard E. Holthaus
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Grove Investors Capital, Inc. has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on April 27, 1999.
GROVE INVESTORS CAPITAL, INC.
By /s/ SALVATORE J. BONANNO
-----------------------------------------
Salvatore J. Bonanno
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Salvatore
J. Bonanno and Keith R. Simmons, or any one of them, with full power to act
without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
Registration Statement and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in- fact and agents, or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
II-9
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons on behalf
of the registrant and in the capacities indicated, on April 27, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
/s/ SALVATORE J. BONANNO Chairman and Chief Executive Officer and Member
------------------------------------------- (Principal Executive Officer)
Salvatore J. Bonanno
/s/ STEPHEN L. CRIPE Chief Financial Officer (Principal Financial and
------------------------------------------- Accounting Officer)
Stephen L. Cripe
/s/ ROBERT HENSKE Director
-------------------------------------------
Robert Henske
/s/ SALVATORE J. BONANNO Director
-------------------------------------------
Salvatore J. Bonanno
/s/ ANTHONY P. SCOTTO Director
-------------------------------------------
Anthony P. Scotto
</TABLE>
II-10
<PAGE>
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
GROVE INVESTORS LLC
CONDENSED BALANCE SHEET
OCTOBER 3, 1998
<TABLE>
<S> <C>
ASSETS
Investment in subsidiaries......................................................... $ 93,392
Other assets....................................................................... 3,725
---------
$ 97,117
---------
---------
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accrued expenses and other current liabilities................................... $ 1,260
---------
Long-term debt..................................................................... 49,130
Due to subsidiaries................................................................ 3,262
---------
Total liabilities.................................................................. 53,652
---------
Members' equity:
Invested capital................................................................. 75,000
Notes receivable from members.................................................... (1,871)
Accumulated deficit.............................................................. (29,664)
---------
Total members' equity.............................................................. 43,465
---------
$ 97,117
---------
---------
</TABLE>
S-1
<PAGE>
GROVE INVESTORS LLC
CONDENSED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE FIVE MONTHS ENDED OCTOBER 3, 1998
<TABLE>
<S> <C>
Selling, engineering, general and administrative expenses........................ $ 20
Interest expense................................................................. (3,044)
Net loss of subsidiaries......................................................... (26,600)
---------
Net loss and comprehensive loss.................................................. $ (29,664)
---------
---------
</TABLE>
S-2
<PAGE>
GROVE INVESTORS LLC
CONDENSED STATEMENT OF CASH FLOWS
FOR THE FIVE MONTHS ENDED OCTOBER 3, 1998
<TABLE>
<S> <C>
Cash flow from operating activities:
Net loss....................................................................... $ (29,664)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization................................................ 19
Amortization of deferred financing costs..................................... 94
Accrued interest on Senior Debentures........................................ 1,755
Net loss of subsidiaries..................................................... 26,600
Changes in operating assets and liabilities:
Accounts payable and accrued expenses...................................... 3,624
---------
Net cash provided by operating activities........................................ 2,428
---------
Cash flows from investing activities:
Investment in subsidiaries..................................................... (120,000)
Net cash used in investing activities............................................ (120,000)
---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt....................................... 47,375
Equity investment from members................................................. 75,000
Loans to stockholders.......................................................... (1,878)
Deferred financing costs....................................................... (2,925)
Net cash provided by financing activities........................................ 117,572
---------
Net change in cash and cash equivalents.......................................... --
Cash and cash equivalents at beginning of period................................. --
---------
Cash and cash equivalents at end of period....................................... $ --
---------
---------
</TABLE>
S-3
<PAGE>
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
------------------------------------
BALANCE AT CHARGED TO
BEGINNING COSTS AND CHARGED TO OTHER BALANCE AT
OF YEAR EXPENSES ACCOUNTS(S) DEDUCTIONS (B) END OF YEAR
----------- --------------- ------------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts:
(in thousands)
Year ended September 28, 1996............ $ 1,891 688 (14) 12 $ 2,553
Year ended September 27, 1997............ $ 2,553 538 (114) 260 $ 2,717
Seven months ended April 28, 1998........ $ 2,717 880 12 146 $ 3,463
Five months ended October 3, 1998........ $ 3,463 290 121 799 $ 3,075
</TABLE>
- ------------------------
(a) Impact of exchange rates
(b)Write-offs
S-4
<PAGE>
Execution Copy
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GROVE INVESTORS LLC
GROVE INVESTORS CAPITAL, INC.
$47,375,000 OF
14 1/2% SENIOR DEBENTURES DUE 2010
PURCHASE AGREEMENT
APRIL 23, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
GROVE INVESTORS LLC
GROVE INVESTORS CAPITAL, INC.
$47,375,000
14 1/2% Senior Debentures due 2010
PURCHASE AGREEMENT
April 23, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Grove Investors LLC., a Delaware limited liability company
("INVESTORS") and Grove Investors Capital, Inc., a Delaware corporation
("GROVE INVESTORS CAPITAL" and, together with Investors, the "ISSUERS"),
propose to issue and sell to Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") the "INITIAL PURCHASER") an aggregate of $47,375,000 in
principal amount of their 14 1/2% Senior Debentures due 2010 (the "Senior
Debentures"), subject to the terms and conditions set forth herein. The
Senior Debentures are to be issued pursuant to the provisions of an indenture
(the "INDENTURE"), to be dated as of the Closing Date (as defined below),
among the Issuers and United States Trust Company of New York, as trustee
(the "TRUSTEE"). The Senior Debentures and the New Senior Debentures (as
defined below) issuable in exchange therefor are collectively referred to
herein as the "DEBENTURES". Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Indenture.
The gross proceeds from the sale to the Initial Purchaser of
the Senior Debentures, together with borrowings by Grove Worldwide LLC, a
Delaware limited liability company (the "COMPANY") under the New Credit
Facility, proceeds from the Company's issuance of the 9 1/4% Senior
Subordinated Notes due 2008 (the "SENIOR SUBORDINATED NOTES") and proceeds
from the issuance of the 11 5/8% Senior Discount Debentures due 2009 (the
"SENIOR DISCOUNT DEBENTURES") by Grove Holdings LLC, a Delaware limited
liability company ("GROVE HOLDINGS") and Grove Holdings Capital Inc., a
Delaware corporation ("GROVE HOLDINGS CAPITAL"), will be used by the Company:
(i) to fund the cash purchase price payable in connection with the
acquisition (the "ACQUISITION") by the Company, through certain of its
subsidiaries, of the mobile hydraulic crane, aerial work platform and truck
mounted crane businesses of Hanson Funding (G) PLC and
<PAGE>
certain of its subsidiaries, pursuant to an agreement (the "ACQUISITION
AGREEMENT") and (ii) to pay fees and expenses in connection with the
transactions.
1. OFFERING MEMORANDUM. The Senior Debentures will be
offered and sold to the Initial Purchaser pursuant to one or more exemptions
from the registration requirements under the Securities Act of 1933, as
amended (the "SECURITIES ACT"). The Issuers have prepared an offering
memorandum, dated April 23, 1998 (the "OFFERING MEMORANDUM"), relating to the
Senior Debentures.
Upon original issuance thereof, and until such time as the same is
no longer required pursuant to the Indenture, the Senior Debentures (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED
THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) IN THE UNITED STATES 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, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT,
(d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1),
(2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE WITH A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH
CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF
COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT OR (e) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
2
<PAGE>
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE ISSUERS SO REQUEST), (2) TO THE ISSUERS OR (3) 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 AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Issuers agree to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees, to
purchase from the Issuers, $47,375,000 in aggregate principal amount of
Senior Debentures at a purchase price equal to 100% of the principal amount
thereof (the "PURCHASE PRICE").
3. TERMS OF OFFERING. The Initial Purchaser has advised the
Issuers that the Initial Purchaser will make offers (the "EXEMPT RESALES") of
the Senior Debentures purchased hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely to (i) persons whom
the Initial Purchaser reasonably believes to be "qualified institutional
buyers" as defined in Rule 144A under the Securities Act ("QIBS") and (ii) to
persons permitted to purchase the Senior Debentures in offshore transactions
in reliance upon Regulation S under the Securities Act (each, a "REGULATION S
PURCHASER") (such persons specified in clauses (i) and (ii) being referred to
herein as the "ELIGIBLE PURCHASERS"). The Initial Purchaser will offer the
Senior Debentures to Eligible Purchasers in accordance with the terms set
forth in the Offering Memorandum initially at a price equal to 100.000% of
the principal amount thereof. Such price may be changed at any time without
notice.
Holders (including subsequent transferees) of the Senior Debentures
will have the registration rights set forth in the registration rights
agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be executed on and dated
the Closing Date, in substantially the form of Exhibit A hereto, for so long
as such Senior Debentures constitute "Transfer Restricted Securities" (as
defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, the Issuers will agree to file with the Securities and
Exchange Commission (the "COMMISSION") under the circumstances set forth
therein, (i) a registration statement under the Securities Act (the "EXCHANGE
OFFER REGISTRATION STATEMENT") relating to the Issuers' 14 1/2% new Senior
Debentures due 2010 (the "NEW SENIOR DEBENTURES"), identical in all material
respects to the Senior Debentures (except that the New Senior Debentures
shall have been registered pursuant to such Exchange Offer Registration
Statement), to be offered in exchange for the Senior Debentures (such offer
to exchange being referred to as the "EXCHANGE OFFER") and (ii) a shelf
registration statement pursuant to Rule 415 under the Securities Act (the
"SHELF REGISTRATION STATEMENT" and,
3
<PAGE>
together with the Exchange Offer Registration Statement, the "REGISTRATION
STATEMENTS") relating to the resale by certain holders of the Senior
Debentures, and to use their best efforts to cause such Registration
Statements to be declared and remain effective and usable for the periods
specified in the Registration Rights Agreement and to consummate the Exchange
Offer. This Agreement, the Indenture, the Debentures and the Registration
Rights Agreement are hereinafter sometimes referred to collectively as the
"OPERATIVE DOCUMENTS."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the
Senior Debentures shall be made at the offices of Paul, Weiss, Rifkind,
Wharton & Garrison, 1285 Avenue of the Americas, New York, New York 10019, or
such other location as may be mutually acceptable. Such delivery and payment
shall be made at 9:00 a.m. New York City time, on April 29, 1998 or at such
other time as shall be agreed upon in writing by the Initial Purchaser and
the Issuers. The time and date of such delivery and payment are herein
called the "Closing Date."
(b) One or more of the Senior Debentures in definitive global
form, registered in the name of Cede & Co., as nominee of the Depository
Trust Company ("DTC"), having an aggregate principal amount corresponding to
the aggregate principal amount of the Senior Debentures (collectively, the
"GLOBAL DEBENTURE"), shall be delivered by the Issuers to the Initial
Purchaser (or as the Initial Purchaser directs) in each case with any
transfer taxes thereon duly paid by the Issuers against payment by the
Initial Purchaser of the Purchase Price thereof by wire transfer in federal
(same day) funds to an account or accounts designated by the Issuers or such
other manner of payment as may be designated by the Issuers and agreed to by
the Initial Purchaser. The Global Debenture shall be made available to the
Initial Purchaser for inspection not later than 9:30 a.m., New York City
time, on the business day immediately preceding the Closing Date.
5. AGREEMENTS OF THE ISSUERS. As of the date hereof, the Issuers
hereby agree with the Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly (and, if
requested by the Initial Purchaser, confirm such advice in writing) of (i)
the issuance by any state securities commission of any order suspending the
qualification or exemption from qualification of any Senior Debentures for
offering or sale in any jurisdiction designated by the Initial Purchaser
pursuant to Section 5(e) hereof, or the initiation of any proceeding by any
state securities commission or any other federal or state regulatory
authority for such purpose and (ii) the happening of any event during the
period referred to in Section 5(c) below that makes any statement of a
material fact made in the Offering Memorandum untrue or that requires any
additions to or changes in the Offering Memorandum in order to make the
statements therein not misleading. The Issuers shall use their best efforts
to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Senior Debentures under any state
4
<PAGE>
securities or Blue Sky laws and, if at any time any state securities
commission or other federal or state regulatory authority shall issue an
order suspending the qualification or exemption of any Senior Debentures
under any state securities or Blue Sky laws, the Issuers shall use their best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) To furnish the Initial Purchaser and those persons
identified by the Initial Purchaser to the Issuers as many copies of the
Offering Memorandum, and any amendments or supplements thereto, as the
Initial Purchaser may reasonably request for the time period specified in
Section 5(c). Subject to the Initial Purchaser's compliance with its
representations and warranties and agreements set forth in Section 7 hereof,
the Issuers consent to the use of the Offering Memorandum, and any amendments
and supplements thereto required pursuant hereto, by the Initial Purchaser in
connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchaser an Offering Memorandum is required by law to be delivered
in connection with Exempt Resales by the Initial Purchaser, not to make any
amendment or supplement to the Offering Memorandum of which the Initial
Purchaser shall not previously have been advised or to which the Initial
Purchaser shall reasonably object after being so advised and to prepare
promptly upon the Initial Purchaser's reasonable request, any amendment or
supplement to the Offering Memorandum which may be necessary or advisable in
connection with Exempt Resales or market-making activities.
(d) If, during the period referred to in Section 5(c) above,
any event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchaser, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein,
in the light of the circumstances existing when such Offering Memorandum is
delivered to an Eligible Purchaser, not misleading, or if, in the opinion of
counsel to the Initial Purchaser, it is necessary to amend or supplement the
Offering Memorandum to comply with any applicable law, to prepare promptly
upon the Initial Purchaser's reasonable request an appropriate amendment or
supplement to such Offering Memorandum so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances existing
when it is so delivered, be misleading, or so that such Offering Memorandum
will comply with applicable law, and to furnish to the Initial Purchaser and
such other persons as the Initial Purchaser may designate such number of
copies thereof as the Initial Purchaser may reasonably request.
(e) Prior to the sale of all Senior Debentures pursuant to
Exempt Resales as contemplated hereby, to cooperate with the Initial
Purchaser and counsel to the Initial Purchaser in connection with the
registration or qualification of the Senior Debentures for offer and sale to
the Initial Purchaser and pursuant to Exempt Resales under the securities or
Blue Sky laws of such jurisdictions as the Initial Purchaser may reasonably
request and to continue such registration or qualification in effect so long
as required for Exempt Resales and to file such
5
<PAGE>
consents to service of process or other documents as may be necessary in
order to effect such registration or qualification; PROVIDED, HOWEVER, that
the Issuers shall not be required in connection therewith to register or
qualify as a foreign corporation in any jurisdiction in which it is not now
so qualified or to take any action that would subject it to general consent
to service of process or taxation other than as to matters and transactions
relating to the Offering Memorandum or Exempt Resales, in any jurisdiction in
which it is not now so subject.
(f) So long as any Debentures are outstanding, Investors will
furnish to the holders of the Debentures (i) all quarterly and annual
financial information that would be required to be contained in a filing with
the Commission on Forms 10-Q and 10-K if Investors was required to file such
Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that describes the financial condition
and results of operations of the Company and its consolidated subsidiaries
and, with respect to the annual information only, a report thereon by
Investors' certified independent accountants and (ii) all current reports
that would be required to be filed with the Commission on Form 8-K if
Investors was required to file such reports, in each case within the time
periods specified in the Commission's rules and regulations. In addition,
following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, Investors will file a copy of all such
information and reports with the Commission for public availability within
the time periods specified in the Commission's rules and regulations (unless
the Commission will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request. In
addition, (i) at all times the Commission does not accept the filings
provided for in the preceding sentence, or (ii) such filings provided for in
the preceding sentence do not contain the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act, then, in each
case, Investors has agreed that, for so long as any Debentures remain
outstanding, it will furnish to the holders of the Debentures and to
securities analysts and prospective investors, upon their request, the
information ("RULE 144A INFORMATION") required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
(g) So long as the Debentures are outstanding, to furnish to
the Initial Purchaser promptly after furnishing to its public security
holders or filing with any national securities exchange copies of all reports
or other communications furnished by the Issuers to their public security
holders or filed with the Commission or any national securities exchange on
which any class of securities of the Issuers is listed and such other
publicly available information concerning the Issuers and/or their
subsidiaries as the Initial Purchaser may reasonably request.
(h) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay or cause to
be paid all reasonable expenses incident to the performance of the
obligations of the Issuers under this Agreement, including: (i) the fees,
disbursements and expenses of counsel to the Issuers and accountants of the
Issuers in connection with the sale and delivery of the Senior Debentures to
the Initial
6
<PAGE>
Purchaser and pursuant to Exempt Resales, and all other fees or expenses in
connection with the preparation, printing, filing and distribution of the
Offering Memorandum and all amendments and supplements to any of the
foregoing (including financial statements) including the mailing and
delivering of copies thereof to the Initial Purchaser and persons designated
by it in the quantities specified herein, (ii) all costs and expenses related
to the sale and delivery of the Senior Debentures to the Initial Purchaser
and pursuant to Exempt Resales, including any transfer or other taxes payable
thereon, (iii) all costs of printing or producing this Agreement, the other
Operative Documents and any other agreements or documents in connection with
the offering, purchase, sale or delivery of the Senior Debentures, (iv) all
expenses in connection with the registration or qualification of the Senior
Debentures for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and the reasonable fees and disbursements of counsel for the Initial
Purchaser in connection with such registration or qualification and memoranda
relating thereto), (v) the cost of printing certificates representing the
Senior Debentures, (vi) all expenses and listing fees in connection with the
application for quotation of the Senior Debentures in the National
Association of Securities Dealers, Inc. ("NASD") Private Offerings, Resales
and Trading through Automated Linkages market ("PORTAL"), (vii) the fees and
expenses of the Trustee and the Trustee's counsel in connection with the
Indenture and the Debentures, (viii) the costs and charges of any transfer
agent, registrar and/or depository (including DTC), (ix) any fees charged by
rating agencies for the rating of the Debentures, (x) all costs and expenses
of the Exchange Offer and any Registration Statement, as set forth in the
Registration Rights Agreement, and (xi) and all other costs and expenses
incident to the performance of the obligations of the Issuers hereunder for
which provision is not otherwise made in this Section (but specifically
excluding any fees, disbursements and expenses of counsel to the Initial
Purchaser except as specifically provided for herein).
(i) To use its best efforts to effect the inclusion of the
Senior Debentures in PORTAL and to maintain the listing of the Senior
Debentures on PORTAL for so long as the Senior Debentures are outstanding.
(j) To obtain the approval of DTC for "book-entry" transfer of
the Debentures, and to comply with all of its agreements set forth in the
representation letters of the Issuers to DTC relating to the approval of the
Debentures by DTC for "book-entry" transfer.
(k) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Issuers
or any warrants, rights or options to purchase or otherwise acquire debt
securities of the Issuers substantially similar to the Debentures (other than
(i) the Debentures) and (ii) commercial paper issued in the ordinary course
of business), without the prior written consent of the Initial Purchaser.
7
<PAGE>
(l) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Securities
Act) that would be integrated with the sale of the Senior Debentures to the
Initial Purchaser or pursuant to Exempt Resales in a manner that would
require the registration of any such sale of the Senior Debentures under the
Securities Act.
(m) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Debentures.
(n) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(o) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it
prior to the Closing Date and to satisfy or obtain the waiver of all
conditions precedent to the delivery of the Senior Debentures.
(p) Not to use any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer and sale of the Senior Debentures pursuant hereto,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ISSUERS. As of
the date hereof, the Issuers, represent and warrant to, and agree with, the
Initial Purchaser as set forth below.
(a) The Offering Memorandum does not, and any supplement or
amendment to them 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 the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties contained in this paragraph (a) shall not apply to statements in
or omissions from the Offering Memorandum (or any supplement or amendment
thereto) based upon information relating to the Initial Purchaser furnished
to the Issuers in writing by the Initial Purchaser expressly for use therein.
The Issuers acknowledge for all purposes under this Agreement that the
statements set forth in the last paragraph on the cover page, the legend on
the bottom of the inside cover page and in the first sentence of the third
paragraph, the first sentence of the fourth paragraph, the fourth sentence of
the sixth paragraph and the seventh and eighth paragraphs under the caption
"PLAN OF DISTRIBUTION" in the Offering Memorandum constitute the only written
information furnished to the Issuers by the Initial Purchaser expressly for
use in the Offering Documents (or any amendment or supplement thereto). No
stop order preventing the use of the Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any
8
<PAGE>
of the transactions contemplated by this Agreement are subject to the
registration requirements of the Securities Act, has been issued.
(b) Each of the Issuers and their subsidiaries is a
corporation or limited liability company, duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization (if such concept exists under such laws), as the case may be,
and has the corporate power (in the case of a corporation) or power (in the
case of a limited liability company) and authority to carry on its business
as described in the Offering Memorandum and to own, lease and operate its
properties as described in the Offering Memorandum, and each is duly
qualified and in good standing as a foreign corporation or limited liability
company, as the case may be, authorized to do business in each jurisdiction
in which the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect. As used herein, "MATERIAL ADVERSE
EFFECT" shall mean, with respect to any Person, any effect that (i) would be
reasonably expected, individually or in the aggregate, to result in a
material adverse effect on the assets, properties, business, results of
operations, condition (financial or otherwise) or prospects of such Person
and its subsidiaries, taken as a whole or (ii) would materially and adversely
affect (A) the issuance of the Senior Debentures or the consummation of this
Agreement, (B) the performance by such Person and each of its subsidiaries of
its respective agreements and obligations under this Agreement or the
consummation of the transactions contemplated thereby.
(c) All limited liability company interests of Investors are
owned by its members free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each a "Lien"). All shares of
capital stock of Grove Investors Capital are owned by Investors, free and
clear of any Liens (other than Liens in favor of the Lenders under the New
Credit Facility). All outstanding limited liability company interests of
Investors have been duly authorized and validly issued and are not subject to
any preemptive or similar rights. All outstanding shares of capital stock of
Grove Investors Capital have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive or similar
rights.
(d) All of the outstanding shares of capital stock of each of
Investors' subsidiaries that are corporations have been duly authorized and
validly issued and are fully paid and non-assessable, and are owned by
Investors, directly or indirectly through one or more subsidiaries, free and
clear of any lien. All of the outstanding limited liability company
interests of each of Investors' subsidiaries that are limited liability
companies have been duly authorized and validly issued and are owned by
Investors, directly or indirectly through one or more subsidiaries, free and
clear of any Liens (other than Liens in favor of the Lenders under the New
Credit Facility).
(e) This Agreement has been duly authorized, executed and
delivered by the Issuers and is a valid and binding agreement of the Issuers,
enforceable against the Issuers
9
<PAGE>
in accordance with its terms, except as the enforcement hereof may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing and except as rights to indemnity and contribution thereunder
may be limited by Federal or state securities laws or principles of public
policy.
(f) The Indenture has been duly authorized by the Issuers and,
on the Closing Date, will have been validly executed and delivered by the
Issuers. When the Indenture has been duly executed and delivered by the
Trustee and the Issuers, the Indenture will be a valid and binding agreement
of the Issuers, enforceable against the Issuers in accordance with its terms,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing and except as
rights to indemnity and contribution thereunder may be limited by Federal or
state securities laws or principles of public policy. On the Closing Date,
the Indenture will comply in all material respects with the requirements of
the Trust Indenture Act of 1939, as amended (the "TIA" or" TRUST INDENTURE
ACT"), and the rules and regulations of the Commission applicable to an
indenture which is qualified thereunder.
(g) The Senior Debentures have been duly authorized by the
Issuers for issuance and sale to the Initial Purchaser pursuant to this
Agreement and, on the Closing Date, will have been validly executed and
delivered by the Issuers. When the Senior Debentures have been issued,
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchaser in accordance with the
terms of this Agreement, the Senior Debentures will be entitled to the
benefits of the Indenture and will be the valid and binding obligations of
the Issuers, enforceable in accordance with their terms except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing and except as rights to
indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy. On the Closing Date, the
Senior Debentures will conform as to legal matters in all material respects
to the description thereof contained in the Offering Memorandum.
(h) On the Closing Date, the New Senior Debentures will have
been duly authorized by the Issuers. When the New Senior Debentures are
issued, executed and authenticated in accordance with the terms of the
Exchange Offer and the Indenture, the New Senior Debentures will be entitled
to the benefits of the Indenture and will be the valid and binding
obligations of the Issuers, enforceable against the Issuers in accordance
with their terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency,
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fraudulent conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing and except as rights to
indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy.
(i) The Registration Rights Agreement has been duly authorized
by the Issuers and, on the Closing Date, will have been duly executed and
delivered by the Issuers. When the Registration Rights Agreement has been
duly executed and delivered, the Registration Rights Agreement will be a
valid and binding agreement of the Issuers, enforceable against the Issuers
in accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith
and fair dealing and except as rights to indemnity and contribution
thereunder may be limited by Federal or state securities laws or principles
of public policy. On the Closing Date, the Registration Rights Agreement will
conform as to legal matters in all material respects to the description
thereof contained in the Offering Memorandum.
(j) Neither of the Issuers nor any of their subsidiaries are
in violation of its respective charter or by-laws or operating agreement, as
the case may be, or in default in the performance of any obligation,
agreement or condition contained in any material bond, debenture, note or any
other evidence of material indebtedness or in any other material agreement,
indenture or instrument to which the Issuers or any of their subsidiaries are
a party or by which the Issuers or any of their subsidiaries or their
respective properties are bound, except for such defaults that would not have
a Material Adverse Effect.
(k) Except as described in the Offering Memorandum, the
execution, delivery and performance of this Agreement and the other Operative
Documents by the Issuers, compliance by the Issuers with all provisions
hereof and thereof and the consummation of the transactions contemplated
hereby and thereby will not require any consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body (except as such may be required under (1) the Securities
Act and state securities or Blue Sky laws and regulations, (2) the Trust
Indenture Act, (3) the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and similar provisions of foreign laws and (4)
applicable Environmental Laws (as defined below) and will not conflict with
or constitute a breach of any of the terms or provisions of, or a default
under, (x) the charter or by-laws or operating agreement, as the case may be
of the Issuers or any of their respective subsidiaries or (y) any agreement,
indenture or other instrument to which the Issuers or any of their respective
subsidiaries are a party or by which the Issuers, or any of their respective
subsidiaries or their respective properties are bound except for, in the case
of clause (y), for such conflicts, breaches or defaults as would not have a
Material Adverse Effect, or
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violate or conflict with any laws, administrative regulations or rulings or
court decrees applicable to the Issuers or any of their respective
subsidiaries or their respective properties except for such violations and
conflicts as would not have a Material Adverse Effect.
(l) Except as described in this Offering Memorandum, there are
no legal or governmental proceedings pending or, to the knowledge of Issuers,
threatened to which the Issuers or any of their respective subsidiaries are
or would be a party or to which any of their respective properties are or
would be subject, which would, if determined adversely to the Issuers result,
singly or in the aggregate, in a Material Adverse Effect.
(m) Except as described in the Offering Memorandum, neither of
the Issuers nor any of their subsidiaries have violated any foreign, federal,
state or local law or regulation relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS") or any federal or state law
relating to discrimination in the hiring, promotion or pay of employees or
any applicable federal or state wages and hours laws, or any provisions of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
the rules and regulations promulgated thereunder, except for such violations
which, singly or in the aggregate, would not have a Material Adverse Effect.
(n) Except as described in the Offering Memorandum, neither
Issuer is required under any Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any
Authorization, any related constraints on operating activities and any
potential liabilities to third parties) to incur any costs or liabilities
which would, singly or in the aggregate, have a Material Adverse Effect.
(o) Except as described in the Offering Memorandum, each of
the Issuers and its subsidiaries has such permits, licenses, consents,
exemptions, franchises, authorizations and other approvals (each, an
"AUTHORIZATION") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and
all courts and other tribunals, including without limitation, under any
applicable Environmental Laws, as are necessary to own, lease, license and
operate its respective properties and to conduct its business in the manner
described in the Offering Memorandum, except where the failure to have any
such Authorization or to make any such filing or notice would not, singly or
in the aggregate, have a Material Adverse Effect. Except as described in the
Offering Memorandum, each such Authorization is valid and in full force and
effect and each of the Issuers and their respective subsidiaries is in
compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation,
the receipt of any notice from any authority or governing body) which allows
or, after notice or lapse of time or both, would allow, revocation,
suspension or termination of any such Authorization or results or, after
notice
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or lapse of time or both, would result in any other impairment of the rights
of the holder of any such Authorization; and such Authorizations contain no
restrictions that are burdensome to the Issuers or any of their subsidiaries;
except where such failure to be valid and in full force and effect or to be
in compliance, the occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a Material Adverse
Effect.
(p) Except as described in the Offering Memorandum, Investors
and each of its subsidiaries has good and marketable title, free and clear of
all liens, claims, encumbrances and restrictions except for Liens in favor of
the Lenders under the New Credit Facility, assessments, quasi-easements,
licenses, covenants rights of way, utility agreements or other similar
restrictions that affect the use of such properties or assets and liens for
taxes not yet due and payable (collectively "Permitted Liens"), to all
property and assets being described in the Offering Memorandum as being owned
by it, except as would not have a Material Adverse Effect. All leases for
real property to which any of Investors or any of its subsidiaries is a party
are valid and binding and no default has occurred or is continuing thereunder
which would have a Material Adverse Effect, and Investors and its
subsidiaries enjoy peaceful and undisturbed possession under all such leases
to which any of Investors and its subsidiaries is a party as lessee with such
exceptions as do not materially interfere with the use currently made by
Investors or such subsidiary, as the case may be.
(q) Investors and its subsidiaries maintain reasonably
adequate insurance.
(r) The accountants, Ernst & Young LLP and Price Waterhouse
LLP, that have certified the financial statements included in the Offering
Memorandum and are independent public accountants with respect to the
Issuers, as required by the Securities Act and the Exchange Act. The
historical financial statements, together with related schedules and notes,
set forth in the Offering Memorandum comply as to form in all material
respects with the requirements applicable to registration statements on Form
S-1 under the Securities Act.
(s) The historical financial statements of the Issuers and
their subsidiaries, together with related schedules and notes forming part of
the Offering Memorandum (and any amendment or supplement thereto), present
fairly the combined financial position, results of operations and changes in
financial position of the Issuers and their subsidiaries on the basis stated
in the Offering Memorandum at the respective dates or for the respective
periods to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein and, with respect to interim financial statements, except
for the absence of footnote presentation and normal year-end adjustments; and
the other financial and statistical information and data of the Issuers and
their subsidiaries set forth in the Offering Memorandum (and any amendment or
supplement thereto) are, in all
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material respects, accurately presented and prepared on a basis consistent
with such financial statements and the books and records of the Issuers.
(t) The PRO FORMA financial statements included in the
Offering Memorandum have been prepared on a basis consistent with the
historical financial statements of the Issuers and their subsidiaries and
give effect to assumptions used in the preparation thereof on a reasonable
basis and in good faith, and such PRO FORMA financial statements comply as to
form in all material respects with the requirements applicable to PRO FORMA
financial statements included in registration statements on Form S-1 under
the Securities Act. The other PRO FORMA financial and statistical
information and data included in the Offering Memorandum are, in all material
respects, accurately and consistently derived from the PRO FORMA financial
statements.
(u) In the Issuers' opinion, the assumptions used in the
preparation of the PRO FORMA financial statements included in the Offering
Memorandum are reasonable and the adjustments used therein are appropriate to
give effect to and present fairly the transactions or circumstances referred
to therein.
(aa) The Issuers are not and, after immediately giving effect
to the offering and sale of the Senior Debentures and the application of the
net proceeds thereof as described in the Offering Memorandum will not be, an
"investment company," as such term is defined in the Investment Company Act
of 1940, as amended.
(ab) Except as described in the Offering Memorandum, there are
no holders of securities of the Issuers who, by reason of the execution by
the Issuers of the Registration Rights Agreement or the consummation of the
transactions contemplated thereby, have the right to request or demand that
the Issuers register under the Securities Act securities held by them other
than pursuant to the Registration Rights Agreement.
(ac) Neither of the Issuers nor any of their subsidiaries nor
any agent thereof acting on the behalf of them have taken, and none of them
will take, any action that might cause this Agreement or the issuance or sale
of the Senior Debentures to violate Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the
Board of Governors of the Federal Reserve System.
(ad) Since the date as of which information is given in the
Offering Memorandum other than as set forth in or contemplated by the
Offering Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), (i) there has not occurred any
material adverse change in the condition, financial or otherwise, or the
earnings, business, management, prospects (viewed as of the date hereof) or
operations of the Issuers and their subsidiaries, taken as a whole, (ii)
there has not been any material adverse change in the capital stock or in the
long-term debt of the Issuers or any of their subsidiaries and
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(iii) neither the Issuers nor any of their subsidiaries have incurred any
material liability or obligation, direct or contingent.
(ae) There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens related
to or entitling any person to purchase or otherwise to acquire any shares of
the capital stock of, or other ownership interest in, any of Investors'
subsidiaries other than Permitted Liens and liens in favor of the lenders
under the New Credit Facility.
(af) There is (i) no significant unfair labor practice
complaint pending against Investors, any of its subsidiaries or, to the
knowledge of Investors, threatened against any of them, before the National
Labor Relations Board or any state or local labor relations board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against Investors or
any of its subsidiaries or, to the best knowledge of Investors, threatened
against any of them, and (ii) no significant strike, labor dispute, slowdown
or stoppage pending against Investors, any of its subsidiaries, or, to the
knowledge of Investors, threatened against it or any of its subsidiaries
except for such actions specified in clause (i) or (ii) above, which, singly
or in the aggregate, would not have a Material Adverse Effect.
(ag) Investors maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions
are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(ah) All material tax returns required to be filed by Investors
and its subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received
by Investors or any of its subsidiaries have been paid, other than those
being contested in good faith and for which adequate reserves have been
provided.
(ai) The Offering Memorandum, as of its date, contains all the
information specified in, and meeting the requirements of, Rule 144A(d)(4)
under the Securities Act.
(aj) When the Senior Debentures are issued and delivered
pursuant to this Agreement, the Senior Debentures will not be of the same
class (within the meaning of Rule 144A under the Securities Act) as any
security of the Issuers that is listed on a national securities
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exchange registered under Section 6 of the Exchange Act or that is quoted in
a United States automated inter-dealer quotation system.
(ak) No form of general solicitation or general advertising
(within the meaning of Regulation D under the Securities Act) was used by the
Issuers or any of their respective representatives (other than the Initial
Purchaser, as to whom the Issuers make no representation) in connection with
the offer and sale of the Senior Debentures contemplated hereby, including,
but not limited to, articles, notices or other communications published in
any newspaper, magazine, or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. No securities of the same class
as the Senior Debentures have been issued and sold by the Issuers within the
six-month period immediately prior to the date hereof.
(al) Prior to the effectiveness of any Registration Statement,
the Indenture will not be required to be qualified under the TIA.
(am) Neither of the Issuers nor any of their respective
affiliates or any person acting on its or their behalf (other than the
Initial Purchaser, as to whom the Issuers make no representation) has engaged
or will engage in any directed selling efforts within the meaning of
Regulation S under the Securities Act ("REGULATION S") with respect to the
Senior Debentures.
(an) The Issuers have not, and will not, offer or sell the
Senior Debentures in reliance on Regulation S except in offshore transactions.
(ao) The Issuers have not, and will not, offer or sell the
Senior Debentures as part of a plan or scheme to evade the registration
provisions of the Securities Act.
(ap) The Issuers and their respective affiliates and all
persons acting on their behalf (other than the Initial Purchaser, as to whom
the Issuers make no representation) have complied with and will comply with
the offering restrictions requirements of Regulation S in connection with the
offering of the Senior Debentures outside the United States and, in
connection therewith, the Offering Memorandum will contain the disclosure
required by Rule 902(h).
(aq) Assuming (i) the accuracy of the Initial Purchaser's
representations and warranties and agreements set forth in Section 7 hereof
and (ii) compliance by the Initial Purchaser with the offering and transfer
procedures and restrictions described elsewhere in this Agreement and the
Offering Memorandum, no registration under the Securities Act of the Senior
Debentures is required for the sale of the Senior Debentures to the Initial
Purchaser as contemplated hereby or for the Exempt Resales.
(ar) No "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Securities
Act (i) has informed the
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Issuers that it is imposing or considering imposing any condition (financial
or otherwise) on the Issuers' retaining any rating assigned as of the date
hereof to the Issuers or any securities of the Issuers or (ii) has indicated
to the Issuers that it is considering (a) the downgrading, suspension or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change
in the outlook for any rating of the Issuers.
(as) Each certificate signed by any officer of the Issuers and
delivered to the Initial Purchaser or counsel for the Initial Purchaser shall
be deemed to be a representation and warranty by the Issuers to the Initial
Purchaser as to the matters covered thereby.
The Issuers acknowledge that the Initial Purchaser and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section
9 hereof, counsel to the Issuers and counsel to the Initial Purchaser, will
rely upon the accuracy and truth of the foregoing representations and hereby
consents to such reliance.
7. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES. The
Initial Purchaser represents and warrants to the Issuers, and agrees that:
(a) Such Initial Purchaser is either a QIB or an institutional
"accredited investor" (as defined in rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) (an "Accredited Institution"), in
either case, with such knowledge and experience in financial and business
matters as is necessary in order to evaluate the merits and risks of an
investment in the Senior Debentures.
(b) Such Initial Purchaser (A) is not acquiring the Senior
Debentures with a view to any distribution thereof or with any present
intention of offering or selling any of the Senior Debentures in a
transaction that would violate the Securities Act or the securities laws of
any state of the United States or any other applicable jurisdiction and (B)
will be reoffering and reselling the Senior Debentures only to (x) QIBs in
reliance on the exemption from the registration requirements of the
Securities Act provided by Rule 144A and (y) in offshore transactions in
reliance upon Regulation S under the Securities Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) has been or will be used by such Initial Purchaser or any
of its representatives in connection with the offer and sale of the Senior
Debentures pursuant hereto, including, but not limited to, articles, notices
or other communications published in any newspaper, magazine or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising.
(d) Such Initial Purchaser understands that the Senior
Debentures are being offered in a transaction not involving any public
offering in the United States within the
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meaning of the Securities Act, that the Senior Debentures have not been
registered under the Securities Act and that (A) the Senior Debentures may be
offered, resold, pledged or otherwise transferred only (i) to a person who
the seller reasonably believes is a QIB in a transaction meeting the
requirements of Rule 144A, in a transaction meeting the requirements of Rule
144 under the Securities Act, outside the United States to a foreign person
in a transaction meeting the requirements of Rule 904 under the Securities
Act, to an institutional "accredited investor" as defined in Rules 501(a)(1),
(2), (3) or (7) of the Securities Act (an "institutional accredited
investor") that, prior to such transfer, furnishes the Trustee a signed
letter containing certain representations and agreements (the form of which
can be obtained from the Trustee) and, if such transfer is in respect of an
aggregate principal amount of Senior Debentures less than $250,000, an
opinion of counsel that such transfer is in compliance with the Securities
Act or in accordance with another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel if
the Issuers so request), (ii) to the Issuers or (iii) 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 and (B) the Initial Purchaser shall, and each
subsequent holder shall be required to, notify any subsequent purchaser from
it of the resale restrictions set forth in (A) above.
(e) None of such Initial Purchaser nor any of its affiliates
or any person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with respect to
the Senior Debentures.
(f) The Senior Debentures offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
(g) The sale of the Senior Debentures offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of
a plan or scheme to evade the registration provisions of the Securities Act.
(h) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Senior Debentures in the United States or
to, or for the benefit or account of, a U.S. Person (other than a
distributor), in each case, as defined in Rule 902 under the Securities Act
(i) as part of its distribution at any time and (ii) otherwise until 40 days
after the later of the commencement of the offering of the Senior Debentures
pursuant hereto and the Closing Date, other than in accordance with
Regulation S of the Securities Act or another exemption from the registration
requirements of the Securities Act. Such Initial Purchaser agrees that,
during such 40-day restricted period, it will not cause any advertisement
with respect to the Senior Debentures (including any "tombstone"
advertisement) to be published in any newspaper or periodical or posted in
any public place and will not issue any circular relating to the Senior
Debentures, except such advertisements as permitted by and including the
statements required by Regulation S.
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(i) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Senior Debentures by it to any distributor, dealer
or person receiving a selling concession, fee or other remuneration during
the 40-day restricted period referred to in Rule 903(c)(3) under the
Securities Act, it will send to such distributor, dealer or person receiving
a selling concession, fee or other remuneration a confirmation or notice to
substantially the following effect:
"The Senior Debentures covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (the
"Securities Act"), and may not be offered and sold within the
United States or to, or for the account or benefit of, U.S.
persons (i) as part of your distribution at any time or (ii)
otherwise until 40 days after the later of the commencement of
the Offering and the Closing Date, except in either case in
accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are
exempt from the registration requirements of the Securities Act),
and in connection with any subsequent sale by you of the Senior
Debentures covered hereby in reliance on Regulation S during the
period referred to above to any distributor, dealer or person
receiving a selling concession, fee or other remuneration, you
must deliver a notice to substantially the foregoing effect.
Terms used above have the meanings assigned to them in Regulation
S."
(j) Such Initial Purchaser agrees that the Senior Debentures
offered and sold in reliance on Regulation S will be represented upon
issuance by a global security that may not be exchanged for definitive
securities until the expiration of the 40-day restricted period referred to
in Rule 903(c)(3) of the Securities Act and only upon certification of
beneficial ownership of such Senior Debentures by non-U.S. persons or U.S.
persons who purchased such Senior Debentures in transactions that were exempt
from the registration requirements of the Securities Act.
The Initial Purchaser acknowledges that the Issuers, for purposes of
the opinions to be delivered to each Initial Purchaser pursuant to Section 9
hereof, counsel to the Issuers and counsel to the Initial Purchaser, will
rely upon the accuracy and truth of the foregoing representations and the
Initial Purchaser hereby consents to such reliance.
8. INDEMNIFICATION.
(a) Each of the Issuers agrees, jointly and severally, to
indemnify and hold harmless the Initial Purchaser, its directors, its
officers and each person, if any, who controls such Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any reasonable legal or other
reasonable expenses incurred in connection with investigating or defending
any matter, including any action, that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
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alleged untrue statement of a material fact contained in the Offering
Memorandum (or any amendment or supplement thereto), or any Rule 144A
Information provided by the Issuers to any holder or prospective purchaser of
Senior Debentures pursuant to Section 5(h) or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or judgments are caused
by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to an Initial Purchaser furnished in
writing to the Issuers by the Initial Purchaser.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Issuers, and their respective directors and officers and each
person, if any, who controls (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) the Issuers, to the same
extent as the foregoing indemnity from the Issuers to each Initial Purchaser
but only with reference to information relating to an Initial Purchaser
furnished in writing to the Issuers by the Initial Purchaser expressly for
use in the Offering Memorandum.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY")
in writing and the indemnifying party shall assume the defense of such
action, including the employment of counsel reasonably satisfactory to the
indemnified party and the payment of all fees and expenses of such counsel,
as incurred (except that in the case of any action in respect of which
indemnity may be sought pursuant to both Sections 8(a) and 8(b), the Initial
Purchaser shall not be required to assume the defense of such action pursuant
to this Section 8(c), but may employ separate counsel and participate in the
defense thereof, but the fees and expenses of such counsel, except as
provided below, shall be at the expense of the Initial Purchaser). Any
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing
by the indemnifying party, (ii) the indemnifying party shall have failed to
assume the defense of such action or employ counsel reasonably satisfactory
to the indemnified party or (iii) the named parties to any such action
(including any impleaded parties) include both the indemnified party and the
indemnifying party, and the indemnified party shall have been advised by such
counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the indemnifying party
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of the indemnified party). In any such
case, the indemnifying party shall not, in connection with any one action or
separate but substantially similar or related actions 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
(in addition to any local counsel) for all indemnified parties and all such
fees and expenss shall be reimbursed as they are incurred. Such firm shall
be designated in writing by
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Donaldson, Lufkin & Jenrette Securities Corporation, in the case of the
parties indemnified pursuant to Section 8(a), and by the Issuers, in the case
of parties indemnified pursuant to Section 8(b). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and
all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with the indemnifying party's written
consent (which consent shall not be unreasonably withheld) or (ii) effected
without its written consent if the settlement is entered into more than
thirty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the reasonable fees
and expenses of counsel (in any case where such fees and expenses are at the
expense of the indemnifying party) and, prior to the date of such settlement,
the indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
on claims that are or could have been the subject matter of such action and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages, liabilities or judgments referred to herein,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers, on the one hand, and the Initial Purchaser, on the other hand, from
the offering of the Senior Debentures or (ii) if the allocation provided by
clause 8(d)(i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause 8(d)(i) above but also the relative fault of the Issuers, on the one
hand, and the Initial Purchaser, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Issuers, on the one
hand and the Initial Purchaser, on the other hand, shall be deemed to be in
the same proportion as the total net proceeds from the offering of the Senior
Debentures (after discounts and commissions, but before deducting expenses)
received by the Issuers, and the total discounts and commissions received by
the Initial Purchaser bear to the total price to investors of the Senior
Debentures, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the Issuers, on the one hand, and
the Initial Purchaser, on the other hand, 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 Issuers, on the one hand, or the
Initial Purchaser, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
21
<PAGE>
The Issuers and the Initial Purchaser agree that it would not
be just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
judgments referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses incurred by such indemnified party in connection with investigating
or defending any matter, including any action, that could have given rise to
such losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of this Section 8, the Initial Purchaser shall not be required to
contribute any amount in excess of the amount by which the total discounts
and commissions received by such Initial Purchaser exceeds the amount of any
damages which the Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this paragraph (d), each member of the
Management Committee or each director of the Issuers, each officer of the
Issuers, and each person, if any, who controls the Issuers within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, shall
have the same rights to contribution as the Issuers.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations
of the Initial Purchaser to purchase the Senior Debentures under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Issuers
contained in this Agreement shall be true and correct on the Closing Date
with the same force and effect as if made on and as of the Closing Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice
have been given of any potential or intended downgrading, suspension or
withdrawal of, or of any review (or of any potential or intended review) for
a possible change that does not indicate the direction of the possible change
in, any rating of the Issuers or any securities of the Issuers (including,
without limitation, the placing of any of the foregoing ratings on credit
watch with negative or developing implications or under review with an
uncertain direction) by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under
the Securities Act, (ii) there shall not have occurred any change, nor shall
notice have been given of any potential or intended change, in the outlook
for any rating of the Issuers by any such rating organization and
22
<PAGE>
(iii) no such rating organization shall have given notice that it has
assigned (or is considering assigning) a lower rating to the Debentures than
that on which the Debentures were marketed.
(c) Since the respective dates as of which information is
given in the Offering Memorandum, other than as set forth in or contemplated
by the Offering Memorandum (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement), (i) there shall not have
occurred any material adverse change in the condition, financial or
otherwise, or the earnings, business, management, prospectus (view as of the
Closing Date) or operations of the Issuers and their subsidiaries, taken as a
whole, (ii) there shall not have been any material adverse change or in the
capital stock or in the long-term debt of the Issuers and their subsidiaries,
taken as a whole, and (iii) neither the Issuers nor any of their subsidiaries
shall have incurred any liability or obligation, direct or contingent, the
effect of which, in any such case described in clause 9(c)(i), 9(c)(ii) or
9(c)(iii), in your judgment, is material and adverse and, in your judgment,
makes it impracticable to market the Senior Debentures on the terms and in
the manner contemplated in the Offering Memorandum.
(d) The Initial Purchaser shall have received on the Closing
Date a certificate dated the Closing Date, signed by the Presidents and the
Chief Financial Officers of the Issuers, confirming the matters set forth in
Sections 9(a), 9(b) and 9(c) and stating that each of the Issuers has
complied with all agreements and satisfied all of the conditions herein
contained and required to be complied with or satisfied on or prior to the
Closing Date.
(e) The Initial Purchaser shall have received on the Closing
Date an opinion (satisfactory to you and counsel for the Initial Purchaser),
dated the Closing Date, of Paul, Weiss, Rifkind, Wharton & Garrison, special
counsel for the Issuers, to the effect that:
(i) each of the Issuers has been duly incorporated or
organized, as applicable, is validly existing as a limited
liability company or corporation, as applicable, in good standing
under the laws of its jurisdiction of organization and has the
limited liability company or corporate power and authority, as
applicable, to carry on the business as described in the Offering
Memorandum and to own lease and operate its properties;
(ii) each of the Issuers is duly qualified and in good
standing as a foreign limited liability company or corporation,
as applicable, authorized to do business in each jurisdiction
listed on Schedule I hereto;
(iii) the Issuers have duly authorized the Senior
Debentures and, when executed, issued and authenticated in
accordance with the provisions of the Indenture and delivered to
and paid for by the Initial Purchaser in accordance with the
terms of this Agreement, the Senior Debentures will be entitled
to the benefits of the Indenture and will be
23
<PAGE>
valid and binding obligations of the Issuers, enforceable
against the Issuers in accordance with their terms except as
(x) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance or transfer, moratorium or
similar laws affecting creditors' rights generally and (y)
rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability whether asserted in law or in equity;
(iv) the Indenture has been duly authorized, executed and
delivered by the Issuers and is a valid and binding agreement of
the Issuers, enforceable against the Issuers in accordance with
its terms except as (x) the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally
and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability whether asserted in law or in equity;
(v) this Agreement has been duly authorized, executed
and delivered by the Issuers;
(vi) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Issuers and is a valid
and binding agreement of the Issuers enforceable against the
Issuers in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance or transfer, moratorium or similar laws
affecting creditors' rights generally, (y) rights of acceleration
and the availability of equitable remedies may be limited by
equitable principles of general applicability whether asserted in
action at law or in equity and (z) indemnification or
contribution provisions may be held to be unenforceable;
(vii) the Issuers have duly authorized the New Senior
Debentures and, when the New Senior Debentures are issued and
authenticated in accordance with the terms of the Registered
Exchange Offer and the Indenture, the new Senior Debentures will
be the legally valid and binding obligations of the Issuers,
enforceable against the Issuers in accordance with their terms
except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance or transfer,
moratorium or similar laws affecting creditors' rights generally
and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability whether asserted in law or in equity;
24
<PAGE>
(viii) the statements under the captions "Description of
Debentures", 'Transactions", "Business--Environmental Matters
--Legal Proceedings", "Certain Relationships and Related
Transactions" and "Description of Certain Indebtedness" in the
Offering Memorandum, insofar as such statements refer to matters
arising under or governed by Applicable Law (as hereinafter
defined) and constitute a summary of the legal matters, documents
or proceedings referred to therein, fairly present in all
material respects such legal matters, documents and proceedings;
(ix) such counsel is of the opinion ascribed to it in the
Offering Memorandum under the caption "United States Federal Tax
Considerations for Non-United States Holders";
(x) based on current provisions of the Internal Revenue
Code of 1986, as amended, applicable regulations promulgated by
the Department of Treasury, and the current administrative and
judicial interpretations thereof, Investors has been properly
treated either as a partnership or (y) not as an entity separate
from its sole member for all periods of its existence and should
not have been treated as an "association" taxable as a
corporation; no assurance can be given that changes in applicable
law, regulations or administrative rulings, procedures or
announcements, or that judicial decisions would not adversely
affect the classification of such entities for federal income tax
purposes;
(xi) to such counsel's knowledge, the Issuers (i) are not
in violation of their respective charter or by-laws and (ii) are
not in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which the
Issuers are a party or by which the Issuers or any of their
respective properties are bound, which indenture, loan agreement,
mortgage, lease or other agreement or instrument is material to
the Issuers, taken as a whole, and would be required to be filed
as an exhibit to a registration statement of Investors on Form
S-1 covering this offering of the Senior Debentures;
(xii) except as described in the Offering Memorandum, the
execution, delivery and performance of this Agreement and the
other Operative Documents by the Issuers, compliance by the
Issuers with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby
will not (i) require any consent, approval, authorization or
other order of, or qualification with, any court
25
<PAGE>
or governmental body or agency of the United States or the
State of New York or under the Limited Liability Company Act of
the State of Delaware (the "DLLC Act") or the Delaware General
Corporation Law ("GCL", together with the DLLC Act, the
"Delaware Laws") (except such as may be required under the
securities or Blue Sky laws of the various states), (ii)
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws or
operating agreements, as applicable, of the Issuers to such
counsel's knowledge, any indenture, loan agreement, mortgage,
lease or other agreement or instrument is material to Investors
or its subsidiaries, taken as a whole, and would be required to
be filed as an exhibit to a registration statement of Investors
on Form S-1 covering this offering of the Senior Debentures, or
(iii) violate or conflict with any Applicable Law (as
hereinafter defined) or any judgment, order or decree known to
such counsel of any court or any governmental body or agency of
the United States or the State of New York that has
jurisdiction over the Issuers or their respective properties,
except, in each case, where such failure to obtain consent,
such conflict, breach, default or violation will not result in
a Material Adverse Effect. The term "Applicable Law" means the
Delaware Laws, the laws of the State of New York and the laws,
rules and regulations of the United States, in each case, which
in such counsel's experience are normally applicable to a
transaction of the type contemplated by this Agreement;
(xiii) except as described in the Offering Memorandum, such
counsel does not know of any legal or governmental proceedings
pending or threatened to which the Issuers are or would be a
party or to which any of their respective properties are or would
be subject, which, if adversely determined, would result, singly
or in the aggregate, in a Material Adverse Effect;
(xiv) the Issuers, after giving effect to the offering and
sale of the Senior Debentures and the application of the net
proceeds thereof as described in the Offering Memorandum, will
not be required to register under the Investment Company Act of
1940, as amended, as an "investment company" as such term is
defined in such Act;
(xv) the Indenture appears on its face to be
appropriately responsive in all material respects to the
requirements of the TIA, and the rules and regulations of the
Commission applicable to an indenture which is qualified
thereunder. It is not necessary in connection with the offer,
sale and delivery of the Senior Debentures to the Initial
Purchaser in the manner
26
<PAGE>
contemplated by this Agreement or in connection with the Exempt
Resales to qualify the Indenture under the TIA;
(xvi) no registration under the Securities Act of the
Senior Debentures is required for the sale of the Senior
Debentures to the Initial Purchaser as contemplated by this
Agreement or for the Exempt Resales assuming that (i) the Initial
Purchaser is a QIB or a Regulation S Purchaser, (ii) the accuracy
of, and compliance with, the Initial Purchaser's representations
and agreements contained in Section 7 of this Agreement, (iii)
the accuracy of the representations of the Issuers set forth in
Sections 5(h) and 6(ac), (ad), (ae) and (ak) of this Agreement.
In addition, such counsel shall state that no facts have come
to such counsel's attention that cause such counsel to believe that, as of
the date of the Offering Memorandum or as of the Closing Date, the Offering
Memorandum, as amended or supplemented, if applicable (except for the
financial statements and other financial data included therein or omitted
therefrom, as to which such counsel need not express any belief) contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The opinion of
Paul, Weiss, Rifkind, Wharton & Garrison described in Section 9(e) above
shall be rendered to you at the request of the Issuers and shall so state
therein. With respect to the matters covered by the statement in the first
sentence of this paragraph, Paul, Weiss, Rifkind, Wharton & Garrison may
state that their belief is based upon their participation in the preparation
of the Offering Memorandum and any amendments or supplements thereto and
review and discussion of the contents thereof, but are without independent
check or verification except as specified and such counsel may rely as to
materiality to the extent they deem appropriate upon facts provided to such
counsel by officers and other representatives of the Issuers.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the
Closing Date, of Keith Simmons, Esq., General Counsel of the Issuers, to the
effect that:
(i) except as described in the Offering Memorandum, such
counsel does not know of any legal or governmental proceedings
pending or threatened to which the Issuers are or could be a
party or to which any of their respective properties are or could
be subject, which would result, singly or in the aggregate, in a
Material Adverse Effect;
(ii) except as described in the Offering Memorandum, to
such counsel's knowledge, the Issuers have not violated any
Environmental Law or any provisions of ERISA, or the rules or
regulations thereunder,
27
<PAGE>
except for such violations which, singly or in the aggregate,
would not have a Material Adverse Effect;
(iii) except as described in the Offering Memorandum, to
such counsel's knowledge, each of the Issuers has such permits,
licenses, consents, exemptions, franchises, authorizations and
other approvals (each, an "Authorization") of, and has made all
filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and
other tribunals, including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease,
license and operate its respective properties and to conduct its
business, except where the filing or notice would not, singly or
in the aggregate, have a Material Adverse Effect; except as
described in the Offering Memorandum, to such counsel's
knowledge, each such Authorization is valid and in full force and
effect and each of the Issuers is in compliance with all the
terms and conditions thereof and with the rules and regulations
of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including the receipt
of any notice from any authority or governing body) which allows
or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization
or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any
such Authorization; and such Authorizations contain no
restrictions that are burdensome to the Issuers; except where
such failure to be valid and in full force and effect or to be in
compliance on the occurrence of any such event would not, singly
or in the aggregate, have a Material Adverse Effect; and
(iv) except as described in the Offering Memorandum, to
such counsel's knowledge, there are no contracts, agreements or
understandings between the Issuers and any person granting such
person the right to require the Issuers to include any securities
with the Senior Debentures registered pursuant to any
Registration Statement. The opinions to be rendered by such
counsel shall also be subject to customary exceptions and
assumptions.
(g) The Initial Purchaser shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchaser, in form and substance reasonably satisfactory to the
Initial Purchaser.
(h) The Initial Purchaser shall have received, at the time
this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date,
28
<PAGE>
as the case may be, in form and substance satisfactory to the Initial
Purchaser from Ernst & Young LLP and Price Waterhouse, independent public
accountants for the Issuers and, in each case, containing the information and
statements of the type ordinarily included in accountants' "comfort letters"
to the Initial Purchaser with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(i) The Senior Debentures shall have been approved for
trading on, and duly listed in, PORTAL.
(j) The Initial Purchaser shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Issuers and the Trustee.
(k) The Issuers shall have executed the Registration Rights
Agreement and the Initial Purchaser shall have received an original copy
thereof, duly executed by the Issuers.
(l) The Issuers shall have executed this Agreement and the
Initial Purchaser shall have received an original copy thereof, duly executed
by the Issuers.
(m) The Company shall have entered into the New Credit
Facility (the form and substance of which shall be reasonably acceptable to
the Initial Purchaser) and the Initial Purchaser shall have received a
counterpart, conformed as executed, thereof and of all other documents and
agreements entered into in connection therewith.
(n) Each condition to the closing contemplated by the New
Credit Facility (other than the issuance and sale of the Senior Subordinated
Notes and Subsidiary Guarantees pursuant thereto) shall have been satisfied
or waived. There shall exist at and as of the Closing Date (after giving
effect to the transactions contemplated by this Agreement and the Acquisition
Agreement) no conditions that would constitute a default (or an event that
with notice or the lapse of time, or both, would constitute a default) under
the New Credit Facility. On the Closing Date, the closing under the New
Credit Facility shall have been consummated on terms that conform in all
material respects to the description thereof in the Offering Memorandum.
(o) Each condition to the closing of the Acquisition
contemplated by the Acquisition Agreement (other than the issuance and sale
of the Senior Subordinated Notes pursuant thereto and the closing under the
New Credit Facility) shall have been satisfied or waived. There shall exist
at and as of the Closing Date (after giving effect to the transactions
contemplated by this Agreement and the New Credit Facility) no conditions
that would constitute a default (or an event that with notice or the lapse of
time, or both, would constitute a default) under the Acquisition Agreement.
On the Closing Date, the Acquisition shall have been consummated on terms
that conform in all material respects to the description thereof in the
Offering Memorandum and the Initial Purchaser shall have received evidence
satisfactory to the Initial Purchaser of the consummation thereof.
29
<PAGE>
(p) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon the matters
referred to in this Section 9 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(q) Prior to the Closing Date, the Issuers shall have
furnished to the Initial Purchaser such further information, certificates and
documents as the Initial Purchaser may reasonably request.
(r) The Issuers shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Issuers at or prior to
the Closing Date.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the execution and delivery of this Agreement by
the parties hereto.
This Agreement may be terminated at any time prior to the Closing
Date by the Initial Purchaser by written notice to the Issuers if any of the
following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere
that, in the Initial Purchaser's judgment, is material and adverse and, in
the Initial Purchaser's judgment, makes it impracticable to market the Senior
Debentures on the terms and in the manner contemplated in the Offering
Memorandum, (ii) the suspension or material limitation of trading in
securities or other instruments on the New York Stock Exchange, the American
Stock Exchange, the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange, the Chicago Board of Trade or the Nasdaq National Market or
limitation on prices for securities or other instruments on any such exchange
or the Nasdaq National Market, (iii) the suspension of trading of any
securities of the Issuers on any exchange or in the over-the-counter market,
(iv) the enactment, publication, decree or other promulgation of any federal
or state statute, regulation, rule or order of any court or other
governmental authority which in your opinion materially and adversely
affects, or will materially and adversely affect, the business, prospects,
financial condition or results of operations of the Issuers and their
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium
by either federal or New York State authorities or (vi) the taking of any
action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your opinion has a material adverse
effect on the financial markets in the United States.
11. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (i) if to the Issuers, to 201
Main Street, Fort Worth, Texas 76102, Telecopier No.: (717) 593-5120,
Attention: Keith Simmons, with a copy to Grove Investors LLC, c\o Paul,
Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, NY
10019, Attention: Matthew Nimetz and Bruce Gruder, and (ii) if to the Initial
Purchaser, Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park
Avenue, New York,
30
<PAGE>
New York 10172, Attention: Syndicate Department, or in any case to such
other address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Issuers and the
Initial Purchaser set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of
and payment for the Senior Debentures, regardless of (i) any investigation,
or statement as to the results thereof, made by or on behalf of the Initial
Purchaser, the officers or directors of the Initial Purchaser, any person
controlling the Initial Purchaser, the Issuers, the officers or directors of
the Issuers, or any person controlling the Issuers, (ii) acceptance of the
Senior Debentures and payment for them hereunder and (iii) termination of
this Agreement.
If this Agreement shall be terminated by the Initial Purchaser
because of any failure or refusal on the part of the Issuers to comply with
the terms or to fulfill any of the conditions of this Agreement, the Issuers,
jointly and severally, agree to reimburse the Initial Purchaser for all
out-of-pocket expenses (including the reasonable fees and disbursements of
counsel) reasonably incurred by them. Notwithstanding any termination of
this Agreement, the Issuers shall be liable for all expenses which they have
agreed to pay pursuant to Section 5(i) hereof. The Issuers also agree,
jointly and severally, to reimburse the Initial Purchaser and its officers,
directors and each person, if any, who controls the Initial Purchaser within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act for any and all fees and expenses (including without limitation the
reasonable fees and expenses of counsel) incurred by them in connection with
enforcing their rights under this Agreement (including without limitation its
rights under this Section 12).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Issuers, the Initial
Purchaser, the Initial Purchaser's directors and officers, any controlling
persons referred to herein, the directors of the Issuers and their respective
successors and assigns, all as and to the extent provided in this Agreement,
and no other person shall acquire or have any right under or by virtue of
this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Senior Debentures from the Initial Purchaser merely
because of such purchase.
This Agreement shall be governed and construed in accordance with
the internal laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
* * * *
31
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement among the Issuers and the Initial Purchaser as of the date first
above written.
Very truly yours,
GROVE INVESTORS, LLC
By: /s/ Salvatore J. Bonanno
----------------------------------
Name: Salvatore J. Bonanno
Title: CEO
GROVE INVESTORS CAPITAL, INC.
By: /s/ Salvatore J. Bonanno
----------------------------------
Name: Salvatore J. Bonanno
Title: CEO
32
<PAGE>
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written
by Donaldson, Lufkin & Jenrette
Securities Corporation on behalf
of the Initial Purchaser.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Edward Biggins
-------------------------------
Name: Edward Biggins
Title:
33
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
COMPANY JURISDICTIONS
------- -------------
<S> <C>
- -------------------------------------------------------------------------------
Grove Investors LLC
- -------------------------------------------------------------------------------
Grove Investors Capital, Inc.
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THE SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GROVE INVESTORS LLC
(a Delaware limited liability company)
---------------------------------------
Dated as of June 27, 1998
---------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS; CONSTRUCTION . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Cross References. . . . . . . . . . . . . . . . . . . . . . .12
1.3 Usage Generally . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE II FORMATION; NAME; TERM . . . . . . . . . . . . . . . . . . . .13
2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . .13
2.2 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2.3 Effective Date; Term. . . . . . . . . . . . . . . . . . . . .14
2.4 Principal Place of Business . . . . . . . . . . . . . . . . .14
2.5 Registered Office . . . . . . . . . . . . . . . . . . . . . .14
2.6 Registered Agent. . . . . . . . . . . . . . . . . . . . . . .14
2.7 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2.8 Authorized Person . . . . . . . . . . . . . . . . . . . . . .14
2.9 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2.10 Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE III INTERESTS; CLOSING; CONTRIBUTIONS . . . . . . . . . . . . . .17
3.1 Initial Capital Contributions . . . . . . . . . . . . . . . .17
3.2 Contribution Closing. . . . . . . . . . . . . . . . . . . . .17
3.3 Class A Units.. . . . . . . . . . . . . . . . . . . . . . . .17
3.4 Return of Capital Contributions . . . . . . . . . . . . . . .17
ARTICLE IV CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS. . . . . . . . .18
4.1 Capital Accounts. . . . . . . . . . . . . . . . . . . . . . .18
4.2 Allocation of Net Income. . . . . . . . . . . . . . . . . . .18
4.3 Allocation of Net Loss. . . . . . . . . . . . . . . . . . . .18
4.4 Class A Units . . . . . . . . . . . . . . . . . . . . . . . .19
4.5 Adjustments to Class B Percentage Interests . . . . . . . . .19
4.6 Interim Allocations Due to Percentage Interest Adjustment . .21
4.7 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . .21
4.8 Reimbursement of Expenses . . . . . . . . . . . . . . . . . .23
4.9 Distributions . . . . . . . . . . . . . . . . . . . . . . . .23
4.10 Distributions in Kind . . . . . . . . . . . . . . . . . . . .24
4.11 Restrictions on Distributions . . . . . . . . . . . . . . . .24
4.12 Tax Withholding . . . . . . . . . . . . . . . . . . . . . . .24
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ARTICLE V MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . .25
5.1 Members . . . . . . . . . . . . . . . . . . . . . . . . . . .25
5.2 Admission of New Members. . . . . . . . . . . . . . . . . . .26
5.3 Resignation . . . . . . . . . . . . . . . . . . . . . . . . .26
5.4 Power of Members. . . . . . . . . . . . . . . . . . . . . . .26
5.5 Members' Right to Make Certain Additional Investment. . . . .26
5.6 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.7 Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.8 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.9 Actions Without a Meeting . . . . . . . . . . . . . . . . . .27
ARTICLE VI MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . .27
6.1 Management of the Company . . . . . . . . . . . . . . . . . .27
6.2 Powers of the Management Committee. . . . . . . . . . . . . .28
6.3 Governance. . . . . . . . . . . . . . . . . . . . . . . . . .30
6.4 No Management by Other Persons or Entities. . . . . . . . . .31
6.5 By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . .31
6.6 Reliance by Third Parties . . . . . . . . . . . . . . . . . .31
ARTICLE VII ACCOUNTING; FINANCIAL AND TAX MATTERS . . . . . . . . . . . .31
7.1 Accounting Method . . . . . . . . . . . . . . . . . . . . . .31
7.2 Accounting Records. . . . . . . . . . . . . . . . . . . . . .31
7.3 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . .32
7.4 Financial Statements. . . . . . . . . . . . . . . . . . . . .32
7.5 Bank and Investment Accounts. . . . . . . . . . . . . . . . .32
7.6 Tax Matters Partner . . . . . . . . . . . . . . . . . . . . .33
7.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
7.8 Classification as a Partnership . . . . . . . . . . . . . . .33
7.9 Accounting Decisions. . . . . . . . . . . . . . . . . . . . .34
ARTICLE VIII LIABILITY; EXCULPATION; INDEMNIFICATION . . . . . . . . . . .34
8.1 Liability of Members. . . . . . . . . . . . . . . . . . . . .34
8.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . .34
8.3 Duties and Liabilities of Covered Persons . . . . . . . . . .34
8.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . .35
8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE IX TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . .37
9.1 General Restrictions. . . . . . . . . . . . . . . . . . . . .37
9.2 Permitted Transfers . . . . . . . . . . . . . . . . . . . . .37
9.3 Drag-Along Right. . . . . . . . . . . . . . . . . . . . . . .37
9.4 Tag Along Right . . . . . . . . . . . . . . . . . . . . . . .38
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9.5 Conditions to Transfers . . . . . . . . . . . . . . . . . . .38
9.6 Effect of Permitted Transfer. . . . . . . . . . . . . . . . .39
ARTICLE X REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . .40
10.1 Demand Registration Rights. . . . . . . . . . . . . . . . . .40
10.2 Registration Procedures . . . . . . . . . . . . . . . . . . .42
10.3 Conditions to Offerings . . . . . . . . . . . . . . . . . . .45
10.4 Registration Expenses . . . . . . . . . . . . . . . . . . . .45
10.5 Indemnification; Contribution . . . . . . . . . . . . . . . .46
10.6 Holdback. . . . . . . . . . . . . . . . . . . . . . . . . . .48
ARTICLE XI TERMINATION CALL RIGHTS . . . . . . . . . . . . . . . . . . .49
11.1 Call Rights . . . . . . . . . . . . . . . . . . . . . . . . .49
ARTICLE XII TERMINATION; DISSOLUTION; LIQUIDATION AND WINDING-UP. . . . .50
12.1 Termination of the Company. . . . . . . . . . . . . . . . . .50
12.2 Events of Dissolution . . . . . . . . . . . . . . . . . . . .51
12.3 Notice of Dissolution Event . . . . . . . . . . . . . . . . .51
12.4 Liquidation and Winding-Up. . . . . . . . . . . . . . . . . .51
12.5 Survival of Rights, Duties and Obligations. . . . . . . . . .52
12.6 Claims of the Members . . . . . . . . . . . . . . . . . . . .52
ARTICLE XIII REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MEMBERS. . .53
13.1 Representations . . . . . . . . . . . . . . . . . . . . . . .53
13.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . .53
ARTICLE XIV GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . .53
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .53
14.2 Entire Agreement; Non-Waiver. . . . . . . . . . . . . . . . .54
14.3 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . .54
14.4 No Waivers. . . . . . . . . . . . . . . . . . . . . . . . . .54
14.5 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . .55
14.6 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
SELECTION OF FORUM. . . . . . . . . . . . . . . . . . . . . .55
14.7 Further Assurances. . . . . . . . . . . . . . . . . . . . . .55
14.8 Assignment of Contracts and Rights. . . . . . . . . . . . . .55
14.9 No Right to Partition . . . . . . . . . . . . . . . . . . . .55
14.10 No Third Party Rights . . . . . . . . . . . . . . . . . . . .56
14.11 Successors and Assigns. . . . . . . . . . . . . . . . . . . .56
14.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . .56
14.13 Remedies Not Exclusive. . . . . . . . . . . . . . . . . . . .56
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14.14 Representation by Counsel . . . . . . . . . . . . . . . . . .56
14.15 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .56
14.16 Attachments . . . . . . . . . . . . . . . . . . . . . . . . .56
14.17 Table of Contents and Headings. . . . . . . . . . . . . . . .57
14.18 Competing Business. . . . . . . . . . . . . . . . . . . . . .57
14.19 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . .57
14.20 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . .57
14.21 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . .58
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<PAGE>
THE SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GROVE INVESTORS LLC
This Second Amended and Restated Limited Liability Company
Agreement (this "AGREEMENT") of GROVE INVESTORS LLC, a Delaware limited
liability company (the "COMPANY"), is made as of June 27, 1998, by and
between the Persons set forth on the signature pages hereto.
WHEREAS, the Company was formed under the laws of the State of
Delaware by filing a certificate of formation with the Secretary of State of
the State of Delaware pursuant to an Operating Agreement, dated as of January
15, 1998.
WHEREAS, the members wish to admit Salvatore J. Bonanno, Jeff Bust,
Joseph Shull, James Kolinski, Ted Bratthauar and John Wheeler as Employee
Members.
WHEREAS, the Members wish to amend and restate the Amended and
Restated Limited Liability Company Agreement of the Company dated as of April
29, 1998 as set forth below.
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.1 DEFINITIONS. Unless the context otherwise requires, the terms
defined in this Article I shall, for the purposes of this Agreement, have the
meanings specified below.
<PAGE>
2
"ADJUSTED CAPITAL ACCOUNT" shall mean, with respect to any Member,
such Member's Capital Account balance, increased by such Member's share of
Company Minimum Gain and Member Minimum Gain.
"AFFILIATE" shall mean, with respect to any Person, any other
Person who, directly or indirectly, controls, is controlled by, or is under
direct or indirect common control with, such Person. For the purposes of
this definition "control," when used with respect to any specified Person,
shall mean the power to direct or cause the direction of the management and
policies of such Person, directly or indirectly, whether through ownership of
voting securities or partnership or other ownership interests, by contract or
otherwise; and the terms "controlling" and "controlled" shall have
correlative meanings.
"AGREEMENT" shall mean this Second Amended and Restated Limited
Liability Company Agreement of the Company as amended, modified, supplemented
and/or restated from time to time.
"ANCILLARY LETTER" shall mean that certain letter dated as of April
29, 1998, by and between FW Grove, Strategic and GGEP.
"ANNUAL EBITDA ACTUAL" shall mean, for the prior 12 month period,
the net profit of the Company and its Subsidiaries after all expenses, but
before any (a) interest, (b) income taxes or other taxes based on profits,
(c) amortization of goodwill, (d) depreciation, (e) cash expenses directly
associated with the implementation of the operations improvement program,
including consulting fees under the Consulting Agreement, and (f) to the
extent determined by the Management Committee, any nonrecurring or unbudgeted
extraordinary items of income or loss.
"ANNUAL EBITDA ACTUAL IMPROVEMENT" shall mean the excess, if any,
of (a) the Annual EBITDA Actual, over (b) the Annual EBITDA Baseline.
"ANNUAL EBITDA BASELINE" shall mean, for any year described in the
Ancillary Letter, for any revenue level, the amounts calculated from the
formula described in the Ancillary Letter for such year for such revenue
level.
"ANNUAL EBITDA INCREASE" shall mean, for any year described in the
Ancillary Letter for any revenue level, (a) the lesser of (i) one or (ii) (x)
the Annual EBITDA Actual Improvement, (y) divided by the Annual EBITDA
Promised Improvement, multiplied by (b) 18.75% of the Total Promote
Percentage.
"ANNUAL EBITDA PROMISED IMPROVEMENT" shall mean, for any year
described in the Ancillary Letter, for any revenue level, the excess of (a)
the Annual EBITDA Target, over (b) the Annual EBITDA Baseline.
<PAGE>
3
"ANNUAL EBITDA TARGET" shall mean, for any year described in the
Ancillary Letter, for any revenue level, the amounts calculated from the
formula described in the Ancillary Letter for such year for such revenue
level.
"BENEFICIAL OWNERSHIP" shall have the meaning ascribed to such term
in Rule 13d-3, as in effect on the date hereof, promulgated under the
Exchange Act; "BENEFICIALLY OWNED," "OWNED BENEFICIALLY" and like terms shall
have correlative meanings.
"BUSINESS" shall mean the business of designing, manufacturing,
selling and providing customer support for mobile hydraulic cranes, aerial
work platforms and truck mounted cranes and similar devices.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
a day when banks in New York City are authorized or required by law to be
closed.
"CAPITAL ACCOUNT" shall mean, with respect to any Member, the
capital account of such Member, maintained in accordance with Section 4.1.
"CAPITAL CONTRIBUTION" shall mean, with respect to any Member, the
aggregate amount of money and the initial Gross Asset Value of any property
(other than money) contributed to the capital of the Company with respect to
such Member's Interest.
"CERTIFICATE" shall mean the certificate of formation of the
Company and any amendments thereto and restatements thereof filed on behalf
of the Company with the office of the Secretary of State of the State of
Delaware pursuant to the Act.
"Change in Control" shall mean (a) the closing of any transaction
whereby any Person other than FW Grove Coinvestors, L.P., Keystone, Inc.
(including funds sponsored by Keystone, Inc.), FW Strategic Partners, L.P.,
Michael L. George or the George Group, Inc. or any of their respective
Affiliates shall have become the beneficial owner of more than 50% of the
Equity Securities of the Company or a reorganization, merger, consolidation,
acquisition or other similar transaction, after which all or substantially
all of the assets of the Company are controlled by an entity other than FW
Grove Coinvestors, L.P., Keystone, Inc. (including investment funds sponsored
by Keystone, Inc.), Michael L. George, the George Group Inc. and/or FW
Strategic Partners, L.P. or their respective Affiliates or (b) if the Company
has been reconstituted as a corporation, the consummation of any public
offering after which more than 50% of the Company's stock is publicly traded.
"CLASS A PERCENTAGE INTERESTS" shall mean, with respect to any
Member, at any time, a fraction, the numerator of which equals the number of
Class A Units
<PAGE>
4
held by such Member at such time, and the denominator of which equals the
aggregate number of Class A Units held by all the Members at such time.
"CLASS A SHARE" shall mean a fraction, (a) the numerator of which
equals the number of Class A Units outstanding, and (b) the denominator of
which equals the greater of (x) the sum of (i) the number of Class A Units
outstanding, (ii) 69,500, and (iii) the Class B New Interest Amount, or (y)
the sum of (i) 75,000 plus (ii) the Class B New Interest Amount.
"CLASS A UNITS" shall mean the denomination of Interests in the
Company of the Employee Members; PROVIDED that the Company shall not issue
Class A Units that would cause the Class A Share to exceed 12.579%; PROVIDED
FURTHER that if the Company is unable to issue Class A Units by reason of the
preceding proviso, it may issue Class B Interests to Employee Members.
"CLASS B NEW INTEREST AMOUNT" means (a) 69,500 multiplied by (b)
the New Class B Percentage Interests as of such date, divided by (c) (i) 100%
minus (ii) the New Class B Percentage Interests.
"CLASS B PERCENTAGE INTEREST" shall mean with respect to a Member
as of any date the sum, with respect to each Class B Interest that it holds,
of:
(i) (x) in the case of interests not resulting from the
operation of Section 4.5, the Class B Percentage Interest of such Class B
Interest on the date acquired, multiplied by (y) 100% minus the Class B
Percentage Interests attributable to any Class B Interest issued subsequently
thereto (including increases in GGEP's Class B Interests pursuant to Section
4.5), and
(ii) in the case of GGEP, (x) the cumulative gross amount by
which its Class B Percentage Interests have been increased pursuant to
Section 4.5 (determined without regard to paragraph (e) thereof), multiplied
by (y) 100% minus the New Class B Percentage Interests.
"CLASS B SHARE" shall mean the excess of (a) 100% minus (b) the
Class A Share.
"CODE" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
"COMPANY MINIMUM GAIN" shall mean "partnership minimum gain," as
defined in Section 1.704-2(b)(2) of the Treasury Regulations, and shall be
determined in accordance with Section 1.704-2(d) of the Treasury Regulations.
<PAGE>
5
"CONSULTING AGREEMENT" shall mean the Consulting Agreement, dated
as of April 29, 1998, by and between the Operating Company and George Group,
Inc.
"CUMULATIVE EBITDA ACTUAL" shall mean the sum of Annual EBITDA
Actual for the following four one-year periods; (i) September 28, 1998 -
September 25, 1999, (ii) September 26, 1999 - September 30, 2000, (iii)
October 1, 2000 -September 29, 2001, and (iv) September 30, 2001 - September
28, 2002.
"CUMULATIVE EBITDA ACTUAL IMPROVEMENT" shall mean, the excess of
(a) the Cumulative EBITDA Actual, over (b) the Cumulative EBITDA Baseline.
"CUMULATIVE EBITDA BASELINE" shall mean $467.2 million.
"CUMULATIVE EBITDA INCREASE" shall mean, (a) the lesser of (i) one
or (ii) the Cumulative EBITDA Actual Improvement, (y) divided by the excess
of (1) $524.7 million, over (2) the Cumulative EBITDA Baseline, multiplied by
(b)75% of the Total Promote Percentage.
"DEPRECIATION" shall mean, with respect to any Taxable Year, an
amount equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for Federal income tax purposes,
except that if the Gross Asset Value of the asset differs from its adjusted
tax basis, Depreciation shall be determined in accordance with the methods
used for Federal income tax purposes and shall equal the amount that bears
the same ratio to the Gross Asset Value of such asset as the depreciation,
amortization or other cost recovery deduction computed for Federal income tax
purposes with respect to such asset bears to the adjusted Federal income tax
basis of such asset; PROVIDED, HOWEVER, that if any such asset that is
depreciable or amortizable has an adjusted federal income tax basis of zero,
the rate of Depreciation shall be as determined by the "tax matters partner".
"EMPLOYEE MEMBERS" shall mean (i) any employee of the Operating
Company or any of its Subsidiaries who purchases Interests subsequent to the
date hereof, (ii) any other Person, who is not a Member on the date hereof,
designated as an Employee Member by the Management Committee and (iii) all
Permitted Transferees of such Persons that become parties to this Agreement
in accordance with Article IX.
"EQUITY SECURITIES" has the meaning ascribed to such term in Rule
405 promulgated under the Securities Act as in effect on the date hereof, and
in any event includes any limited partnership interest, any limited liability
company interest and any other interest or security having the attendant
right to vote for directors or similar representatives.
<PAGE>
6
"EXCHANGE ACT" shall mean the United States Securities Exchange Act
of 1934, as amended.
"EXERCISE PRICE" shall mean, with respect to any Option holder, the
amount set forth in the Management Option Plan.
"EXERCISE PRICE EQUIVALENT" shall mean, (a) in the case of GGEP the
product of (i) the excess, of (x) $75,000,000 over (y) the cumulative amounts
distributed pursuant to Section 4.9(c) and (ii) the gross increase in GGEP's
Class B Percentage Interest pursuant to Section 4.5 (determined without
regard the clause (e) thereof) divided by (iii) 100% minus the amount set
forth in clause (a)(ii) of this definition, and (b) in the case of an
Employee Member the product of (i) $1,000 (or such other amount set forth in
the award of such Units), and (ii) the aggregate number of Class A Units
awarded to such Employee Member pursuant to the Management Incentive Plan.
"FAIR MARKET VALUE" shall mean, with respect to any property
(including, without limitation, any Interest), the price at which such
property is likely to be sold in an arm's-length transaction between a
willing and able buyer and a willing and able seller, neither of which is an
Affiliate or an officer, director, shareholder, partner, member or agent of a
Member or an Affiliate of a Member of the other, based on the then prevailing
market conditions; PROVIDED, HOWEVER, that for purposes of determining
Internal Rate of Return and Net Value of the Company, Fair Market Value shall
be determined with reference to a recent or imminent actual arm's length
transaction (including a public offering of interests or a recent or imminent
sale of all or part of the Company or its direct or indirect subsidiaries);
and PROVIDED, FURTHER, that if no such actual arm's length transaction has
occurred or is imminent, then Fair Market Value shall be determined in
accordance with Section 14.20.
"FISCAL YEAR" shall mean the accounting fiscal year of the Company
(or portion thereof) which shall end on the last Saturday of September in
each year unless changed by the Management Committee as provided hereunder;
PROVIDED, HOWEVER, that upon termination of the Company, "FISCAL YEAR" shall
mean the period from the first day of the Fiscal Year immediately preceding
such termination to the date thereof.
"GAAP" shall mean generally accepted accounting principles as in
effect in the United States from time to time.
"GROSS ASSET VALUE" shall mean, with respect to any asset, such
asset's adjusted basis for Federal income tax purposes, except that (i) the
initial Gross Asset Value of any asset contributed to the Company shall be
its gross Fair Market Value (as
<PAGE>
7
determined by the tax matters partner) at the time such asset is contributed
or deemed contributed for purposes of computing Capital Accounts, (ii) upon a
change in the Members' Percentage Interests, the Gross Asset Value of all of
the assets of the Company shall be adjusted to equal their respective gross
Fair Market Values (as determined by the tax matters partner), (iii) the
Gross Asset Value of any asset distributed in kind to any Member shall be the
gross Fair Market Value of such asset (as determined by the tax matters
partner) on the date of such distribution, and (iv) the Gross Asset Value of
any asset determined pursuant to clauses (i) or (ii) above shall thereafter
be adjusted from time to time by the Depreciation taken into account with
respect to such asset for purposes of determining Net Income or Net Loss.
"INTEREST" shall mean the entire ownership interest of a Member in
the Company at any time, including such Member's share of Net Income and Net
Loss, such Member's rights to receive distributions and other benefits to
which such Member may be entitled hereunder and under the Act, and the
obligations of such Member to comply with the applicable terms and provisions
of this Agreement; PROVIDED, HOWEVER, that in no event shall any issued and
outstanding Option be considered an Interest for any purpose of this
Agreement.
"INTERNAL RATE OF RETURN" shall be calculated as though (i) all
assets of the Company were sold as a going concern to a third party for cash
in the amount of the Fair Market Value thereof as of the date of the event
("VALUATION EVENT") requiring such determination (the "EVENT DATE"), (ii) all
obligations of the Company, including the costs, expenses, claims, and
liabilities of any type or kind, whether contingent or otherwise, of the
Company in connection with such hypothetical liquidation were satisfied and
(iii) the remaining assets of the Company were distributed to the Members in
accordance with Article XII.
"INVENTORY TURN ACTUAL" shall mean, as of any test date described
in the Ancillary Letter, (a) the cost of goods sold by the Operating Company
for the last 12 months prior to such test date, divided by (b) the inventory
per the closing balance sheet for such 12 month period.
"INVENTORY TURN ACTUAL IMPROVEMENT" shall mean, as of any test date
described in the Ancillary Letter, the excess of (a) the Inventory Turn
Actual for such test date, over (b) the Inventory Turn Hurdle for such test
date.
"INVENTORY TURN HURDLE" shall mean, as of any test date described
in the Ancillary Letter, the amount set forth under the heading "Turn Hurdle"
in the Ancillary Letter.
"INVENTORY TURN INCREASE" shall mean, as of any test date described
in the Ancillary Letter, (a) the lesser of (i) one or (ii) the Inventory Turn
Actual
<PAGE>
8
Improvement for such test date, divided by the Inventory Turn Promised
Improvement for such test date, multiplied by (b) 6.25% of the Total Promote
Percentage.
"INVENTORY TURN PROMISED IMPROVEMENT" shall mean, as of any test
date described in the Ancillary Letter, the excess of (a) the Inventory Turn
Target for such date, over (b) the Inventory Turn Hurdle for such date.
"INVENTORY TURN TARGET" shall mean, as of the dates described in
the Ancillary Letter, the targets set forth under the heading "Turn Target."
"INVESTMENT BANKING FIRM" shall mean any nationally recognized
investment banking firm that is not an Affiliate of any Member.
"IPO PRICE" shall mean the public offering price per share as set
forth on the cover of the registration statement of the Company as declared
effective by the SEC.
"MAJORITY MEMBERS" shall mean Members holding more than 66% of the
Interests held by all Members (measured in terms of Percentage Interests).
"MANAGEMENT COMMITTEE" means the Management Committee referred to
in Section 6.1.
"MANAGEMENT OPTION PLAN" means the Management Option Plan of the
Company as in effect from time to time.
"MEMBER" means each of the Persons described in the Ancillary
Letter, the Employee Members admitted on the date hereof, any Person
hereafter admitted as a Member hereunder and Permitted Transferees of such
Members, individually, when acting in the capacity of each as a member of the
Company and "Members" means any Person hereafter admitted as a Member
hereunder and Permitted Transferees of such Members, collectively, when
acting in their capacities as members of the Company.
"MEMBER MINIMUM GAIN" shall mean "partner nonrecourse debt minimum
gain," as defined in Section 1.704-2(i)(2) of the Treasury Regulations, and
shall be determined in accordance with Section 1.704-2(i)(3) of the Treasury
Regulations.
"MEMBER NONRECOURSE DEBT" shall mean "partner nonrecourse debt," as
defined in Section 1.704-2(b)(4) of the Treasury Regulations.
"MEMBER NONRECOURSE DEDUCTIONS" shall mean "partner nonrecourse
deductions," as defined in Section 1.704-2(i)(1) of the Treasury Regulations,
and shall be determined in accordance with Section 1.704-2(i)(2) of the
Treasury Regulations.
<PAGE>
9
"MODIFIED CAPITAL ACCOUNT" shall mean, at any time (i) with respect
to GGEP and each Employee Member, the sum of its Capital Account balance at
such time plus its Exercise Price Equivalent, and (ii) with respect to the
other Members, such Member's Capital Account balance at such time.
"NET INCOME" or "NET LOSS" shall mean, with respect to any Taxable
Year, an amount equal to the taxable income or loss of the Company as
determined for federal income tax purposes, with the following adjustments:
(i) Such taxable income or loss shall be increased by
the amount, if any, of tax-exempt income received or accrued by the Company;
(ii) Such taxable income or loss shall be reduced by
the amount, if any, of all expenditures of the Company described in Section
705(a)(2)(B) of the Code, including expenditures treated as described therein
under Section 1.704(b)(2)(iv)(i) of the Treasury Regulations;
(iii) items of income, gain, deductions or losses
specially allocated pursuant to Section 4.7(c) through (h) in any year shall
be excluded from the calculation of such taxable income or loss for such year;
(iv) If the Gross Asset Value of any asset is adjusted
pursuant to clause (ii) or (iii) of the definition of Gross Asset Value, the
amount of such adjustment shall be taken into account, immediately prior to
the event giving rise to such adjustment, as gain or loss from the
disposition of such asset for purposes of computing Net Profit or Net Loss;
(v) Gain or loss resulting from any disposition of any
asset with respect to which gain or loss is recognized for Federal income tax
purposes shall be computed by reference to the Gross Asset Value of the asset
disposed of, notwithstanding that such Gross Asset Value differs from the
adjusted tax basis of such asset; and
(vi) In lieu of the depreciation, amortization, or
other cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Taxable Year.
"NET VALUE OF THE COMPANY" shall mean the aggregate amount of cash
payable to the Members upon the liquidation of the Company if (i) all assets
of the Company were sold as a going concern to a third party for cash in the
amount of the Fair Market Value thereof as of the date of the event requiring
such determination, (ii) all obligations of the Company, including the costs,
expenses, claims, and liabilities of any type or kind, whether contingent or
otherwise, of the Company in connection
<PAGE>
10
with such hypothetical liquidation were satisfied and (iii) the remaining
assets of the Company were distributed to the Members thereafter in
accordance with Article XII.
"NEW CLASS B PERCENTAGE INTERESTS" as of any date shall mean the
aggregate Class B Percentage Interests of all Class B Interests issued after
the date hereof, other than pursuant to Section 4.5.
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Section 1.704-2(b)(1) of the Treasury Regulations. The amount of
Nonrecourse Deductions for any year equals the excess, if any, of the net
increase in the amount of Company Minimum Gain during such year over the
aggregate amount of any distributions during such year of proceeds of a
Nonrecourse Liability that are allocable to an increase in Company Minimum
Gain, determined in accordance with Section 1.704-2(c) of the Treasury
Regulations.
"NONRECOURSE LIABILITY" shall have the meaning set forth in Section
1.704-2(b)(3) of the Treasury Regulations.
"OPERATING COMPANY" shall mean Grove Worldwide LLC, a Delaware
limited liability company.
"OPTION" shall mean an Option which will have a Exercise price and
be exercisable for a number of Interests, pursuant to the Management Option
Plan.
"PARENT" shall mean with respect to any Person, any other Person
that controls such Person directly or indirectly through any Subsidiary of
such other Person or owns directly or indirectly through any Subsidiary of
such other Person more than 50% of the outstanding common stock or
outstanding Equity Securities ordinarily entitled to vote of such Person.
"PERCENTAGE INTEREST" shall mean, as of any date, with respect to
any Member, the sum of (a) the product of (i) such Member's Class A
Percentage Interest, multiplied by (ii) the Class A Share, and (b) the
product of (i) such Member's Class B Percentage Interest, multiplied by (ii)
the Class B Share.
"PERSON" shall mean any individual, partnership, company,
corporation, limited liability company, trust, estate, unincorporated
association, syndicate, joint venture or unincorporated organization, any
government or any department, agency or political subdivision thereof, or any
other entity.
"PUBLIC COMPANY" shall mean a Person required to make periodic
filings with the SEC under Section 13 or 15(d) of the Exchange Act with
respect to its Equity Securities.
<PAGE>
11
"RELATIVE INTEREST" of any Member, as compared to any other Member
or Members, shall mean the proportion that such Member's Percentage Interest
bears to such other Member's or Members' Percentage Interests.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the United States Securities Act of
1933, as amended.
"STOCK AND ASSET PURCHASE AGREEMENT" shall mean the Stock and Asset
Purchase Agreement, dated March 10, 1998, among Hanson Funding (G) Ltd.,
Grove Europe Ltd., Deutsche Grove Corp., Kidde Industries, Inc. and Grove
Worldwide LLC, as in effect from time to time.
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership, limited liability company or other business entity
controlled by such Person directly or indirectly through any other Subsidiary
of such Person or in which such Person owns directly or indirectly through
any other Subsidiary of such Person more than 50% of the outstanding common
stock or other outstanding Equity Securities ordinarily entitled to vote in
such Person.
"TAX AMOUNT" shall mean, with respect to any Member, the product of
(i) the taxable income allocated to such Member pursuant to this Agreement,
and (ii) the maximum combined Federal, state and local income tax rates
applicable to an individual resident of New York City or California,
whichever is higher, PROVIDED, HOWEVER, that in determining the Tax Amount,
the effect thereon of any net operating loss carryforwards or other
carryforwards or tax attributes attributable to the Company, such as
alternative minimum tax carryforwards shall be taken into account, and
adjusted to take into account any applicable credits, deductions or other
adjustments allowed under both New York and California law to a direct or
indirect owner of an Interest in the Company for state and local income tax
purposes based on the assumption that such carryforwards and other tax
attributes have not been utilized against income not attributable to the
Company.
"TAX MATTERS PARTNER" shall have the meaning set forth in Section
8.6.
"TAXABLE YEAR" shall mean the taxable year of the Company (or
portion thereof) which shall end on December 31 in each year; PROVIDED,
HOWEVER, that upon termination of the Company, "TAXABLE YEAR" shall mean the
period from January 1 immediately preceding such termination to the date
thereof.
<PAGE>
12
"TOTAL PROMOTE PERCENTAGE" shall have the meaning set forth in the
Ancillary Letter.
"TRANSFER" shall mean any transfer, sale, assignment, pledge,
lease, hypothecation, mortgage, gift or creation of security interest, lien
or trust (voting or otherwise) or other encumbrance or other disposition of
any Interests. "TRANSFEROR" and "TRANSFEREE" have correlative meanings.
"TREASURY REGULATIONS" shall mean the income tax regulations,
including temporary regulations, promulgated under the Code, as such
regulations may be amended from time to time.
"VALUATION DATE" shall mean any date the assets of the Company are
valued for any reason.
1.2 CROSS REFERENCES. Each of the following terms shall have the
meaning assigned thereto in the Section of this Agreement set forth below
opposite such term:
<TABLE>
<S> <C>
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Agents . . . . . . . . . . . . . . . . . . . . . . . 10.2(f)
Amended and Restated Agreement . . . . . . . . . . .Preamble
Buyout Notice. . . . . . . . . . . . . . . . . . . . . . 9.3
Chosen Court . . . . . . . . . . . . . . . . . . . . . .13.6
Class B Interest . . . . . . . . . . . . . . . . . . . . 3.1
Company. . . . . . . . . . . . . . . . . . . . . . .Preamble
Contribute . . . . . . . . . . . . . . . . . . . . 4.4(a)(i)
Contribution Closing . . . . . . . . . . . . . . . . . . 3.2
Contribution Closing Date. . . . . . . . . . . . . . . . 3.2
Converted Securities . . . . . . . . . . . . . . . . 2.10(b)
Covered Person . . . . . . . . . . . . . . . . . . . .8.2(a)
Deficit Member . . . . . . . . . . . . . . . . . . . .4.6(g)
Demand Member. . . . . . . . . . . . . . . . . . . .10(a)(i)
Demand Notice. . . . . . . . . . . . . . . . . . .10.1(a)(i)
Dissolution Event. . . . . . . . . . . . . . . . . . . .12.2
EBITDA Target. . . . . . . . . . . . . . . . . . . . . . 9.5
Effective Transfer Time. . . . . . . . . . . . . . . . . 9.5
Family Members . . . . . . . . . . . . . . . . . . . .9.2(b)
Family Trust . . . . . . . . . . . . . . . . . . . . .9.2(b)
Initial Class B Percentage Interests . . . . . . . . . . 3.3
Inventory Turn Targets . . . . . . . . . . . . . . . .4.5(a)
Offered Securities . . . . . . . . . . . . . . . .10.1(a)(i)
Offering Members . . . . . . . . . . . . . . . . .10.1(c)(i)
<PAGE>
13
Participating Member . . . . . . . . . . . . . . .10.1(c)(i)
Participation Request. . . . . . . . . . . . . . .10.1(c)(i)
Permitted Transfer . . . . . . . . . . . . . . . . . . . 9.2
Permitted Transferee . . . . . . . . . . . . . . . . . . 9.2
Reconstituted Company. . . . . . . . . . . . . . . . 2.10(b)
Reconstitution . . . . . . . . . . . . . . . . . . . 2.10(b)
Records. . . . . . . . . . . . . . . . . . . . . . . 10.2(f)
Registration Statement . . . . . . . . . . . . . . . 10.2(a)
Regulatory Allocations . . . . . . . . . . . . . . . .4.6(h)
Selling Member . . . . . . . . . . . . . . . . . . 9.3(a)(i)
Tag Along Exercise Notice. . . . . . . . . . . . . . . . 9.4
Tag Along Interest . . . . . . . . . . . . . . . . . . . 9.4
Tag Along Notice . . . . . . . . . . . . . . . . . . . . 9.4
Tag Along Price. . . . . . . . . . . . . . . . . . . . . 9.4
Tag Along Right. . . . . . . . . . . . . . . . . . . . . 9.4
Tax Distributions. . . . . . . . . . . . . . . . . . .4.8(a)
Termination Called Interest. . . . . . . . . . . . . 11.2(b)
Termination Call Notice. . . . . . . . . . . . . . . 11.2(b)
Termination Call Right . . . . . . . . . . . . . . . 11.2(a)
Third Party Purchaser. . . . . . . . . . . . . . . . . . 9.3
Unvested Class A Units . . . . . . . . . . . .10.1(a)(ii)(a)
Unvested Class B Interests . . . . . . . . . .10.1(a)(ii)(b)
</TABLE>
1.3 USAGE GENERALLY. The definitions in this Article I shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Articles,
Sections, and Schedules shall be deemed to be references to Articles and
Sections of, and Schedules to, this Agreement unless the context shall
otherwise require. All Schedules attached hereto shall be deemed
incorporated herein as if set forth in full herein and, unless otherwise
defined therein, all terms used in any Schedule shall have the meaning
ascribed to such term in this Agreement. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". All accounting terms not defined in this Agreement shall have
the meanings determined by GAAP. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise expressly provided herein, any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case
of statutes) by succession of comparable successor statutes and references to
all attachments thereto and instruments incorporated therein. Unless
otherwise expressly specified herein, any allocation to be made among all
<PAGE>
14
Members or a group of Members "on a pro-rata basis" or "ratably" shall be
made in proportion to the Relative Interests of such Members or group of
Members immediately prior to the transaction with respect to which such
allocation is being made.
ARTICLE II
FORMATION; NAME; TERM
2.1 FORMATION. The Company was formed on January 15, 1998
pursuant to the provisions of the Delaware Limited Liability Company Act, as
amended from time to time upon the filing of a Certificate of Formation with
the Secretary of State of Delaware (the "ACT"). The Members hereby agree
that the Company shall be governed by, and the rights, duties and liabilities
of the Members shall be as provided in, the Act and this Agreement.
2.2 NAME. The name of the Company shall be "Grove Investors LLC".
The business of the Company may be conducted upon compliance with all
applicable laws under any other name designated by the Management Committee
2.3 EFFECTIVE DATE; TERM. This Agreement shall become effective
upon the execution of this Agreement by the Members. The Company shall
continue in existence until it is dissolved and its affairs wound up in
accordance with the Act and this Agreement or until it is terminated as
provided in the Act or this Agreement.
2.4 PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Company shall be at 1565 Buchanan Trail East, P.O. Box 21, Shady
Grove, Pennsylvania 17256 or at such other or additional place or places as
the Management Committee shall determine from time to time. The Company may
have other offices, either within or outside of the State of Delaware, at
such place or places as the Management Committee may from time to time
designate or the business of the Company may require.
2.5 REGISTERED OFFICE. The address of the Company's registered
office in Delaware shall be Corporation Service Company, 1013 Centre Road,
Wilmington, Delaware 19805.
2.6 REGISTERED AGENT. The name and address of the registered
agent of the Company for service of process on the Company in the State of
Delaware initially is Corporation Service Company, 1013 Centre Road,
Wilmington, Delaware
<PAGE>
15
19805. The Management Committee may at any time and from time to time
designate another registered agent.
2.7 FILINGS. The Members promptly shall cause the execution and
delivery of such documents and performance of such acts consistent with the
terms of this Agreement as may be necessary to comply with the requirements
of law for the formation, qualification and operation of a limited liability
company under the laws of each jurisdiction in which the Company shall
conduct business. All expenses of such filings shall be borne by the Company.
2.8 AUTHORIZED PERSON. The Chief Executive Officer or any officer
designated by the Management Committee is hereby designated as an authorized
person, within the meaning of the Act, to execute, deliver and file the
certificate of formation of the Company, and any amendments and/or
restatements thereof.
2.9 PURPOSE. The Company is formed for the purpose of, directly
or indirectly, engaging in the Business and in any and all activities and
transactions which are necessary, convenient, desirable or incidental to the
foregoing and in any lawful business, act or activity related thereto as the
Management Committee may determine from time to time and for which a limited
liability company may be organized under the Act, and in any and all
activities necessary, convenient, desirable or incidental to the foregoing.
2.10 POWERS. Except as otherwise limited in this Agreement,
(a) the Company shall have the power and authority to do any
and all acts necessary, appropriate, proper, advisable, convenient or
incidental to or for the furtherance of the purpose set forth in Section 2.9,
including:
(i) to conduct its business, carry on its operations
and have and exercise the powers granted to a limited liability company
by the Act in any state, territory, district or possession of the United
States, or in any foreign country that may be necessary, convenient or
incidental to the accomplishment of the purpose of the Company;
(ii) to acquire by purchase, lease, contribution of
property or otherwise, own, hold, operate, maintain, finance, improve,
lease, sell, convey, mortgage, transfer, demolish or dispose of any real
or personal property that may be necessary, convenient or incidental to
the accomplishment of the purpose of the Company;
(iii) to enter into, perform and carry out contracts of
any kind, including, without limitation, contracts with any Member or
any
<PAGE>
16
Affiliate thereof, or any agent of the Company necessary to, in
connection with, convenient to, or incidental to the accomplishment of
the purposes of the Company;
(iv) to purchase, take, receive, subscribe for or
otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and with,
shares or other interests in or obligations of domestic or foreign
corporations, associations, general or limited partnerships (including
the power to be admitted as a partner thereof and to exercise the rights
and perform the duties created thereby), trusts, limited liability
companies (including the power to be admitted as a member or appointed
as a manager thereof and to exercise the rights and perform the duties
created thereby), or individuals or direct or indirect obligations of
the United States or of any government, state, territory, governmental
district or municipality or of any instrumentality of any of them;
(v) to lend money for any proper purpose, to invest
and reinvest funds and to take and hold real and personal property for
the payment of funds so loaned or invested;
(vi) to sue and be sued, complain and defend and
participate in administrative or other proceedings, in its name;
(vii) to appoint employees and agents of the Company,
define their duties and fix their compensation;
(viii) to indemnify any Person in accordance with the
Delaware Act and to obtain any and all types of insurance;
(ix) to cease its activities and cancel its Certificate;
(x) to negotiate, enter into, renegotiate, extend,
renew, terminate, modify, amend, waive, execute, acknowledge or take any
other action with respect to any lease, contract or security agreement
in respect of any assets of the Company;
(xi) to borrow money and issue evidences of
indebtedness, and to secure the same by a mortgage, pledge or other lien
on the assets of the Company;
(xii) to pay, collect, compromise, litigate, arbitrate
or otherwise adjust or settle any and all other claims or demands of or
against the
<PAGE>
17
Company or to hold such proceeds against the payment of contingent
liabilities; and
(xiii) to make, execute, acknowledge and file any and all
documents or instruments necessary, convenient or incidental to the
accomplishment of the purpose of the Company.
(b) The Company upon the approval of the Management
Committee, may merge with, or consolidate into, another Delaware limited
liability company or other business entity (as defined in Section 18-209(a)
of the Act) or take such action as is necessary to cause the Company to be
reconstituted into a corporation or other business entity (the "RECONSTITUTED
COMPANY") organized under the laws of the State of Delaware, or any other
jurisdiction selected by the Majority Members (including without limitation
through a merger of the Company with and into a direct or indirect
Subsidiary, including Crane Acquisition Corp.) (the "RECONSTITUTION"), and to
convert each Member's Interest into Equity Securities with a Fair Market
Value (determined at the IPO Price, if applicable) equal to the amount such
Member would receive upon the distribution described in clause (iii) of the
definition of Net Value of the Company assuming, in the case of a
Reconstitution of the Company in connection with an IPO, that the aggregate
amount so distributed equals the IPO Price multiplied by the aggregate number
of shares received by the Company or its Members in the Reconstitution (with
the Management Committee determining any adjustments required in the event
that the Reconstituted Company issues more than one class of securities
and/or other issues arising with respect to such determinations) (such equity
securities being referred to herein as "CONVERTED SECURITIES"). If the
Company's business is reconstituted in corporate form, the principal features
of Options granted under the Management Option Plan and any partnership
Interests acquired upon exercise thereof (including any call or other right
related thereto), shall be applied to the successor Options and stock, as
determined by the Committee.
ARTICLE III
INTERESTS; CLOSING; CONTRIBUTIONS
3.1 MANAGEMENT CONTRIBUTIONS. On the date hereof, each of the
Employee Members shall contribute, transfer, assign and convey (collectively,
"CONTRIBUTE"), or cause to be contributed, to the capital of the Company, an
amount in cash equal to the amount set forth opposite their respective names
and beneath the column headed "Initial Capital Contributions" as found in the
Ancillary Letter in exchange for an interest in the Company (a "CLASS A
UNITS").
<PAGE>
18
3.2 CONTRIBUTION CLOSING. The actions required to be taken
pursuant to Section 3.1 shall take place at a closing (the "CONTRIBUTION
CLOSING") to be held on June 26, 1998 at the office of the Company or at such
other time and place as the is mutually agreed to by the parties. The time
and date upon which the Contribution Closing occurs is herein called the
"CONTRIBUTION CLOSING DATE."
3.3 CLASS A UNITS. Each Member's Class A Units shall entitle such
Member to an interest in the income, loss and distributions of the Company in
accordance with Article IV. The number of Class A Units of purchased by each
Employee Member of the Company shall be set forth opposite such Employee
Member's name in the Ancillary Letter.
3.4 RETURN OF CAPITAL CONTRIBUTIONS.
(a) Except as otherwise provided herein, all or a portion of
a Member's Capital Contribution may be returned to it at any time, but only
with the consent of the Management Committee. Any such returns of Capital
Contributions shall be made to all Members in the same proportions as
distributions are made pursuant to Section 4.8; and provided that no return
shall be made of a Member's Capital Contribution if such distribution would
violate applicable law. No Member shall have the right to demand or receive
property other than cash as a return of his Capital Contribution, except as
may be specifically provided in this Agreement.
(b) A Member's Interest shall for all purposes be personal
property. A Member has no interest in specific Company property.
ARTICLE IV
CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS
4.1 CAPITAL ACCOUNTS. A separate capital account (a "CAPITAL
ACCOUNT") shall be maintained for each Member. Each Member's Capital Account
shall be credited with (i) the amount of such Member's Capital Contribution
(including, without limitation, the payment of a Exercise price) made in
cash, (ii) such Member's allocated share of Net Income of the Company and
(iii) any items of income or gain allocated to such Member pursuant to
Sections 4.7(c) through 4.7(h). Each Member's Capital Account shall be
reduced by (i) the amount of any cash distributions to such Member and the
Fair Market Value (net of liabilities assumed or taken subject to) of all
property distributed in kind to such Member, (ii) such Member's allocated
share of Net Loss of the Company and (iii) any items of deduction or loss
allocated to such Member pursuant to Sections 4.7(c) through (h).
<PAGE>
19
4.2 ALLOCATION OF NET INCOME.
Except as otherwise provided in the further provisions of this
Article IV, Net Income of the Company for any Taxable Year shall be allocated
as follows and in the following order of priority:
(i) FIRST, to the Members in proportion to and to the
extent of any deficit balances in their respective Adjusted Capital
Accounts;
(ii) NEXT, to the Members in the manner necessary to
cause, the maximum extent possible, the ratio of their respective Modified
Capital Account balances to equal the ratio of their respective Percentage
Interests; and
(iii) THEREAFTER, to the Members in accordance with their
respective Percentage Interests.
4.3 ALLOCATION OF NET LOSS.
Except as otherwise provided in the further provisions of this
Article IV, Net Loss of the Company for any Taxable Year shall be allocated
as follows and in the following order of priority:
(i) FIRST, to the Members in the manner necessary to
cause, the maximum extent possible, the ratio of their respective Modified
Capital Account balances to equal the ratio of their respective Percentage
Interests;
(ii) NEXT, to the Members in proportion to and to the
extent of their respective positive Capital Account balances; and
(iii) THEREAFTER, to the Members in accordance with their
respective Percentage Interests.
4.4 CLASS A UNITS. The Company may from time to time sell for
consideration Class A Units to Employee Members. Pursuant to and in
accordance with the Management Option Plan, the Company may issue Options.
Each Option holder shall have the right to purchase Interests in the Company
in an amount equal to the number of Interests set forth in the Management
Option Plan, by payment to the Company of Capital Contributions equal to
their respective Exercise prices upon the exercise of such Options in
accordance with the terms thereof. Upon exercise of an Option by such
payment, a holder shall receive allocations and distributions as set forth in
Articles IV and XII hereof.
<PAGE>
20
4.5 ADJUSTMENTS TO CLASS B PERCENTAGE INTERESTS.
(a) INVENTORY TURN TARGETS.
(i) Subject to subsection (ii), below, if as of each
test date described in the Ancillary Letter, the Inventory Turn Actual is
greater than the Inventory Turn Hurdle, then the Class B Percentage
Interest of GGEP shall be increased by adding to it the Inventory Turn
Increase for such test date.
(ii) In the event a Change in Control occurs prior to
September 28, 2002 in which the Members other than GGEP and Michael L.
George collectively, after giving effect to the transaction giving rise to
such a Change in Control, have received an Internal Rate of Return on their
investment in the Company of greater than or equal to 20%, then immediately
prior to such Change in Control the Class B Percentage Interests of GGEP
shall be increased by adding to it the excess, if any, of 25% of the Total
Promote Percentage over the amount by which GGEP's Interest has previously
been increased pursuant to Section 4.5(a)(i).
(b) EBITDA TARGET.
(i) Subject to subsection (iii) below, if on each of the
last day of Fiscal Years 1999, 2000, 2001 and 2002, the Annual EBITDA
Actual is greater than the Annual EBITDA Baseline set forth for such date,
then the Class B Percentage Interest of GGEP shall be increased by adding
to it the Annual EBITDA Increase.
(ii) Subject to subsection (iii) below, if on
September 30, 2002, the Cumulative EBITDA Actual is greater than the
Cumulative EBITDA Baseline, then the Class B Percentage Interest of GGEP
shall be increased by adding to it the excess, if any, of (A) the
Cumulative EBITDA Increase, over (B) the aggregate Annual EBITDA Increases
previously added to the Class B Percentage Interest of GGEP pursuant to
Section 4.5(b)(i).
(iii) In the event a Change in Control occurs prior to
September 30, 2002 and all the Members other than GGEP and Michael L.
George collectively, after giving effect to the transaction giving rise to
such a Change in Control, have received an Internal Rate of Return on their
investment in the Company of greater than or equal to 20%, then immediately
prior to such Change in Control the Class B Percentage Interests of GGEP
shall be increased by adding to it the excess of (A) 75% of the Total
Promote Percentage over, (B) the aggregate Annual EBITDA Increases
previously added to the Class B Percentage Interest of GGEP pursuant to
Section 4.5(b)(i).
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21
(c) (i) In the event that a Change of Control occurs on a
date other than the last day of a Fiscal Year and the Internal Rate of Return
is less than 20%, then the calculation of the Inventory Turn Increase shall
be calculated on the basis of the next Test Date, and if the target for such
Test Date is achieved, the Percentage Interests of GGEP shall be increased by
the Inventory Turn Increase multiplied by a fraction, the numerator of which
is the number of days from the last Test Date through the Change of Control
and the denominator of which is 365.
(ii) In the event that a Change of Control occurs on a date
other than the last day of a Fiscal Year and the Internal Rate of Return is
less than 20%, then the calculation of the Annual EBITDA Increase shall be
calculated on the basis of a 12-month period preceding the Change of
Control and compared to the subsequent Annual EBITDA target date and if the
target for such target year is achieved, the Percentage Interests of GGEP
shall be increased by the Annual EBITDA Increase multiplied by a fraction,
the numerator of which is the number of days from the last Annual EBITDA
target date through the Change of Control and the denominator of which is
365.
(d) If the Class B Percentage Interests of GGEP is adjusted
pursuant to this Section 4.5, no Member shall have the right to modify,
rectify, or undo such adjustments thereafter, and such adjustments shall be
made without the need for any further act or writing to effect any such
adjustment. Each Member hereby appoints the Management Committee as its duly
authorized agent and attorney-in-fact for purposes of preparing and executing
any amendments to this Agreement necessary or desirable to reflect any
adjustment of Class B Percentage Interests under this Section 4.5. The
rights granted to any Member under this Section 4.5 shall be such Member's
sole and exclusive remedy for seeking relief with respect to any adjustment
pursuant to this Section 4.5.
(e) The Total Promote Percentage is based upon aggregate
Capital Contributions by all Members of $75 million. Notwithstanding
anything contained herein to the contrary, in the event that additional
Capital Contributions were made by or to the Members on a particular date,
other than Capital Contributions referred to in Section 4.9(c), then as of
such date, the Total Promote Percentage shall be decreased by subtracting
from it an amount equal to the product of the Total Promote Percentage
multiplied by a fraction, with a numerator equal to the additional Capital
Contributions made on such date, and a denominator equal to the Net Value of
the Company on such date (inclusive of the value of the addition Capital
Contributions made on such date). For example, if $20 million of additional
Capital Contributions are made on a date when the Net Value of the Company
(including the value of such additional Capital Contributions) is $95 million,
then the Total Promote Percentage shall for all purposes be reduced by
subtracting from it an amount equal to the product of the Total Promote
Percentage multiplied by a fraction equal to 20 million/95 million.
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22
(f) This Section 4.5 shall terminate upon the termination of
the Consulting Agreement. GGEP shall retain any adjustments to their
Percentage Interests made in accordance with Section 4.5 to the extent that
such adjustments were made prior to the termination of the Consulting
Agreement.
4.6 INTERIM ALLOCATIONS DUE TO PERCENTAGE INTEREST ADJUSTMENT. In
the event of a change in the Members' Percentage Interests during any year or
a Transfer of an Interest in the Company, the Company's Net Income or Net
Loss shall be allocated among the Members for the periods before and after
the change or transfer based on an interim closing of the books or any lawful
equitable alternative method as determined by the Management Committee. This
Section 4.6 shall apply both for purposes of computing a Member's Capital
Account and for Federal income tax purposes.
4.7 CERTAIN TAX MATTERS.
(a) Except as otherwise provided herein, all items of Company
income, gain, deduction and loss shall be allocated among the Members in the
same proportion as they share in the Net Income and Net Loss to which such
items relate. Any credits against income tax shall be allocated in
accordance with the Members' Percentage Interests.
(b) Income, gain, loss or deductions of the Company shall,
solely for income tax purposes, be allocated among the Members in accordance
with Section 704(c) of the Code and the Treasury Regulations promulgated
thereunder, so as to take account of any difference between the adjusted
basis of the assets of the Company and their respective Gross Asset Values in
accordance with the traditional method set forth in Section 1.704-3(c) of
the Treasury Regulations.
(c) Notwithstanding any other provision of this Article IV,
if there is a net decrease in Company Minimum Gain during any year, each
Member shall be specially allocated items of income and gain for such year
(and, if necessary, subsequent years) in an amount equal to the portion of
such Member's share of the net decrease in Company Minimum Gain, determined
in accordance with Section 1.704-2(g) of the Treasury Regulations. Allocations
pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant thereto.
The items to be so allocated shall be determined in accordance with
Section 1.704-2(f)(6) of the Treasury Regulations. This Section 4.7(c) is
intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(d) Notwithstanding any other provisions of this Article IV
except Section 4.7(c), if there is a net decrease in Member Minimum Gain
attributable
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23
to a Member Nonrecourse Debt during any year, each Member who has a share of
the Member Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations, shall be specially allocated items of income and gain for such
year (and, if necessary, subsequent years) in an amount equal to the portion
of such Member's share of the net decrease in Member Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(4) of the Treasury Regulations. Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be so
allocated shall be determined in accordance with Section 1.704-2(i)(4) of the
Treasury Regulations. This Section 4.7(d) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(i) of the Treasury
Regulations and shall be interpreted consistently therewith.
(e) Nonrecourse Deductions for any year shall be allocated as
Net Loss pursuant to Section 4.3.
(f) Any Member Nonrecourse Deductions for any year shall be
specially allocated to the Member who bears the economic risk of loss with
respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Section 1.704-2(i)(1) of the
Treasury Regulations.
(g) Notwithstanding any other provision of this Article IV,
no Member shall be allocated in any Taxable Year of the Company any Net Loss
to the extent such allocation would cause or increase a deficit balance in
such Member's Adjusted Capital Account, taking into account all other
allocations to be made for such year pursuant to this Article IV and the
reasonably expected adjustments, allocations and distributions described in
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations. Any such Net Loss
that would be allocated to a Member (the "DEFICIT MEMBER") shall instead be
allocated to the other Members. Moreover, if a Deficit Member unexpectedly
receives an adjustment, allocation or distribution described in
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations which creates or
increases a deficit balance in such Member's Adjusted Capital Account
(computed after all other allocations to be made for such year pursuant to
this Article IV have been tentatively made as if this Section 4.7(g) were not
in this Agreement), such Deficit Member shall be allocated items of Gross
Income in an amount equal to such deficit balance. This Section 4.7(g) is
intended to comply with the qualified income offset requirement of
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be
interpreted consistently therewith.
(h) The allocations set forth in Sections 4.7(c) through
4.7(g) (the "REGULATORY ALLOCATIONS") are intended to comply with Section 704(b)
of the Code and the Treasury Regulations thereunder and shall be taken into
account in allocating items of income, gain, loss and deduction among the
Members so that, to the extent
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24
possible, the net amount of such allocations of other items and the Regulatory
Allocations to each Member shall be equal to the net amount that would have
been allocated to each such Member if the Regulatory Allocations had not
occurred.
4.8 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Members for all ordinary and necessary expenses reasonably incurred (as
determined by the Management Committee) by the Members on behalf of the
Company, upon presentation of copies of invoices or other documents
reasonably evidencing the amount and nature of such expenses. Such
reimbursed amounts shall be treated as expenses of the Company that shall be
deducted in calculating Net Income and shall not be deemed to constitute a
distributive share of Net Income or a distribution or return of capital to
any Member.
4.9 DISTRIBUTIONS.
(a) Subject to Sections 4.9(c) and 4.10, the Company shall,
to the extent the Management Committee determines the Company has cash
available to do so, make quarterly advances of cash or other property to the
Members in proportion and to the extent of their respective Tax Amounts ("TAX
DISTRIBUTIONS"). Such Tax Distributions shall be treated as non-interest
bearing advances recoverable from future distributions from the Company
pursuant to Sections 4.9(b) and 12.4.
(b) Subject to Sections 4.9(c) and 4.10, after provision for
sufficient working capital consistent with good fiscal operating policy and
such other needs as the Management Committee, in its sole discretion, shall
deem appropriate, distributions (other than distributions pursuant to
Section 12.4) of the net funds remaining after payment or provision for
payment of current obligations and operating expenses of the Company and
after distributions pursuant to the preceding paragraph, shall be made to the
Members in accordance with their respective Percentage Interests, at such
times as the Management Committee, in its sole discretion, shall determine.
(c) Upon Capital Contributions by the Employee Members in
exchange for the first 5,500 Class A Units issued by the Company, not
including Class A Units issued pursuant to the Management Incentive Plan,
such Capital Contributions shall be distributed within 90 days following such
contribution to the Members in proportion to their Initial Class B Percentage
Interests.
4.10 DISTRIBUTIONS IN KIND. Distributions made pursuant to this
Agreement may be made in cash or in assets in kind in the discretion of the
Management Committee; provided, however, that any distribution in kind shall
be made to all Members proportionately in accordance with their Percentage
Interests.
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4.11 RESTRICTIONS ON DISTRIBUTIONS. Notwithstanding any provision
to the contrary contained in this Agreement, the Company shall not make a
distribution to any Member with respect to such Member's Interest if such
distribution would violate Section 18-607 of the Act or other applicable law.
In addition, except as specifically determined by the Management Committee,
the Company shall not make a distribution to any Member if such distribution
would be prohibited by the terms of, or would cause any obligation of the
Company to become due prior to the final maturity date of, or would cause the
net worth or assets of the Company to be less than the minimum amount (or
less in relation to another amount than the minimum ratio of such amounts)
required to be maintained by the Company under, or otherwise would conflict
with, any agreement or other instrument to which the Company is a party or by
which it is bound which relates to borrowed money.
4.12 TAX WITHHOLDING.
(a) If requested by the Company, each Member shall deliver to
the Company (i) an affidavit in form satisfactory to the Company that the
applicable Member is not subject to withholding under the provisions of any
federal, state, local, foreign or other law, (ii) any certificate that the
Company may reasonably request with respect to any such laws, (iii) any other
form reasonably requested by the Company relating to any Member's status
under any such law, and/or (iv) a copy of any tax return or similar document
of the applicable Member that the Company may reasonably request with respect
to any such law.
(b) To the extent that the Company is required by any
applicable law to withhold or to make tax payments on behalf of or with
respect to distributions to, allocations to, or otherwise for any Member
(each a "TAX LIABILITY"), the Company may make such tax payments (each a "TAX
ADVANCE") as so required; PROVIDED, that at least ten (10) days, if
commercially possible, prior to making a Tax Advance on behalf of or with
respect to a Member, the Company shall first notify such affected Member.
Such tax payments shall be deducted from concurrent distributions, if any,
from the Company to such Member pursuant to Sections 4.9 and 12.4. For the
avoidance of doubt, to the extent that such tax payments are recovered from
Tax Distributions, such Tax Distributions shall continue to be recoverable
from future distributions from the Company pursuant to Sections 4.9(b) and
12.4. To the extent a Tax Advance is greater than a concurrent distribution
(a "TAX EXCESS"), such Tax Excess shall be deemed to be a recourse loan to
such Member by the Company and shall be due and payable immediately after
such Tax Excess is made by the Company, and if not repaid within three (3)
days after the Tax Excess is made by the Company, the Tax Excess shall bear
interest at a rate equal to the lesser of (i) fifteen percent (15%) per
annum, or (ii) the maximum rate permitted by law until repaid. Notwithstanding
anything to the contrary contained herein or in any other agreement between
or among Members, each Member hereby agrees to indemnify, defend, and
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26
hold harmless the Company and its Affiliates from and against any Tax
Liability of or with respect to such Member, at any time, and this indemnity
and hold harmless provision shall survive this Agreement and the termination
of the Company. In the event of any claimed over-withholding, such Member
shall be limited to an action against the applicable government agencies for
refund and hereby waives any claim or right of action against the Company on
account of such withholding. The Company may, and is hereby authorized to,
withhold from any distributions or payments otherwise due to a Member from
the Company under this Agreement the amount of any Tax Excess made on behalf
of such Member that as of such date has neither been repaid to the Company
nor been previously offset hereunder, any amount withheld under this
Section 4.12 shall be deemed for all purposes of this Agreement to have been
distributed or paid to such Member. Any Member who does not repay a Tax
Excess after a written final demand has been given by the Management
Committee shall pay, in addition to the Tax Excess and applicable interest,
all expenses, including without limitation reasonable attorney's fees,
incurred by the Company and/or any other Member in collecting the Tax Excess
plus interest and/or pursuing any other remedy provided in the Section 4.12
and otherwise in this Agreement.
ARTICLE V
MEMBERS
5.1 MEMBERS. The names and addresses of the Members are set forth
on the signature page hereto.
5.2 ADMISSION OF NEW MEMBERS. New members may be admitted by the
Management Committee or in accordance with the transfer provisions contained
in Article IX.
5.3 RESIGNATION. A Member may not resign from the Company prior
to the dissolution and winding up of the Company. A resigning Member shall
not be entitled to receive any distribution except as expressly provided in
this Agreement.
5.4 POWER OF MEMBERS. The Members shall have the power to
exercise any and all rights or powers granted to Members pursuant to the
express terms of this Agreement. The Members shall elect the Management
Committee in accordance with Section 6.3(b). Except as otherwise
specifically provided by this Agreement or required by the Act, no Member
shall have the power to act for or on behalf of, or to bind, the Company.
Notwithstanding the foregoing sentence, all Members shall constitute one
class or group of members for purposes of the Act.
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27
5.5 MEMBERS' RIGHT TO MAKE CERTAIN ADDITIONAL INVESTMENT. Each of
the Members shall have a right to purchase additional interests in the
Company, Grove Holdings LLC ("Holdings"), or the Operating Company pro rata
in accordance with their respective Percentage Interests in the event any
such company sells interests therein to any other Member or to an Affiliate
of such Member, or to an officer, director, shareholder, partner, member, or
agent of such Member of Affiliate or any family member of such Affiliate.
This right shall terminate immediately prior, and shall not be applicable, to
a Public Offering (an "Additional Investment") or a public offering of
Holdings or the Operating Company. Any Additional Investment which any
Member desires to make shall be made through the same entity (i.e. the
investment shall not increase the number of PTP Slots as provided for
hereunder) in which Members electing to invest have invested hereunder
(except as otherwise permitted by the Management Committee) and all Members
shall have the right to invest pro rata in accordance with their respective
Percentage Interests on the same basis as every other Member. The Management
Committee shall give notice to each Member that additional funds are needed
for the Additional Investment. If a Member desires to make an Additional
Investment, and the other Members elect not to participate in the Additional
Investment, then the Members may make the Additional Investment free of the
obligations of this Section 5.5. Sales of Interests to Members, and other
transactions with Members and their Affiliates, shall be on an arms length
basis.
5.6 MEETINGS.
(a) Meetings of the Members shall be held at such times as
the Majority Members or the Management Committee shall from time to time
determine or as otherwise required by law.
(b) The Members may hold meetings at the Company's principal
place of business or such other place as the Management Committee may
designate.
(c) Any Member may participate in a meeting of the Members by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting by such means shall constitute presence in person
at such meeting.
(d) At each meeting of the Members, a person designated by
the Management Committee shall act as chairman of the meeting and preside.
The Secretary, or any person whom the Chairman of the meeting shall appoint
shall act as Secretary of such meeting and keep the minutes thereof.
5.7 VOTING. The Members shall vote in accordance with their
Percentage Interests, to the extent such Interest are entitled to vote.
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28
5.8 QUORUM. A quorum of any meeting of the Members shall require
the presence of the Majority Members. No action at any meeting may be taken
by the Members unless a quorum is present. No action may be taken by the
Members at any meeting at which a quorum is present without the affirmative
vote of the Majority Members.
5.9 ACTIONS WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Members 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 Majority Members and such
consent is filed with the minutes of the proceedings of the Members.
ARTICLE VI
MANAGEMENT
6.1 MANAGEMENT OF THE COMPANY.
(a) The Company shall be managed by a Management Committee.
The following persons are hereby appointed and elected to serve as a member
of the Management Committee, each until his successor shall be appointed and
elected or his earlier death, resignation, removal or termination: J. Taylor
Crandall, Michael L. George, Gerald Grinstein, Steven B. Gruber, Robert B.
Henske, Gerard E. Holthaus, Salvatore J. Bonanno and Anthony P. Scotto. The
Management Committee shall manage the Company in accordance with this Agreement
and the actions of the Management Committee taken in such capacity and in
accordance with this Agreement shall bind the Company.
(b) The Management Committee shall have full, exclusive and
complete discretion to manage and control the business and affairs of the
Company, to make all decisions affecting the business and affairs of the
Company and to take all such actions as it deems necessary or appropriate to
accomplish the purpose of the Company as set forth herein. The Management
Committee shall be the sole person or entity with the power to bind the
Company, except and to the extent that such power is expressly delegated to
any other person, committee or entity by the Management Committee, and such
delegation shall not cause the Management Committee to cease being the
Management Committee. There shall not be a "manager" (within the meaning of
the Act) of the Company.
(c) The Management Committee may appoint individuals with or
without such titles as it may elect, including the titles of President, Vice
President, Treasurer, Secretary, and Assistant Secretary, to act on behalf of
the Company with
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29
such power and authority as the Management Committee may delegate in writing
to any such persons, and otherwise such officers shall have all the powers
and authority customarily exercised by such officers.
(d) The Management Committee may adopt the By-laws of the
Company consistent with this Agreement and the Act.
6.2 POWERS OF THE MANAGEMENT COMMITTEE. The Management Committee
shall have the right, power and authority, in the management of the business
and affairs of the Company, to do or cause to be done, at the expense of the
Company, any and all acts deemed by the Management Committee to be necessary
or appropriate to effectuate the business, purposes and objectives of the
Company.
Without limiting the generality of the foregoing, the Management
Committee shall have the power and authority to:
(a) issue from time to time in one or more series of any
number of Interests, and with such powers, preferences, rights and
qualifications, limitations or restrictions thereof, and such distinctive
serial designations, all as shall hereafter be stated and expressed in the
resolution or resolutions adopted by the Management Committee. Each series
of Interests (a) may have such voting rights or powers, full or limited, or
may be without voting rights or powers; (b) may be subject to redemption at
such time or times and at such prices; (c) may be entitled to receive
allocations and distributions (which may be cumulative or non-cumulative) at
such rate or rates, on such conditions and at such times, and allocable and
payable in preference to, or in such relation to, the allocations and
distributions allocable and payable to any other class or classes or series
of Interests; (d) may have such rights upon the voluntary or involuntary
liquidation, winding up or dissolution of, or upon any distribution of the
assets of, the Company; (e) may be made convertible into or exchangeable for,
Interests of any other class or classes or of any other series of the same or
any other class or classes of interests of the Company at such price or
prices or at such rates of exchange and with such adjustments; (f) may be
entitled to the benefit of a sinking fund to be applied to the purchase or
redemption of Interests of such series in such amount or amounts; (g) may be
entitled to the benefit of conditions and restrictions upon the creation of
indebtedness of the Company or any subsidiary, upon the issue of any
additional Interests (including additional Interests of such series or of any
other series) and upon the making of allocations or distributions on, and the
purchase, redemption or other acquisition by the Company or any subsidiary
of, any outstanding Interests of the Company and (h) may have such other
relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof; all as shall be stated in said
resolution or resolutions providing for the issue of such Interests;
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30
(b) cause the Interests of the Company to be represented by
certificates in such form and on the basis of such procedure as shall be
approved by the Management Committee, including with respect to the issuance
of new certificates to replace lost, destroyed, stolen or mutilated
certificates.
(c) establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to allocations and distributions;
(d) bring and defend on behalf of the Company actions and
proceedings at law or in equity before any court or governmental, administrative
or other regulatory agency, body or commission or otherwise; and
(e) execute all documents or instruments, perform all duties
and powers and do all things for and on behalf of the Company in all matters
necessary, desirable, convenient or incidental to the purpose of the Company,
including, without limitation, all documents, agreements and instruments
related to the making of investments of Company funds.
In connection with the issuance of any Interests as contemplated
under Subsection (a) above, the Management Committee is hereby authorized to
enter into such amendments or supplements to this Agreement as the Management
Committee determines to be necessary or advisable to give effect to such
issuance, including to make appropriate adjustments to the total number of
Interests outstanding, the Percentage Interests and Relative Interests of
the Members; provided, however, that such adjustments shall not treat Members
differently and adversely from the manner in which other Members holding
similar Interests are treated.
The expression of any power or authority of the Management
Committee in this Agreement shall not in any way limit or exclude any other
power or authority of the Management Committee which is not specifically or
expressly set forth in this Agreement.
Notwithstanding anything in this Agreement to the contrary,
all transactions between the Company or any Subsidiary and any Member, its
Affiliates or any officer, director, shareholder, partner, member, employee
or agent of a Member or an Affiliate of a Member or family members of the
foregoing shall be on an arms length basis.
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31
6.3 GOVERNANCE.
(a) NUMBER. The Management Committee shall consist of one or
more members. Each Management Committee member shall hold office until a
successor is elected and qualified or until such member's death, resignation
or removal.
(b) ELECTION. Management Committee members shall be elected
by the Majority Members from time to time.
(c) RESIGNATION. Any Management Committee member may resign
at any time upon written notice to the Company.
(d) REMOVAL. Any or all of the Management Committee members
may be removed with or without cause by the Majority Members.
(e) TIMES AND PLACES OF MEETINGS. The times and places for
fixing meetings may be fixed from time to time by the Management Committee.
(f) QUORUM. A majority of the Management Committee members
shall be necessary and sufficient to constitute a quorum for the transaction
of business at any meeting of the Management Committee.
(g) ACTION BY MAJORITY VOTE. The act of a majority of the
Management Committee members present at a meeting at which a quorum is present
shall be the act of the Management Committee.
(h) ACTION WITHOUT A MEETING. Any action or permitted action
required to be taken at any meeting of the Management Committee 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 a majority of
the Management Committee members and such consent is filed with the minutes
of the proceedings of the Company.
6.4 NO MANAGEMENT BY OTHER PERSONS OR ENTITIES. Except and only
to the extent expressly delegated by the Management Committee, no person or
entity other than the Management Committee shall be an agent of the Company
or have any right, power or authority to transact any business in the name of
the Company or to act for or on behalf of or to bind the Company.
6.5 BY-LAWS. The Members or the Management Committee may adopt
by-laws consistent with this Agreement and the Act.
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32
6.6 RELIANCE BY THIRD PARTIES. Any person or entity dealing with
the Company or the Management Committee or a Member, in his capacity as a
Member, may rely upon a certificate signed by the Management Committee as to:
(a) the identity of the Management Committee or the Member;
(b) the existence or non-existence of any fact or facts which
constitute a condition precedent to acts by the Management Committee or the
Member or are in any other manner germane to the affairs of the Company;
(c) the persons who or entities which are authorized to execute
and deliver any instrument or document of or on behalf of the Company; or
(d) any act or failure to act by the Company as to any other
matter whatsoever involving the Company or the Member.
ARTICLE VII
ACCOUNTING; FINANCIAL AND TAX MATTERS
7.1 ACCOUNTING METHOD. The Company shall keep its accounting
records and shall report Net Income or Net Losses on the accrual method of
accounting in accordance with the principles used by the Company for Federal
income tax purposes and otherwise in accordance with GAAP consistently
applied and, to the extent inconsistent therewith, in accordance with this
Agreement.
7.2 ACCOUNTING RECORDS. The Company shall keep complete and
accurate business and accounting records reflecting all transactions of the
Company. Such accounting records shall be kept in accordance with the principles
set forth in Section 7.1. The Company shall also keep all records required
to be kept pursuant to the Act. The Company's records, together with a copy
of this Agreement and of the Certificate, shall be maintained at the principal
place of business of the Company and shall be subject to inspection or
examination by each Member and its duly authorized representative at all
reasonable times for any purpose reasonably related to such Member's interest
as a member of the Company.
7.3 FISCAL YEAR. The Fiscal Year initially shall end on the last
Saturday of September of each year. The Fiscal Year may be changed by the
Management Committee. If the Fiscal Year is changed by the Management
Committee as provided hereunder, any Target Date and/or measurement periods
as provided in
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Section 4.5, shall be adjusted in an equitable manner as reasonably determined
by the Management Committee and GGEP.
7.4 FINANCIAL STATEMENTS.
(a) As soon as practicable but in any event within 60 days
after the end of each of the first three quarters of each Fiscal Year of the
Company, the Management Committee or the financial officers of the Company
shall prepare and distribute to each Member quarterly financial statements of
the Company (which need not be examined or reported on by an independent
certified public accountant), which shall include a balance sheet of the
Company as of the end of such fiscal quarter, a statement of Net Income and
Net Loss for such fiscal quarter and a statement of cash flows of the Company
for such fiscal quarter, all in reasonable detail, setting forth in each case
in comparative form the information for the corresponding period (or periods)
of the previous Fiscal Year.
(b) As soon as practicable but in any event within 90 days
after the close of each Fiscal Year of the Company, the Company shall cause
to be prepared and delivered to each Member the following financial
statements, accompanied by the audited report thereon of the independent
accountants for the Company: (i) a balance sheet of the Company as at the
end of such Fiscal Year; (ii) a statement of Net Income and Net Loss for such
Fiscal Year; (iii) a statement of cash flows of the Company for such Fiscal
Year; and (iv) a statement of the Members' Capital Accounts and changes
therein for such Fiscal Year, all in reasonable detail, setting forth in each
case in comparative form all the information for the corresponding period (or
periods) of the previous Fiscal Year.
(c) Notwithstanding the foregoing, in the event that the
Company becomes a reporting company under the Securities Exchange Act of
1934, and so long as it shall remain a reporting company thereunder, it shall
only be required to provide the Members with copies of any quarterly or
annual financial statements of the Company filed with the Securities and
Exchange Commission.
7.5 BANK AND INVESTMENT ACCOUNTS. All funds of the Company shall
be deposited in its name, or in such name as may be designated by the
Management Committee, in such checking, savings or other accounts, or held in
its name in the form of such other investments as shall be designated by the
Management Committee. The funds of the Company shall not be commingled with
the funds of any Person. All withdrawals of such deposits or liquidations of
such investments by the Company shall be made exclusively upon the signature
or signatures of such officer or officers of the Company as Management
Committee may designate.
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7.6 TAX MATTERS PARTNER. The "TAX MATTERS PARTNER" (as such term
is defined in Section 6231(a)(7) of the Code) of the Company shall be FW Grove
Coinvestors, L.P. or any successor "tax matters partner" designated by the
Management Committee in accordance with this agreement. Each Member, by its
execution of this Agreement, consents to such designation of the Tax Matters
Partner, and agrees to execute, certify, acknowledge, deliver, swear to, file
and record at the appropriate public offices such documents as may be
necessary or appropriate to evidence such consent.
7.7 TAXES.
(a) The Company shall prepare, or cause to be prepared, and
shall file all tax returns, be they information returns or otherwise, which
are required to be filed with the Internal Revenue Service, state and local
tax authorities and foreign tax jurisdictions, if any.
(b) The Company shall furnish the Members with all Company
information required to be reported in the tax returns of the Members for tax
jurisdictions in which the Company is considered to be doing business,
including a report indicating each Member's share for income tax purposes of
the Company's income, gain, credits, losses and deductions within 90 days
after the end of the Company's Taxable Year.
(c) All determinations as to tax elections shall be made by
the Tax Matters Partner.
7.8 CLASSIFICATION AS A PARTNERSHIP. The Members intend that the
Company be classified as a partnership for Federal tax purposes effective as
of the date of this Agreement. The Tax Matters Partner shall not file an
election for the Company to be taxable as an association for federal income
tax purposes and shall, for and on behalf of the Company, take all steps as
may be required to maintain the Company's classification as a partnership for
Federal tax purposes. By executing this Agreement, each of the parties
hereto consents to the authority of the Tax Matters Partner to make any such
election and shall cooperate in the making of such election and shall
cooperate in the making of such election (including providing consents and
other authorizations that may be required). Nothing in this Section 7.8
shall limit the power of the Company as specified in Section 2.10(c) of this
Agreement.
7.9 ACCOUNTING DECISIONS. All determinations as to accounting
principles shall be made by the Management Committee.
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35
ARTICLE VIII
LIABILITY; EXCULPATION; INDEMNIFICATION
8.1 LIABILITY OF MEMBERS. A Member shall not be personally liable
for any debt, obligation or other liability of the Company, whether arising
in contract, tort or otherwise, except that a Member shall remain personally
liable for the payment of any Capital Contributions required by Article III,
and as otherwise provided in this Agreement, the Act and any other applicable
law.
8.2 EXCULPATION. (a) For purposes of this Agreement, "COVERED
PERSON" shall mean any Member, any Affiliate of a Member, any Management
Committee member, and any officer, director, shareholder, partner, member,
employee or agent of a Member or any Affiliate thereof, and any officer,
employee or expressly authorized agent of the Company or its Affiliates.
(b) No Covered Person shall be liable to the Company or any
other Covered Person for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Covered Person in good faith on
behalf of the Company and in a manner reasonably believed to be within the
scope of authority conferred on such Covered Person by this Agreement, except
that a Covered Person shall be liable for any such loss, damage or claim
incurred by reason of such Covered Person's gross negligence, fraud or
willful misconduct.
(c) A Covered Person shall be fully protected in relying in
good faith upon the records of the Company and upon such information,
opinions, reports or statements presented to the Company by any Person as to
matters the Covered Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Company, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets
from which distributions to Members might properly be paid.
8.3 DUTIES AND LIABILITIES OF COVERED PERSONS.
(a) To the extent that, at law or in equity, any Covered
Person has duties (including fiduciary duties) and liabilities related
thereto to the Company or to any other Covered Person, a Covered Person
acting under this Agreement shall not be liable to the Company or to any
other Covered Person for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they
restrict the duties and liabilities of a Covered Person
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36
otherwise existing at law or in equity, are agreed by the Members to replace
such other duties and liabilities of such Covered Person.
(b) Whenever in this Agreement a Covered Person is permitted
or required to make a decision (a) in its "discretion" or under a grant of
similar authority or latitude, the Covered Person shall be entitled to
consider only such interests and factors as it desires, including its own
interests, and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Company or any other Person, or
(b) in its "good faith" or under another express standard, the Covered Person
shall act under such express standard and shall not be subject to any other
or different standard imposed by this Agreement or other applicable law.
8.4 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the
Company shall indemnify any Covered Person who was or is made a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding brought by or against the Company or otherwise, whether
civil, criminal, administrative or investigative, including, without
limitation, an action by or in the right of the Company to procure a judgment
in its favor, by reason of the fact that such Covered Person is or was a
Member, Affiliate, officer, employee or agent of the Company, or that such
Covered Person is or was serving at the request of the Company as an
Affiliate partner, member, director, officer, trustee, employee or agent of
another Person, against all expenses, including attorneys' fees and
disbursements, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such Covered Person in connection with such action,
suit or proceeding. Notwithstanding the foregoing, no indemnification shall
be provided to or on behalf of any Covered Person if a judgment or other
final adjudication adverse to such Covered Person establishes that his or her
acts constituted intentional misconduct, fraud or gross negligence.
(b) Any indemnification under subsection (a) of this Section
(unless ordered by a court) shall be made by the Company only as authorized
in the specific case upon a determination that the indemnification of the
Covered Person is proper under the circumstances because he or she has met
the applicable standard of conduct set forth in subsection (a) of this
Section 8.4. Such determination shall be made by the Management Committee or
the Majority Members or, if the Management Committee or Majority Members so
direct, by independent legal counsel in a written opinion. Any indemnification
payment shall be payable only out of and to the extent of the Company's assets,
and no Covered Person shall have any liability therefor.
(c) The Company shall, in the discretion of the Majority
Members, pay expenses incurred in defending any action, suit or proceeding
described in subsection (a) above (including reasonable legal fees and
expenses of counsel and
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37
other experts) in advance of the final disposition of such action, suit or
proceeding upon receipt by the Company of an undertaking, in form satisfactory
to the Management Committee or the Company's legal counsel, to repay such
amount if it shall be determined that the Covered Person is not entitled to
be indemnified as authorized by paragraph (a) above.
(d) The indemnification provided by this Section 8.4 shall
not be deemed exclusive of any other rights to indemnification to which those
seeking indemnification may be entitled under any agreement, or otherwise.
The rights to indemnification and reimbursement or advancement of expenses
provided by, or granted pursuant to, this Section 8.4 shall continue as to a
Covered Person who has ceased to be a Member, officer, employee or agent (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.
(e) The provisions of this Section 8.4 shall be a contract
between the Company, on the one hand, and each Covered Person who served in
such capacity at any time while this Section 8.4 is in effect, on the other
hand, pursuant to which the Company and each such Covered Person intend to be
legally bound. No repeal or modification of this Section 8.4 shall affect
any rights or obligations with respect to any state of facts then or
theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon such state of
facts.
8.5 INSURANCE. The Company may purchase and maintain insurance,
to the extent and in such amounts as the Management Committee shall, in its
sole discretion, deem reasonable, on behalf of Covered Persons and such other
persons or entities as the Management Committee shall determine, against any
liability that may be asserted against or expenses that may be incurred by
any such person or entity in connection with the activities of the Company or
such indemnities, regardless of whether the Company would have the power to
indemnify such person or entity against such liability under the provisions
of this Agreement. The Management Committee, on behalf of the Company,
and/or the Company may enter into indemnity contracts with Covered Person and
adopt written procedures pursuant to which arrangements are made for the
advancement of expenses and the funding of obligations under Section 8.4
hereof and containing such other procedures regarding indemnification as are
appropriate.
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ARTICLE IX
TRANSFERS
9.1 GENERAL RESTRICTIONS. Except as otherwise permitted in this
Article IX, no Member shall Transfer, directly or indirectly, all or any
portion of its Interest, or rights to income or other attributes with respect
to its Interest, it being understood that any such Transfer or issuance will
be deemed to constitute a Transfer by such Member in violation of this
Agreement, shall be void AB INITIO and the Company shall not recognize any
such Transfer.
9.2 PERMITTED TRANSFERS. Except as otherwise specified herein and
subject to Section 9.5, the provisions of Section 9.1 shall not apply to the
following Transfers by a Member (each of which shall be deemed to constitute
a "PERMITTED TRANSFER", each Transferee of a Permitted Transfer of Interests
being referred to herein as a "PERMITTED TRANSFEREE"):
(a) any Transfer upon the death of a Member that is an
individual, through testamentary or intestate disposition.
(b) any Transfer with the consent of the Management Committee;
which shall be granted or withheld in its sole discretion.
(c) any Transfer of Interests in accordance with the provisions
of Sections 9.3 and 9.4, Article X or Article XI.
9.3 DRAG-ALONG RIGHT. Subject to the prior approval of the
Management Committee, if at any time prior to the Company first becoming a
Public Company, the Majority Members (the "SELLING MEMBER") desire to sell
all or any portion of such Selling Member's Interest pursuant to a bona fide
offer from a third party which is not an Affiliate of such Selling Member (a
"THIRD PARTY PURCHASER") to purchase all or any portion of its Interests then
such Selling Member shall have the right to require all of the other Members
to sell a pro rata portion of their Interests to such Third Party Purchaser
in connection with such sale. Such right shall be exercisable by written
notice (a "BUYOUT NOTICE") given to each Member which shall state (i) that
the Selling Member proposes to effect the sale of the PRO RATA portion of the
Interests of every Member of the Company to such Third Party Purchaser,
(ii) the proposed purchase price per unit to be paid by the Third Party
Purchaser for the Interests of all of the Members, and (iii) the name of the
Third Party Purchaser, and to which shall be attached a copy of all writings
between such Selling Member and the other parties to such transaction
necessary to establish the terms of such transaction. Each such Member
agrees that, upon receipt of a Buyout Notice, each such Member shall be
obligated to sell a PRO RATA portion of its Interests upon the other terms
and
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39
conditions of such transaction (and otherwise take all reasonably necessary
action to cause consummation of the proposed transaction, including voting
such Interest in favor of such transaction); PROVIDED, HOWEVER, that each
such Member shall only be obligated as provided above in this Section 9.3 if
(x) each Member receives the same pro rata consideration as the Selling
Member for Interests of the same class and series as the Interests to be sold
by the Selling Member, and (y) the Third Party Purchaser shall have furnished
evidence reasonably satisfactory to the Management Committee to the effect
that it has the financial ability to consummate the proposed purchase of the
Interests of all of the Members.
9.4 TAG ALONG RIGHT. In the event of a sale of an Interest by a
Member that would cause a Change of Control, each Member shall have the right
(but not the obligation) (such right, the "TAG ALONG RIGHT") to require the
Selling Member to cause the Third Party Purchaser to purchase a pro rata
portion of such Member's Interest (the "TAG ALONG INTEREST") for the amount
equal to the pro rata amount being paid by the Third Party Purchaser to the
Selling Member (the "TAG ALONG PRICE"). If a Change of Control occurs, the
Company shall promptly give notice in writing to the Members setting forth
the date and circumstances of the Change of Control, the identity of the
Third Party Purchaser that has offered to purchase Selling Member's Interests
and the Tag Along Price (the "TAG ALONG NOTICE"). Each of the Members may
exercise its Tag Along Right by delivering written notice of its election to
sell its Interest (the TAG ALONG EXERCISE NOTICE") to the Company and the
Selling Members within 5 days of receipt of the Tag Along Notice. Delivery
of such notice shall constitute an agreement by the Member delivering the
same to sell its Interest to the Third Party Purchaser and an agreement by
the Selling Member to cause the Third Party Purchaser to purchase such
Interest at the price and upon the other terms set forth herein.
9.5 CONDITIONS TO TRANSFERS. In addition to all other terms and
conditions contained in this Agreement, no Transfers to which the provisions
of Section 9.2 would apply shall be completed or effective for any purpose
unless prior thereto:
(a) the Transferor shall have provided to the Company (i) at
least five Business Days' prior notice of such Transfer or in the case of
Transfer by reason of death pursuant to 9.2(a), at least five Business Days'
notice prior to the proposed effectiveness of such Transfer for purposes of
this Agreement, (ii) a certificate of the Transferor, delivered with such
notice, containing a statement as to which provision of Section 9.2 is
applicable to such Transfer, together with such information as is reasonably
necessary for the Management Committee to determine whether such Transfer is
permitted thereby, and (iii) such other information and documents as may be
reasonably requested by the Management Committee such notice in order for it
to make such determination; and
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(b) the Transferee of such Interests shall have executed and
delivered to each recipient of the notice required by Section 9.5(a) an
agreement by which it shall become a party to and be bound by the applicable
terms and provisions of this Agreement.
(c) counsel to the Transferee of such Interests shall have
delivered to the Company an opinion reasonably satisfactory in form and
substances to the Company, to the effect that: (i) such Transfer would not
violate the Securities Act or any state securities or "blue sky" laws
applicable to the Company or the Interest to be Transferred, (ii) such
Transfer would not, individually or together with other concurrently proposed
Transfers, cause the Company to be regarded as an "investment company" or a
"subsidiary investment company" under the Investment Company Act of 1940, as
amended, and (iii) in the case of a Transfer pursuant to Sections 9.2(a) or
(b), such Transfer would not, individually or together with all other
Transfers by such Transferor, its predecessors, their prior Transferees, and
their indirect owners, if any, cause the Company to have more partners for
purposes of Treasury Regulation section 1.7704-1(h), determined without
regard to section 1.7704-1(h)(3)(ii), as a result of the ownership of such
Transferor, its predecessors, their prior Transferees, and their indirect
owners than the number opposite such Transferor's name under the heading "PTP
Slots" as described in the Ancillary Letter or in Section 13.2(a) of this
Agreement.
9.6 EFFECT OF PERMITTED TRANSFER. Upon consummation of any
Permitted Transfer of an Interest in accordance with the provisions of this
Agreement, (a) the Permitted Transferee shall be admitted as a Member (if not
already a Member) and for purposes of this Agreement such Permitted Transferee
shall be deemed a Member, (b) the Transferred Interest shall continue to be
subject to all the provisions of this Agreement and (c) the Capital Account
(or applicable portion thereof in the case of a Transfer of less than all of
a Transferor's Interest) of the Transferor shall be transferred to the name
of such Permitted Transferee at the close of business on the effective date
of such Permitted Transfer (the "EFFECTIVE TRANSFER TIME"). Unless the
Transferor and Transferee otherwise agree in writing, and give written notice
of such agreement to the Company at least five days prior to such Effective
Transfer Time, all distributions declared to be payable to the Transferor at
or prior to such Effective Transfer Time shall be made to the Transferor. No
Permitted Transfer shall relieve the Transferor (or any of its Affiliates) of
any of their obligations or liabilities under this Agreement arising prior to
the closing of the consummation of such Permitted Transfer.
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41
ARTICLE X
REGISTRATION RIGHTS
10.1 DEMAND REGISTRATION RIGHTS.
(a) (i) INITIAL PUBLIC OFFERING. The Management Committee
may in its sole discretion, and shall at the demand of the Majority Members
(the Majority Members demanding such registration hereunder are referred to
as the "DEMAND MEMBER") cause the Company to (A) effect a Reconstitution,
if such action has not already been taken, and/or (B) register under the
Securities Act and under the securities or "Blue Sky" laws of any
jurisdiction reasonably designated by the Management Committee, all or any
portion of the Converted Securities held by the Demand Member and/or any
Equity Securities proposed to be registered and sold by the Company (the
"OFFERED SECURITIES"). Promptly following any such determination to
register Equity Securities, the Company shall provide written notice
thereof to each Member (the "DEMAND NOTICE"). The Company shall enter into
a Registration Rights Agreement with the Majority Members to provide for
demand and piggyback registration rights for the period subsequent to any
initial Public Offering consistent with the provisions of this Article X.
(ii) SPECIAL INTERESTS - Upon a Reconstitution:
(A) EMPLOYEE MEMBERS. To the extent the Employee
Members have not had the opportunity to obtain certain additional Class A
Units (the "UNVESTED CLASS A UNITS") pursuant to the Management Incentive
Plan because the date of such opportunity has not yet arisen as of the date
of the Reconstitution, the Reconstituted Company shall enter into a plan
with such Employee Members to replace such Unvested Class A Units with
options to purchase Equity Securities in the Reconstituted Company, which
will have exercise prices comparable to the price inherent in such employee
Member's Exercise Price Equivalent.
(B) GGEP. To the extent the GGEP has not had the
opportunity to obtain a portion of the Total Promote Percentage (the
"UNVESTED CLASS B INTERESTS") pursuant to Section 4.5 because the date of
such opportunity has not yet arisen as of the date of the Reconstitution,
the Reconstituted Company shall enter into a plan with GGEP, reasonably
acceptable to GGEP and the Company, to replace such Unvested Class B
Interests with options to purchase Equity Securities in the Reconstituted
Company, which will have exercise prices comparable to the price inherent
in GGEP's Exercise Price Equivalent.
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42
(iii) MANAGING UNDERWRITER. In connection with a
registration effected pursuant to this Section 10.1(a), an Investment
Banking Firm shall be designated by the Management Committee to act as
managing underwriter of the Equity Securities to be sold.
(iv) WITHDRAWAL. The Management Committee or the Demand
Member, as the case may be, may, at any time prior to the effective date of
the Registration Statement, withdraw the Registration Statement and abandon
the offering process.
(b) REGISTRATION. In connection with any such determination by
the Management Committee or Demand Member, as the case may be, and in accordance
with the procedure described below, the Company shall use its reasonable best
efforts (i) to effect the reconstitution and conversion described in
Section 10.1(a)(i)(A), (ii) to effect the registration under the Securities Act
and the securities or "Blue Sky" laws of applicable jurisdictions of all Offered
Securities, and (iii) to keep such registration statement continuously effective
from the date such registration statement is declared effective until the
earlier of (a) 120 days from the effective date for such registration statement
and (b) such time as all Members whose Equity Interests are included in such
Registration Statements notified the Company in writing that the distribution of
the Offered Securities has been completed. The Company further agrees to
supplement or make amendments to such registration statement, if required by
(x) the registration form utilized by the Company for such registration or by
the instructions applicable to such registration form or (y) the Securities Act
or the rules and regulations thereunder. The Company agrees to furnish to all
Members whose Equity Interests are included in such Registration Statement
copies of any such supplement or amendment prior to its being used or filed with
the SEC.
(c) PIGGY-BACK RIGHTS.
(i) Other than in an initial Public Offering, in the
event the Company files a registration statement for the sale of Equity
Securities for the Majority Members or on behalf of the Company, the
Company shall send prompt notice thereof to all other Members (the
"PIGGYBACK NOTICE"). Any Member may request that Equity Securities owned
by such Member (a "PARTICIPATING MEMBER" and, together with the Demand
Member, the "OFFERING MEMBERS") be included in a registration statement by
delivering notice to the Company within ten Business Days after the receipt
of the Piggyback Notice, specifying the number of Converted Securities
intended to be included in such registration by such Participating Member,
such securities being included within the definition of Offered
Securities). The Company shall use all reasonable efforts to effect the
registration under the Securities Act of all
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43
such Offered Securities which the Company has been requested to
register; PROVIDED, that prior to the effective date of the registration
statement filed in connection with such registration, each Participating
Member shall have the right to withdraw its Equity Securities included
in such registration statement at any time prior to 5 Business Days
before the effective date of such registration statement.
Notwithstanding the foregoing provisions of this subsection (i), (a) no
Member shall transfer any Equity Securities in contravention of any
lock-up or similar agreement requested by the managing underwriter of
the Equity Securities to be sold, (b) for the period ending on the fifth
anniversary of the initial Public Offering, no Member shall sell Equity
Securities in excess of the percentage of Equity Securities being sold
by the Majority Members in such registration, unless the Management
Committee specifically consents to the sale of a greater percentage of
Equity Securities by a particular Member. If a Change of Control has
occurred, piggy-back rights apply to initially purchased Interests by
Employee Members as well as Interests acquired by Employee Members upon
Option exercise; however, if a Change of Control has not occurred, such
piggy-back rights only apply to initially purchased Interests by
Employee Members and do not apply to Interests acquired by Employee
Members upon Option exercise.
(ii) If the Company proposes to register any Offered
Securities under the Securities Act as contemplated by this Section 10.1
and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by a Participating Member, use
its reasonable best efforts to arrange for such underwriters to include all
the Offered Securities to be sold by such Participating Member among the
securities of the Company to be distributed by such underwriters, subject
to the provisions of this Section 10.1.
(d) CUT-BACK. If the managing underwriter (selected in
accordance with Section 10.1(a)(ii)) of any underwritten offering pursuant to
this Section 10.1 shall inform the Company and the Demand Member that, in its
reasonable opinion, the number of Offered Securities requested to be included in
such registration by the Demand Member and the Participating Members would
adversely affect such offering, then the managing underwriter of such offering
shall limit the number of Converted Securities included in such offering so as
to eliminate such adverse effect by reducing the number of Offered Securities to
be included by each Participating Member on a pro rata basis (based on the
proportion its Percentage Interest bears to the Percentage Interests of all
other Offering Members).
10.2 REGISTRATION PROCEDURES. In connection with the registration of
Offered Securities pursuant to Section 10.1, the Company shall as expeditiously
as possible:
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(a) furnish to each Member prior to the filing of the requisite
registration statement (the "REGISTRATION STATEMENT"), copies of drafts and
final conformed versions of such Registration Statement as is proposed to be
filed, and thereafter such number of copies of such Registration Statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in such Registration Statement (including each
preliminary prospectus) and such other documents in such quantities as an
Offering Member may reasonably request from time to time in order to facilitate
the disposition of the Offered Securities;
(b) use all reasonable efforts to register or qualify the
Offered Securities under such other securities or "Blue Sky" laws of such
jurisdictions as the Offering Members request and do any and all other acts and
things as may be reasonably necessary or advisable to enable the Company and the
Offering Members to consummate the disposition in such jurisdictions of the
Offered Securities; PROVIDED that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection (b), (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction;
(c) use all reasonable efforts to cause the Offered Securities
to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Company to enable the Company and the Offering Members to consummate the
disposition of such Offered Securities (provided that the Company shall not be
required to incur any expenses to satisfy regulatory requirements applicable to
a particular purchaser of such Offered Securities);
(d) notify the Offering Members, at any time when a prospectus
relating to the proposed sale is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such Registration Statement or amendment contains an untrue statement of a
material fact or omits 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 the Company will prepare a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of the Offered Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(e) enter into customary agreements (including, without
limitation, an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Offered Securities;
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(f) make available for inspection by the Offering Members, any
managing or co-managing underwriter participating in any disposition pursuant to
such registration, and any attorney, accountant or other agent retained by the
Company, the Offering Members or any managing or co-managing underwriter
(collectively, the "AGENTS"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "RECORDS")
as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the officers, directors and employees of the Company
to supply all information reasonably requested by any such Agent in connection
with such registration; PROVIDED that (i) Records and information obtained
hereunder shall be used by such persons only to fulfill their due diligence
responsibility and (ii) Records or information which the Company determines, in
good faith, to be confidential shall not be disclosed by the Agents unless
(x) the Company determines that the disclosure of such Records or information is
necessary to avoid or correct a material misstatement or omission in the
Registration Statement or (y) the release of such Records or information is
ordered pursuant to a subpoena or other order from a court or governmental
authority of competent jurisdiction. Each Offering Member further agrees that
it will, upon learning that disclosure of such Records or information is sought
by a court or governmental authority, give notice to the Company and allow the
Company to undertake appropriate action to prevent disclosure of the Records or
information deemed confidential;
(g) use all reasonable efforts to furnish to the underwriters in
such offering (i) at the effective date of such Registration Statement and the
date of the closing of the sale of the Offered Securities to the underwriters in
such offering, a "comfort" letter signed by the independent certified public
accountants who have certified the financial statements included or incorporated
by reference in such registration statement, covering such matters as are
customarily covered in "comfort letters" for similar offerings and (ii) at the
date of closing of the sale of the Offered Securities to the underwriters in
such offering, a signed opinion of counsel for the Company, dated the closing
date of such offering, covering such matters as are customarily covered in
opinion letters of counsel to the issuer for similar offerings;
(h) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of twelve months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder; and
(i) use all reasonable efforts to cause all Offered
Securities to be listed on a securities exchange or authorized for quotation on
a national quotation system, as determined by the Demand Member.
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46
10.3 CONDITIONS TO OFFERINGS.
(a) The obligations of the Company to take the actions
contemplated by Sections 10.1 and 10.2 hereof with respect to an offering of
Offered Securities shall be subject to the following conditions and limitations:
(i) Each Offering Member shall conform to all applicable
requirements of the Securities Act and the Exchange Act with respect to the
offering and sale of securities and shall advise each underwriter, broker
or dealer through which any of the Offered Securities are offered that the
Offered Securities are part of a distribution that is subject to the
prospectus delivery requirements of the Securities Act.
(ii) Each Offering Member shall provide such information
regarding itself as may be required by law, including the Securities Act,
and, in connection with any underwritten offering, shall complete and
execute all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents (including with respect to the holdback
arrangement described in Section 10.6) reasonably required under the terms
of such underwriting arrangements.
(iii) Each Offering Member, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 10.2(d), shall forthwith discontinue disposition of Offered
Securities pursuant to the registration statement covering such securities
until its receipt of the copies of the supplemented or amended prospectus
contemplated by Section 10.2(d) hereof.
10.4 REGISTRATION EXPENSES. All expenses incident to the performance
of or compliance with this Article X by the Company, including all fees and
expenses of compliance with securities or "Blue Sky" laws (including fees and
disbursements of counsel in connection with blue sky qualifications of the
Offered Securities), registration or filing fees payable under any state or
federal securities or "Blue Sky" laws, rating agency fees, printing expenses,
messenger and delivery expenses, internal expenses (including all salaries and
expenses of its officers and employees performing legal or accounting duties),
fees and expenses incurred in connection with the listing of the securities to
be offered on each securities exchange or over-the-counter market on which
similar securities issued by the Company are then listed, fees and disbursements
of counsel for the Company and its independent certified public accountants
(including the expenses of any comfort letters required by or incident to such
performance), securities act liability insurance (if the Company elects to
obtain such insurance), the fees and expenses of any special experts retained by
the Company in connection with such registration and the fees and expenses of
other persons retained by the Company
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47
shall be borne and paid by the Company. The Company shall not have any
responsibility for any of the expenses of any Offering Member incurred in
connection with any registration hereunder (except that the Company shall pay
for one legal counsel of the Demand Member), including fees and disbursements
of counsel to such Offering Member and underwriting fees, discounts and
commissions and transfer taxes, if any, attributable to the sale of Offered
Securities.
10.5 INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the fullest extent permitted by law, the Offering Members, their
directors and officers and each person who controls the Offering Member (within
the meaning of either the Securities Act or the Exchange Act) and each
underwriter of Offered Securities against any and all losses, claims, damages,
liabilities and expenses (including attorneys' fees and expenses) caused by any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, prospectus or preliminary prospectus or other document
incident to any registration, qualification or compliance, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, or any
violation of any rule or regulation promulgated under the Securities Act
relating to any action or inaction required of the Company in connection with
any such registration, qualification or compliance, and the Company shall
reimburse each Offering Member, its officers, directors, controlling persons and
underwriters for any legal and any other expenses in connection with
investigating or defending any such claim, loss, damage, liability or expense as
they are incurred; PROVIDED that the Company shall not be required to indemnify
any Offering Member or its officers, directors or controlling persons or any
underwriter for any losses, claims, damages, liabilities or expenses resulting
from any such untrue statement or omission if such untrue statement or omission
is made in reliance on and in conformity with any information with respect to
such person furnished to the Company by such person in writing expressly for use
in such Registration Statement, prospectus, amendment or supplement thereto, or
preliminary prospectus.
(b) INDEMNIFICATION BY THE OFFERING MEMBERS. In connection with
any registration in which an Offering Member is participating, such Offering
Member will furnish to the Company in writing such information with respect to
the Offering Member as the Company reasonably requests for use in connection
with any Registration Statement, prospectus, or amendments or supplements
thereto, and preliminary prospectus and agrees to indemnify the Company, its
directors, its officers who sign the Registration Statement and each person, if
any, who controls the Company (within the meaning of either the Securities Act
or of the Exchange Act) and each underwriter of Offered Securities to the same
extent as the foregoing indemnity
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48
from the Company to the Offering Members, but only with respect to
information relating to such Offering Member furnished to the Company in
writing by such Offering Member expressly for use in such Registration
Statement, prospectus, amendment or supplement thereto, or preliminary
prospectus.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 10.5(a) or Section 10.5(b) hereof, such person (hereinafter called the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party 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 party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and the indemnified party shall have been advised by counsel
that representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
indemnified parties, such firm shall be designated in writing by the indemnified
parties with the consent of the indemnifying party, which consent shall not be
unreasonably withheld. The indemnifying party 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 shall be a final non-appealable judgment
for the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or
judgment. 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 reasonably be expected to
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 on claims that are the subject matter
of such proceeding.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 10.5 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 10.5, then the indemnifying party, in lieu of
indemnifying such
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49
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the statement or omission which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the indemnifying and indemnified
party from the offering of Securities covered by such registration statement;
PROVIDED that for the purposes of this clause (ii) the relative benefits
received by an Offering Member shall be deemed not to exceed the amount of
proceeds received by such Offering Member. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether any matter in question, including any untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 10.5(c) hereof, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 10.5(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 10.5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 10.5(a) and 10.5(b) hereof without regard to the relative
fault of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 10.5(d).
10.6 HOLDBACK. Other than pursuant to the Registration Statement, and
subject to Article IX hereof, each Member and the Company shall not Transfer any
Converted Securities or Interests for a period commencing 10 days prior to the
execution of the definitive underwriting agreement in respect of any
registration hereunder and ending no later than 120 days thereafter (or such
shorter period as may be requested by the managing underwriter in respect of
such registration).
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50
ARTICLE XI
TERMINATION CALL RIGHTS
11.1 CALL RIGHTS.
(a) BREACH OF NONCOMPETITION AND CONFIDENTIALITY AGREEMENT. If
an individual breaches any of the provisions of the Noncompetition and
Confidentiality Agreement (to the extent applicable), whether or not during the
term of his employment by the Company and its Affiliates, any Option theretofore
granted to him under the Management Option Plan, whether or not yet vested on
the date of such breach, shall thereupon terminate in all respects. Any
Interests theretofore acquired by a such individual, under the Plan or
otherwise, shall be subject to a Call Right at a repurchase price equal to the
lower of the exercise price paid with respect to such Interests and the Fair
Market Value.
(b) TERMINATION OF EMPLOYMENT
(i) In the event that an Employee Member's employment
with the Company and all of its Subsidiaries is terminated for any reason,
including death or disability, or if, while employed, an Employee Member is
adjudged incompetent or insane, declares bankruptcy or is the subject of
any petition for involuntary bankruptcy, the Company shall have the
assignable right (but not the obligation) to purchase all of such Employee
Member's Interests for an amount equal to the Fair Market Value of such
interests as determined in good faith by the Management Committee, taking
into account the amount recoverable pursuant to Section 4.9(a) with respect
to such Interests, unless the Employee Member is terminated for Cause (as
defined in the Management Plan) or by voluntary resignation.
(ii) If an Employee Member's employment is terminated for
Cause, the Company shall have the assignable right (but not the obligation)
to purchase all of such Employee Member's Interests for an amount equal to
the lower of (x) the Fair Market Value of such Interests as determined in
good faith by the Management Committee, taking into account the amount
recoverable pursuant to Section 4.9(a) with respect to such Interests or
(y) the amount actually received by the Company in connection with such
Employee Member's purchase of the Interest, in either case minus all prior
distributions made to such Employee Member or Permitted Transferee (other
than Tax Distributions permitted under this Agreement).
(iii) If an Employee Member's employment is terminated by
voluntary resignation of such Employee Member, the Company
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51
shall have the assignable right (but not the obligation) to purchase all
of such Employee Member's interests for an amount equal to the lower of
(x) the Fair Market Value of such interests as determined in good faith
by the Management Committee, taking into account the amount recoverable
pursuant to Section 4.9(a) with respect to such Interests or (y) the
amount actually received by the Company in connection with such Employee
Member's purchase of the Interest plus interest accrued but unpaid for
any note outstanding for the purchase of stock in either case minus all
prior distributions made to such Employee Member or permitted Transferee
(other than Tax Distributions permitted under this Agreement), provided
that if the call right is being exercised subsequent to a Change of
Control, the price paid shall be the Fair Market Value of the Interests.
(iv) The Company's rights to purchase under (i) - (iii)
above are herein referred to as the "TERMINATION CALL RIGHT".
(c) EXERCISE OF CALL RIGHT. The Committee may, if it deems
appropriate given the then circumstances, at its sole discretion, exercise any
call right at Fair Market Value which would otherwise be exercisable at cost
paid for such Common Interests.
(d) CALL NOTICE. The Company may exercise its Termination Call
Right by delivering written notice (the "Termination Call Notice") of its
election to purchase the Employee Member's Interests (the "Termination Called
Interest") at any time after the Employee Member's termination.
(e) CLOSING. The closing of the purchase of the Termination
Called Interest shall be held at the principal office of Company at 11:00 a.m.
local time on the date set forth in the Termination Call Notice, or at such
other times and places as the parties to the transaction agree. At the closing,
the Company shall pay to such Employee Member the relevant termination call
price, in cash or by certified check or wire transfer of funds or any
combination of the foregoing. All of the parties to the transaction shall
execute such additional documents as are otherwise necessary or appropriate to
effectuate the intent of the foregoing.
ARTICLE XII
TERMINATION; DISSOLUTION; LIQUIDATION AND WINDING-UP
12.1 TERMINATION OF THE COMPANY. In the event of the occurrence of a
Dissolution Event (as defined in Section 12.2), the Company shall be terminated
on the
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52
90th day after the occurrence of such event unless the remaining Members
prior to the close of business on such 90th day elect to continue the business
of the Company by the affirmative agreement of the Majority Members.
12.2 EVENTS OF DISSOLUTION. The Company shall be dissolved upon any
of the following (each a "DISSOLUTION EVENT"):
(a) the entry of a decree of judicial dissolution under Section
18-802 of the Act;
(b) the written consent to a dissolution by the Majority
Members;
(c) the expiration of 60 days after the assignment, sale,
transfer or other disposition of all or substantially all of the assets,
properties and business of the Company other than as provided in Article IX.
Notwithstanding any provision of the Act to the contrary, the Company shall
continue and shall not be dissolved as a result of the death, retirement,
resignation, expulsion, bankruptcy or dissolution of any Member or any other
event that terminates the continued membership of a Member.
12.3 NOTICE OF DISSOLUTION EVENT. The Management Committee shall
promptly notify the other Members of any such Dissolution Event.
12.4 LIQUIDATION AND WINDING-UP. If the Company is dissolved pursuant
to Section 12.2 and the Members have not elected to continue the business of the
Company pursuant to Section 12.1, the Company shall be liquidated and wound up
in accordance with the Act and the following provisions:
(a) The financial officers of the Company shall be directed to
prepare a balance sheet, income statement and statement of cash flows of the
Company in accordance with GAAP as of the date of dissolution and for the period
ended on such date, which balance sheet shall be reported upon by the Company's
independent public accountants.
(b) The assets, properties and business of the Company shall be
liquidated by the Management Committee as promptly as possible, but in an
orderly and businesslike manner so as not to involve undue sacrifice.
Notwithstanding the foregoing, if it is determined by the Management Committee
not to sell all or any portion of the properties and assets of the Company, such
properties and assets shall be distributed in kind in the order of priority set
forth in subsection (d); PROVIDED, HOWEVER, that the Fair Market Value of such
properties and assets, as determined in
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53
good faith by the Management Committee, shall be used in determining the
extent and amount of a distribution in kind of such properties and assets in
lieu of actual cash proceeds of any sale or other disposition thereof.
(c) Net Income or Net Loss of the Company for the year of
liquidation shall be credited or charged to the Capital Accounts of the Members
in accordance with the allocation provisions set forth in Sections 4.2 and 4.3,
respectively.
(d) The proceeds of sale of all or substantially all of the
properties and assets of the Company and all other properties and assets of the
Company not sold, as provided in subsection (b) above, and valued at the Fair
Market Value thereof as provided in such subsection (b), shall be applied and
distributed as follows, and in the following order or priority:
(i) FIRST, to the payment of all debts and liabilities
of the Company and the expenses of liquidation not otherwise adequately
provided for;
(ii) SECOND, to the setting up of any reserves that are
reasonably necessary for any contingent unforeseen liabilities or
obligations of the Company or of the Members arising out of, or in
connection with, the Company;
(iii) THIRD, to the Members in proportion to the positive
balances of their respective Capital Accounts until the remaining balances
of all such accounts are zero; and
(iv) FOURTH, the remaining proceeds to the Members in
proportion to their Percentage Interests.
(e) A Certificate of Cancellation shall be filed with the
Secretary of State of the State of Delaware by the Members.
12.5 SURVIVAL OF RIGHTS, DUTIES AND OBLIGATIONS. Termination,
dissolution, liquidation or winding up of the Company for any reason shall not
release any party from any liability which at the time of such termination,
dissolution, liquidation or winding up already had accrued to any other party or
which thereafter may accrue in respect to any act or omission prior to such
termination, dissolution, liquidation or winding up.
12.6 CLAIMS OF THE MEMBERS. Members and former Members shall look
solely to the Company's assets for the return of their contributions to the
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54
Company, and if the assets of the Company remaining after payment of or due
provision for all debts, liabilities and obligations of the Company are
insufficient to return such contributions, the Members and former Members shall
have no recourse against the Company or any other Member.
ARTICLE XIII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MEMBERS
13.1 REPRESENTATIONS.
(a) PUBLICLY TRADED PARTNERSHIP REPRESENTATION. DLJ, Squam Lake
Investors, II, L.P., and Sunapee Securities, Inc., each hereby certify and
represent that for purposes of Treasury Regulation section 1.7704-1(h), it is
not a partnership, grantor trust or S corporation, substantially all the value
of any Interest in which is attributable to its Interests in the Company.
13.2 COVENANTS.
(a) PRIVATELY TRADED PARTNERSHIP COVENANT. The Members each
hereby agree and covenant that they shall not cause the Company to have more
partners for purposes of Treasury Regulation section 1.7704-1(h), determined
without regard to section 1.7704-1(h)(3)(ii), as a result of the ownership of
such Member, its predecessors, their prior Transferees, and their indirect
owners than the number opposite such Member's name under the heading "PTP Slots"
as described in the Ancillary Letter. In the case of the Employee Members, each
Employee Member shall have one "PTP Slot" allocated to them and for purposes of
this Section 13.2, Options shall be treated as if they were converted into Class
A Units. Each Member hereby agrees and covenants that it will implement
restrictions or rights to reacquire ownership interests upon its own direct and
indirect owners, if any, to ensure compliance with this covenant. Any transfer
in violation of this Section shall be void ab initio.
(b) Squam, Sunapee, DLJ and GGEP hereby agree and covenant that
they shall not materially modify their ownership structure as presented to the
Company on the date hereof except with the consent of the Management Committee
or in the event of the death of a partner of GGEP, subject in all cases to the
restrictions on transfer set forth in Section 9.5(c).
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55
ARTICLE XIV
GENERAL PROVISIONS
14.1 NOTICES. Wherever provision is made in this Agreement for the
giving of any notice, such notice shall be in writing and shall be deemed to
have been duly given if mailed by first class United States mail, postage
prepaid, addressed to the party entitled to receive the same or delivered
personally to such party, or telegraphed, telexed, sent by facsimile
transmission or sent by overnight courier, if to the Members, in each case to
the addresses or facsimile telephone numbers therefor set forth on the signature
pages hereto, and if to the Company, to:
GROVE INVESTORS LLC
1565 Buchanan Trail East, P.O. Box 21
Shady Grove, Pennsylvania 17256
Attention: Salvatore J. Bonanno
Fax No.: 717-593-5001
or to such other address, in any such case, as any party hereto shall have last
designated by notice to the other party. Notice shall be deemed to have been
given on the day that it is so delivered personally, telegraphed, telexed or
sent by facsimile transmission and the appropriate answerback or confirmation of
successful transmission is received or, if sent by overnight courier, shall be
deemed to have been given one Business Day after delivery by the courier
company, or if mailed, three Business Days following the date on which such
notice was so mailed. Any Member may change its address for notices by giving
written notice of such change to the other Members and the Company.
14.2 ENTIRE AGREEMENT; NON-WAIVER. This Agreement constitutes the
entire agreement of the parties hereto and supersedes any prior understandings
or written or oral agreements between the parties with respect to the subject
matter hereof.
14.3 AMENDMENTS. Except as provided in Section 6.2, this Agreement or
the Certificate may be amended from time to time only upon the approval of the
Majority Members. Any proposal to amend this Agreement requiring approval of
the Majority Members shall be accompanied by a summary of the proposed
amendment and shall be delivered to all of the Members. The date of adoption of
an amendment shall be the date on which the Company shall have received the
requisite approvals or such other date approved by the Majority Members.
Notwithstanding the above, any amendment that has an adverse effect on the
Capital Account of any Member or on other material rights of a Member hereunder
shall not be effective against such Member without the approval of such Member;
PROVIDED, HOWEVER, that the admittance of new Members or the dilution of the
Percentage Interests or other rights of Members
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56
on a non-discriminating basis occasioned by the increase in Interests or the
admittance of new Members shall not constitute an adverse effect on a Member
for purposes of this Section 14.3. The Management Committee may amend this
Agreement to effect any amendments authorized by this Agreement, including
without limitation, effecting a Reconstitution or the issuance of new
Interests.
14.4 NO WAIVERS. No delay on the part of any party in exercising any
right hereunder shall operate as a waiver thereof, nor shall any waiver, express
or implied, by any party of any right hereunder or of any failure to perform or
breach hereof by any other party constitute or be deemed a waiver of any other
right hereunder or of any other failure to perform or breach hereof by the same
or any other Member, whether of a similar or dissimilar nature thereof.
14.5 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (other than its
rules of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby); PROVIDED that, with respect to
matters governed by the Act, the Act shall govern.
14.6 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; SELECTION OF
FORUM. EACH PARTY HERETO AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN
RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN TORT OR
CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN (A) THE UNITED STATES DISTRICT
COURT FOR DELAWARE (THE "CHOSEN COURT") OR IN THE EVENT THAT SUCH COURT LACKS
JURISDICTION TO HEAR THE CLAIM, (B) IN THE APPROPRIATE DELAWARE STATE COURT AND
(I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURT,
(II) WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW ANY OBJECTION TO LAYING
VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN COURT, (III) WAIVES ANY
OBJECTION THAT THE CHOSEN COURT IS AN INCONVENIENT FORUM OR DOES NOT HAVE
JURISDICTION OVER ANY PARTY HERETO, (IV) IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
A JURY TRIAL AND (V) AGREES THAT SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH
ACTION OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH
SECTION 13.1 OF THIS AGREEMENT.
14.7 FURTHER ASSURANCES. Each of the Members hereby agrees, at the
request of any other Member, to execute and deliver all such other and
additional
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57
instruments and documents and to do such other acts and things as may
be reasonably necessary or appropriate to carry out the intent and purposes
of this Agreement.
14.8 ASSIGNMENT OF CONTRACTS AND RIGHTS. Except as otherwise
provided herein, no party to this Agreement may assign any of its rights or
remedies or delegate any of its obligations under this Agreement without the
prior written consent of the Management Committee.
14.9 NO RIGHT TO PARTITION. The Members, on behalf of
themselves and their shareholders, partners, members, successors and assigns,
if any, hereby specifically renounce, waive and forfeit all rights, whether
arising under contract or statute or by operation of law, except as otherwise
expressly provided in this Agreement, to seek, bring or maintain any action
in any court of law or equity for partition of the Company or any asset of
the Company, or any interest which is considered to be Company property,
regardless of the manner in which title to such property may be held.
14.10 NO THIRD PARTY RIGHTS. This Agreement is made solely and
specifically between and for the benefit of the parties hereto, and their
respective successors and assigns (subject to the express provisions hereof
relating to successors and assigns), and is not intended to confer any benefits
upon, or create any rights in favor of, any Person other than the parties
hereto.
14.11 SUCCESSORS AND ASSIGNS. Subject to the restrictions on
Transfer set forth herein, and except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective heirs, personal representatives,
successors and permitted assignees under this Agreement.
14.12 SEVERABILITY. If any provision of this Agreement shall be
declared to be invalid, illegal or unenforceable, such provision shall survive
to the extent it is not so declared, and the validity, legality and
enforceability of the other provisions hereof shall not in any way be affected
or impaired thereby, unless such action would substantially impair the benefits
to either party of the remaining provisions of this Agreement.
14.13 REMEDIES NOT EXCLUSIVE. Except as otherwise provided
herein, no remedy herein conferred or reserved is intended to be exclusive of
any other available remedy or remedies, and each and every remedy shall be
cumulative and shall be in addition to every remedy under this Agreement or now
or hereafter existing at law or in equity or by statute.
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58
14.14 REPRESENTATION BY COUNSEL. Each of the parties has been
represented by and has had an opportunity to consult legal counsel in connection
with the negotiation and execution of this Agreement. No provision of this
Agreement shall be construed against or interpreted to the disadvantage of any
party by any court or arbitrator or any Governmental Authority by reason of such
party having drafted or being deemed to have drafted such provision.
14.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement shall be
binding when one or more counterparts, individually or taken together, bear the
signatures of each of the parties reflected herein as signatories.
14.16 ATTACHMENTS. All attachments, annexed instruments and
addenda referred to herein shall be considered a part of this Agreement as fully
as if and with the same force and effect as if such attachment, annex or
addendum had been included herein in full.
14.17 TABLE OF CONTENTS AND HEADINGS. The table of contents and
headings in this Agreement are solely for convenience of reference and shall not
affect the interpretation or construction of any of the provisions hereof.
14.18 COMPETING BUSINESS. Notwithstanding any other provision to
the contrary contained in or inferable from this Agreement, the Act or any other
statute or principle of law, neither the Members nor any of their Affiliates
shall be prohibited or restricted in any way from investing in or conducting,
either directly or indirectly, and may invest in and/or conduct, either directly
or indirectly, businesses of any nature whatsoever, including the ownership and
operation of businesses similar to those of the Company. Any investment in or
conduct of any such businesses by a Member or Affiliate of a Member shall not
give rise to any claim for an accounting by the other Members or the Company or
any right to claim any interest therein or the profits therefrom.
14.19 ENTIRE AGREEMENT. This Agreement and the Ancillary Letter
contain the entire agreement among the parties relative to the matters contained
in this Agreement.
14.20 ARBITRATION. For purposes solely of certain determinations
referred to under the definition of Fair Market Value, the following procedure
shall be utilized. The Management Committee shall make such determination in
good faith and shall give notice of such determination by written notice to
GGEP, with appropriate information supporting such determination. If GGEP
objects to such determination, GGEP shall so notify the Management Committee in
writing within five business days
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59
of GGEP's receipt of the notice from the Management Committee. The
Management Committee and GGEP shall then negotiate as to the determination
for a period of thirty calendar days. Neither the Management Committee nor
GGEP shall be required in this negotiation to agree to the determination of
the other. If GGEP and the Management Committee fail to agree as to a
determination of Fair Market Value, then GGEP and the Management Committee
shall endeavor to designate a mutually acceptable appraiser to determine such
Fair Market Value. If GGEP and the Management Committee have not agreed on
an appraiser within fifteen days, then each of GGEP and the Management
Committee shall appoint an appraiser within ten days thereafter. The two
appraisers shall within ten days appoint a third appraiser. The third
appraiser shall determine the Fair Market Value of the assets within thirty
days after such appraiser's appointment. The value determined, whether by
agreement of GGEP and the Management Committee or by appraisal, shall be
conclusive. GGEP shall bear the cost of its appointed appraiser and the
Company shall bear the cost of its appointed appraiser and the third
appraiser. Each of GGEP and the Management Committee shall be given
reasonable advance notice of the time and place of any appraisal proceedings
and shall have the right to be present, heard, and represented by counsel and
to put on expert testimony at such proceedings, each at their own expense.
14.21 WAIVER. No consent or waiver, express or implied, by any
Member to or for any breach or default by any other Member in the performance by
such other Member of its obligations under this Agreement shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance by such other Member of the same or any other obligations of such
other Member under this Agreement. Failure on the part of any Member to
complain of any act or failure to act of any of the other Members or to declare
any of the other Members in default, regardless of how long such failure
continues, shall not constitute a waiver by such Member of its rights hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed, by their respective duly authorized officers or partners, on the
date first above written.
MEMBERS
FW STRATEGIC PARTNERS, L.P.
By: FW Strategic Asset
Management, L.P.
By: Strategic Gen Par, Inc.
By: /s/ James N. Alexander
-----------------------------------
Name: James N. Alexander
Title:
Address: 201 Main Street
Fort Worth, Texas 76102
FW GROVE COINVESTORS, L.P.
By: FW Group Genpar, Inc.
By: /s/ Robert Cothamn
-----------------------------------
Name: Robert Cothamn
Title:
Address: 201 Main Street
Fort Worth, Texas 76102
<PAGE>
SUNAPEE SECURITIES, INC.
By: /s/ Gary B. Wilkinson
-----------------------------------
Name: Gary B. Wilkinson
Title: Treasurer
Address: Two Copely Place
Boston, Massachusetts 02116
SQUAM LAKE INVESTORS, II, L.P.
By: GPI, Inc., its General Partner
By: /s/ Gary B. Wilkinson
-----------------------------------
Name: Gary B. Wilkinson
Title: Treasurer
Address: Two Copely Place
Boston, Massachusetts 02116
DLJ CAPITAL CORPORATION
By: /s/ Ivy Dodes
-----------------------------------
Name: Ivy Dodes
Title:
Address: 277 Park Avenue
New York, New York 10172
<PAGE>
GGEP-GROVE, L.P.
By: George Group Inc.,
its General Partner
By: /s/ Michael L. George
-----------------------------------
Name: Michael L. George
Title:
Address: One Galleria Tower
13355 Noel Road, Suite 1100
Dallas, Texas 02116
MICHAEL L. GEORGE
/s/ Michael L. George
--------------------------------------
Address: One Galleria Tower
13355 Noel Road, Suite 1100
Dallas, Texas 02116
<PAGE>
SALVATORE J. BONANNO
/s/ Salvatore J. Bonanno
---------------------------------
Address:
JEFF BUST
/s/ Jeff Bust
---------------------------------
Address:
JOSEPH SHULL
/s/ Joseph Shull
---------------------------------
Address:
JAMES KOLINSKI
/s/ James Kolinski
---------------------------------
Address:
TED BRATTHAUAR
/s/ Ted Bratthauar
---------------------------------
Address:
<PAGE>
JOHN WHEELER
/s/ John Wheeler
---------------------------------
Address:
<PAGE>
Exhibit 3.2
AMENDMENT NO. 1 TO THE
SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT
OF
GROVE INVESTORS LLC
AMENDMENT NO. 1, dated as of October 27, 1998, to THE SECOND AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT of GROVE INVESTORS LLC (the
"Company") dated as of June 27, 1998 (as the same may be amended, modified and
supplemented from time to time, the "LLC Agreement"), among the members of the
Company listed therein (the "Members"). Capitalized terms used herein and not
otherwise defined are used herein as defined in the LLC Agreement.
WHEREAS, the Management Committee wishes to admit additional Employee
Members to the Company in accordance with the terms of Section 5.2 of the LLC
Agreement.
NOW THEREFORE, the LLC Agreement is amended as follows:
1. ADMISSION OF NEW EMPLOYEE MEMBERS. The individuals listed below
are hereby admitted as new Employee Members of the Company (the "New Employee
Members") and they agree to observe, comply and be bound by all the covenants,
terms and conditions of the LLC Agreement and the Delaware Limited Liability
Company Act.
- --------------------------------------------------------------------------------
NAME ADDRESS
- ---- -------
- --------------------------------------------------------------------------------
Keith R. Simmons 11251 Eastwood Drive
Hagerstown, Maryland 21742
- --------------------------------------------------------------------------------
Stephen L. Cripe 2119 Castle Green Drive
Greencastle, Pennsylvania 17225
- --------------------------------------------------------------------------------
Donald Mallo 20 Waters Edge
Congers, New York 10920
- --------------------------------------------------------------------------------
2. REPRESENTATIONS OF THE NEW EMPLOYEE MEMBER. Each New Employee
Member hereby agrees that he shall have one "PTP Slot" allocated to him under
the LLC Agreement.
3. COUNTERPARTS. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
<PAGE>
2
4. RATIFICATION OF THE LLC AGREEMENT. Except as otherwise expressly
provided herein, all of the terms and conditions of the LLC Agreement are hereby
ratified and shall remain unchanged and continue in full force and effect.
5. GOVERNING LAW. This Amendment shall be enforced, governed and
construed in all respects in accordance with the laws of the state of Delaware
applicable to agreements made and to be wholly performed in Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment and
agreed to be bound by the terms hereof.
NEW EMPLOYEE MEMBERS:
/s/ KEITH R. SIMMONS
-----------------------------
Keith R. Simmons
/s/ STEPHEN CRIPE
-----------------------------
Stephen Cripe
/s/ DONALD MALLO
-----------------------------
Donald Mallo
GROVE INVESTORS LLC
By: /s/ SALVATORE J. BONANNO
-------------------------
Name: Salvatore J. Bonanno
Title: Chairman
<PAGE>
Exhibit 3.3
AMENDMENT NO. 2 TO THE
SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT
OF
GROVE INVESTORS LLC
AMENDMENT NO. 2, dated as of March 1, 1999, to THE SECOND AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT of GROVE INVESTORS LLC (the
"Company") dated as of June 27, 1998 (as the same may be amended, modified and
supplemented from time to time, the "LLC Agreement"), among the members of the
Company listed therein (the "Members"). Capitalized terms used herein and not
otherwise defined are used herein as defined in the LLC Agreement.
WHEREAS, the Management Committee wishes to admit an additional Employee
Member to the Company in accordance with the terms of Section 5.2 of the LLC
Agreement.
NOW THEREFORE, the LLC Agreement is amended as follows:
1. ADMISSION OF NEW EMPLOYEE MEMBER. Donald Manvel is hereby
admitted as a new Employee Member of the Company (the "New Employee Member") and
the New Employee Member agrees to observe, comply and be bound by all the
covenants, terms and conditions of the LLC Agreement and the Delaware Limited
Liability Company Act.
2. REPRESENTATIONS OF THE NEW EMPLOYEE MEMBER. The New Employee
Member hereby agrees that he shall have one "PTP Slot" allocated to him under
the LLC Agreement.
3. COUNTERPARTS. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
4. RATIFICATION OF THE LLC AGREEMENT. Except as otherwise expressly
provided herein, all of the terms and conditions of the LLC Agreement are hereby
ratified and shall remain unchanged and continue in full force and effect.
5. GOVERNING LAW. This Amendment shall be enforced, governed and
construed in all respects in accordance with the laws of the state of Delaware
applicable to agreements made and to be wholly performed in Delaware.
<PAGE>
2
IN WITNESS WHEREOF, the parties hereto have executed this Amendment and
agreed to be bound by the terms hereof.
NEW EMPLOYEE MEMBER:
/s/ DONALD MANVEL
--------------------------------
Donald Manvel
GROVE INVESTORS LLC
By: /s/ SALVATORE J. BONANNO
----------------------------
Name: Salvatore J. Bonanno
Title: Chairman
<PAGE>
EXHIBIT 3.4
THIRD AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GROVE INVESTORS LLC
This Third Amendment (the "AMENDMENT") to the Second Amended and Restated
Limited Liability Company Agreement (this "AGREEMENT") of GROVE INVESTORS LLC, a
Delaware limited liability company (the "COMPANY"), is made as of April 7, 1999.
WHEREAS, the Company was formed under the laws of the State of Delaware by
filing a certificate of formation with the Secretary of State of the State of
Delaware pursuant to an Operating Agreement, dated as of January 15, 1998.
WHEREAS, the Members whose names are set forth on Exhibit A (the "EXHIBIT A
MEMBERS") recognize that the respective balances in their Capital Accounts as of
December 31, 1998 may exceed their respective Percentage Interests of the total
Capital Accounts of all Members as of such date (the "DISPARITY").
WHEREAS, the Members wish to amend the Second Amended and Restated Limited
Liability Company Agreement of the Company dated as of June 27, 1998 as set
forth below to eliminate the Disparity as quickly as possible.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
FIRST: For taxable year 1999 only, prior to the allocation of Net Income or
Net Loss, items of gross deduction will first be allocated to the Exhibit A
Members in a manner necessary to cause to the maximum extent possible, the ratio
of the Modified Capital Account balances of all Members to equal the ratio of
their respective Percentage Interests.
<PAGE>
SECOND: For taxable year 1999 only, the definition of "Net Income" and "Net
Loss" shall be amended to provide that items of deduction specially allocated
pursuant to this Amendment shall also be excluded from the calculation of such
taxable income or loss for such taxable year 1999.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on the date first above written.
MEMBERS
OAK HILL STRATEGIC PARTNERS, L.P.
By: FW Strategic Asset Management, L.P.
----------------------------------------
By: Strategic Gen Par, Inc.
----------------------------------------
By: /s/ Mark A. Wolfson
----------------------------------------
Name: Mark A. Wolfson
----------------------------------
Title:
---------------------------------
Address: 201 Main Street
-------------------------------
Fort Worth, Texas 76102
-------------------------------
FW GROVE COINVESTORS, L.P.
By: FW Group Genpar, Inc.
-----------------------------------------
By: /s/ Mark A. Wolfson
----------------------------------------
Name: Mark A. Wolfson
----------------------------------
Title:
---------------------------------
Address: 201 Main Street
-------------------------------
Fort Worth, Texas 76102
-------------------------------
<PAGE>
SUNAPEE SECURITIES, INC.
By: /s/ Gary B. Wilkinson
----------------------------------------
Name: Gary B. Wilkinson
----------------------------------
Title: Treasurer
---------------------------------
Address: Two Copely Place
-------------------------------
Boston, Massachusetts 02116
-------------------------------
SQUAM LAKE INVESTORS, II, L.P.
By: GPI, Inc., its General Partner
----------------------------------------
By: /s/ Gary B. Wilkinson
----------------------------------------
Name: Gary B. Wilkinson
----------------------------------
Title: Treasurer
---------------------------------
Address: Two Copely Place
-------------------------------
Boston, Massachusetts 02116
-------------------------------
DLJ CAPITAL CORPORATION
By: /s/ Ivy Dobbs
----------------------------------------
Name: Ivy Dobbs
----------------------------------
Title:
---------------------------------
Address: 277 Park Avenue
-------------------------------
New York, New York 10172
-------------------------------
<PAGE>
DLJ PRIVATE EQUITY PARTNERS FUND, L.P.
By:
----------------------------------------
By: /s/ Ivy Dobbs
----------------------------------------
Name: Ivy Dobbs
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
-------------------------------
DLJ INVESTMENT PARTNERS II, L.P.
By:
----------------------------------------
By: /s/ Ivy Dobbs
----------------------------------------
Name: Ivy Dobbs
----------------------------------
Title:
---------------------------------
Address:
-------------------------------
-------------------------------
GGEP-GROVE, L.P.
By: George Group Inc.,
----------------------------------------
its General Partner
By: /s/ Michael L. George
----------------------------------------
Name: Michael L. George
----------------------------------
Title:
---------------------------------
Address: One Galleria Tower
-------------------------------
13355 Noel Road
-------------------------------
Suitte 1100
-------------------------------
Dallas, Texas 02116
-------------------------------
<PAGE>
MICHAEL L. GEORGE
/s/ Michael L. George
------------------------------------
Address: One Galleria Tower
-------------------------------
13355 Noel Road, Suite 1100
-------------------------------
Dallas, Texas 02116
-------------------------------
SALVATORE J. BONANNO
/s/ Salvatore J. Bonanno
------------------------------------
Address:
-------------------------------
-------------------------------
TED BRATTHAUAR
/s/ Ted Bratthauar
------------------------------------
Address:
-------------------------------
-------------------------------
JEFF BUST
/s/ Jeff Bust
------------------------------------
Address:
-------------------------------
-------------------------------
<PAGE>
STEPHEN CRIPE
/s/ Stephen Cripe
------------------------------------
Address:
-------------------------------
-------------------------------
DONALD MALLO
/s/ Donald Mallo
------------------------------------
Address:
-------------------------------
-------------------------------
DONALD MANVEL
/s/ Donald Manvel
------------------------------------
Address:
-------------------------------
-------------------------------
JOSEPH SHULL
/s/ Joseph Shull
------------------------------------
Address:
-------------------------------
-------------------------------
<PAGE>
KEITH SIMMONS
/s/ Keith Simmons
------------------------------------
Address:
-------------------------------
-------------------------------
JOHN WHEELER
/s/ John Wheeler
------------------------------------
Address:
-------------------------------
-------------------------------
<PAGE>
EXHIBIT A
EXHIBIT A MEMBERS
Salvatore J. Bonanno
Ted Bratthauar
Jeff Bust
Stephen Cripe
Donald Mallo
Joseph Shull
Keith Simmons
John Wheeler
<PAGE>
Exhibit 3.5
CERTIFICATE OF INCORPORATION
of
GROVE INVESTORS CAPITAL, INC.
The undersigned incorporator, in order to form a corporation under
the General Corporation Law of the State of Delaware (the "General
Corporation Law"), certifies as follows:
1. NAME. The name of the corporation is Grove Investors Capital,
Inc. (the "Corporation").
2. ADDRESS; REGISTERED OFFICE AND AGENT. The address of the
registered office of the Corporation in the State of Delaware is c/o CSC The
United States Corporation Company, 1013 Centre Road, Wilmington, New Castle
County, Delaware 19805.
3. PURPOSES. The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law.
4. NUMBER OF SHARES. The total number of shares of stock that
the Corporation shall have authority to issue is: One Thousand (1,000), all
of which shall be shares of Common Stock of the par value of One Cent ($0.01)
each.
<PAGE>
5. NAME AND MAILING ADDRESS OF INCORPORATOR. The name and
mailing address of the incorporator are: Michael H. Domesick, 1285 Avenue of
the Americas, New York, New York 10019-6064.
6. ELECTION OF DIRECTORS. Members of the Board of Directors of
the Corporation (the "Board") may be elected either by written ballot or by
voice vote.
7. LIMITATION OF LIABILITY. No director of the Corporation shall
be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that this
provision shall not eliminate or limit the liability of a director (a) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (b) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (c) under section 174
of the General Corporation Law or (d) for any transaction from which the
director derived any improper personal benefits.
Any repeal or modification of the foregoing provision shall not
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
2
<PAGE>
8. INDEMNIFICATION.
8.1 To the extent not prohibited by law, the Corporation
shall indemnify any person who is or was made, or threatened to be made, a
party to any threatened, pending or completed action, suit or proceeding (a
"Proceeding"), whether civil, criminal, administrative or investigative,
including, without limitation, an action by or in the right of the
Corporation to procure a judgment in its favor, by reason of the fact that
such person, or a person of whom such person is the legal representative, is
or was a director or officer of the Corporation, or, at the request of the
Corporation, is or was serving as a director or officer of any other
corporation or in a capacity with comparable authority or responsibilities
for any partnership, joint venture, trust, employee benefit plan or other
enterprise (an "Other Entity"), against judgments, fines, penalties, excise
taxes, amounts paid in settlement and costs, charges and expenses (including
attorneys' fees, disbursements and other charges). Persons who are not
directors or officers of the Corporation (or otherwise entitled to
indemnification pursuant to the preceding sentence) may be similarly
indemnified in respect of service to the Corporation or to an Other Entity at
the request of the Corporation to the extent the Board at any time specifies
that such persons are entitled to the benefits of this Section 8.
8.2 The Corporation shall, from time to time, reimburse or
advance to any director or officer or other person entitled to
indemnification hereunder
3
<PAGE>
the funds necessary for payment of expenses, including attorneys' fees and
disbursements, incurred in connection with any Proceeding, in advance of the
final disposition of such Proceeding; PROVIDED, HOWEVER, that, if required by
the General Corporation Law, such expenses incurred by or on behalf of any
director or officer or other person may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Corporation of an
undertaking, by or on behalf of such director or officer (or other person
indemnified hereunder), to repay any such amount so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal that such director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or reimbursement or advancement of expenses may have or
hereafter be entitled under any statute, this Certificate of Incorporation,
the By-laws of the Corporation (the "By-laws"), any agreement, any vote of
stockholders or disinterested directors or otherwise, both as to action in
his or her official capacity and as to action in another capacity while
holding such office.
8.4 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall
4
<PAGE>
continue as to a person who has ceased to be a director or officer (or other
person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.
8.5 The Corporation shall have power to purchase and maintain
insurance on behalf of any person who 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 an Other Entity,
against any liability asserted against such person and incurred by such
person in any such capacity, or arising out of such person's status as such,
whether or not the Corporation would have the power to indemnify such person
against such liability under the provisions of this Section 8, the By-laws or
under section 145 of the General Corporation Law or any other provision of
law.
8.6 The provisions of this Section 8 shall be a contract
between the Corporation, on the one hand, and each director and officer who
serves in such capacity at any time while this Section 8 is in effect and any
other person entitled to indemnification hereunder, on the other hand,
pursuant to which the Corporation and each such director, officer, or other
person intend to be, and shall be, legally bound. No repeal or modification
of this Section 8 shall affect any rights or obligations with respect to any
state of facts then or theretofore existing or thereafter arising or any
5
<PAGE>
proceeding theretofore or thereafter brought or threatened based in whole or
in part upon any such state of facts.
8.7 The rights to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 8
shall be enforceable by any person entitled to such indemnification or
reimbursement or advancement of expenses in any court of competent
jurisdiction. The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its Board,
its independent legal counsel and its stockholders) to have made a
determination prior to the commencement of such action that such
indemnification or reimbursement or advancement of expenses is proper in the
circumstances nor an actual determination by the Corporation (including its
Board, its independent legal counsel and its stockholders) that such person
is not entitled to such indemnification or reimbursement or advancement of
expenses shall constitute a defense to the action or create a presumption
that such person is not so entitled. Such a person shall also be indemnified
for any expenses incurred in connection with successfully establishing his or
her right to such indemnification or reimbursement or advancement of
expenses, in whole or in part, in any such proceeding.
8.8 Any director or officer of the Corporation serving in any
capacity of (a) another corporation of which a majority of the shares
entitled to vote in
6
<PAGE>
the election of its directors is held, directly or indirectly, by the
Corporation or (b) any employee benefit plan of the Corporation or any
corporation referred to in clause (a) shall be deemed to be doing so at the
request of the Corporation.
8.9 Any person entitled to be indemnified or to reimbursement
or advancement of expenses as a matter of right pursuant to this Section 8
may elect to have the right to indemnification or reimbursement or
advancement of expenses interpreted on the basis of the applicable law in
effect at the time of the occurrence of the event or events giving rise to
the applicable Proceeding, to the extent permitted by law, or on the basis of
the applicable law in effect at the time such indemnification or
reimbursement or advancement of expenses is sought. Such election shall be
made, by a notice in writing to the Corporation, at the time indemnification
or reimbursement or advancement of expenses is sought; PROVIDED, HOWEVER,
that if no such notice is given, the right to indemnification or
reimbursement or advancement of expenses shall be determined by the law in
effect at the time indemnification or reimbursement or advancement of
expenses is sought.
9. ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS. The Board may
from time to time adopt, amend or repeal the By-laws of the Corporation;
PROVIDED, HOWEVER, that any By-laws adopted or amended by the Board may be
amended or repealed, and any By-laws may be adopted, by the stockholders of
the
7
<PAGE>
Corporation by vote of a majority of the holders of shares of stock of the
Corporation entitled to vote in the election of directors of the Corporation.
WITNESS the signature of this Certificate this 23rd day of April,
1998.
/s/ Michael H. Domesick
-------------------------------
Michael H. Domesick
Incorporator
8
<PAGE>
Exhibit 3.6
BY-LAWS
of
GROVE INVESTORS CAPITAL, INC.
(A Delaware Corporation)
------------------------
ARTICLE 1
DEFINITIONS
As used in these By-laws, unless the context otherwise requires,
the term:
1.1 "Assistant Secretary" means an Assistant Secretary of the
Corporation.
1.2 "Assistant Treasurer" means an Assistant Treasurer of the
Corporation.
1.3 "Board" means the Board of Directors of the Corporation.
1.4 "By-laws" means the initial by-laws of the Corporation, as
amended from time to time.
1.5 "Certificate of Incorporation" means the initial certificate
of incorporation of the Corporation, as amended, supplemented or restated
from time to time.
1.6 "Chairman" means the Chairman of the Board of Directors of
the Corporation.
1.7 "Corporation" means Grove Investors Capital, Inc.
1.8 "Directors" means directors of the Corporation.
<PAGE>
2
1.9 "Entire Board" means all directors of the Corporation in
office, whether or not present at a meeting of the Board, but disregarding
vacancies.
1.10 "General Corporation Law" means the General Corporation Law
of the State of Delaware, as amended from time to time.
1.11 "Office of the Corporation" means the executive office of
the Corporation, anything in Section 131 of the General Corporation Law to
the contrary notwithstanding.
1.12 "President" means the President of the Corporation.
1.13 "Secretary" means the Secretary of the Corporation.
1.14 "Stockholders" means stockholders of the Corporation.
1.15 "Treasurer" means the Treasurer of the Corporation.
1.16 "Vice President" means a Vice President of the Corporation.
ARTICLE 2
STOCKHOLDERS
2.1 PLACE OF MEETINGS. Every meeting of Stockholders shall be
held at the office of the Corporation or at such other place within or
without the State of Delaware as shall be specified or fixed in the notice of
such meeting or in the waiver of notice thereof.
2.2 ANNUAL MEETING. A meeting of Stockholders shall be held
annually for the election of Directors and the transaction of other business
at such hour
<PAGE>
3
and on such business day in September or October or as may be determined by
the Board and designated in the notice of meeting.
2.3 DEFERRED MEETING FOR ELECTION OF DIRECTORS, ETC. If the
annual meeting of Stockholders for the election of Directors and the
transaction of other business is not held within the months specified in
Section 2.2 hereof, the Board shall call a meeting of Stockholders for the
election of Directors and the transaction of other business as soon
thereafter as convenient.
2.4 OTHER SPECIAL MEETINGS. A special meeting of Stockholders
(other than a special meeting for the election of Directors), unless
otherwise prescribed by statute, may be called at any time by the Board or by
the President or by the Secretary. At any special meeting of Stockholders
only such business may be transacted as is related to the purpose or purposes
of such meeting set forth in the notice thereof given pursuant to Section 2.6
hereof or in any waiver of notice thereof given pursuant to Section 2.7
hereof.
2.5 FIXING RECORD DATE. For the purpose of (a) determining the
Stockholders entitled (i) to notice of or to vote at any meeting of
Stockholders or any adjournment thereof, (ii) unless otherwise provided in
the Certificate of Incorporation to express consent to corporate action in
writing without a meeting or (iii) to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock; or (b) any
other lawful action, the Board may fix a record date, which record date shall
<PAGE>
4
not precede the date upon which the resolution fixing the record date was
adopted by the Board and which record date shall not be (x) in the case of
clause (a)(i) above, more than sixty nor less than ten days before the date
of such meeting, (y) in the case of clause (a)(ii) above, more than 10 days
after the date upon which the resolution fixing the record date was adopted
by the Board and (z) in the case of clause (a)(iii) or (b) above, more than
sixty days prior to such action. If no such record date is fixed:
2.5.1 the record date for determining Stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at
the close of business on the day 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;
2.5.2 the record date for determining stockholders
entitled to express consent to corporate action in writing without a
meeting (unless otherwise provided in the Certificate of Incorporation),
when no prior action by the Board is required under the General
Corporation Law, shall be the first day on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office in the State of
Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded; and when prior action by the Board is
required under the General Corporation Law, the record date for
determining
<PAGE>
5
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the date on which the Board
adopts the resolution taking such prior action; and
2.5.3 the record date for determining stockholders for
any purpose other than those specified in Sections 2.5.1 and 2.5.2 shall
be at the close of business on the day on which the Board adopts the
resolution relating thereto.
When a determination of Stockholders entitled to notice of or to vote at any
meeting of Stockholders has been made as provided in this Section 2.5, such
determination shall apply to any adjournment thereof unless the Board fixes a
new record date for the adjourned meeting. Delivery made to the
Corporation's registered office in accordance with Section 2.5.2 shall be by
hand or by certified or registered mail, return receipt requested.
2.6 NOTICE OF MEETINGS OF STOCKHOLDERS. Except as otherwise
provided in Sections 2.5 and 2.7 hereof, whenever under the provisions of any
statute, the Certificate of Incorporation or these By-laws, Stockholders are
required or permitted to take any action at a meeting, written notice shall
be given stating the place, date and hour of the meeting and, in the case of
a special meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by any statute, the Certificate of Incorporation or
these By-laws, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten nor more than sixty days before
<PAGE>
6
the date of the meeting, to each Stockholder entitled to notice of or to vote
at such meeting. If mailed, such notice shall be deemed to be given when
deposited in the United States mail, with postage prepaid, directed to the
Stockholder at his or her address as it appears on the records of the
Corporation. An affidavit of the Secretary or an Assistant Secretary or of
the transfer agent of the Corporation that the notice required by this
Section 2.6 has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken, and at the adjourned meeting any business may be transacted that might
have been transacted at the meeting as originally called. If, however, the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Stockholder of record entitled to vote at the
meeting.
2.7 WAIVERS OF NOTICE. Whenever the giving of any notice is
required by statute, the Certificate of Incorporation or these By-laws, a
waiver thereof, in writing, signed by the Stockholder or Stockholders
entitled to said notice, whether before or after the event as to which such
notice is required, shall be deemed equivalent to notice. Attendance by a
Stockholder at a meeting shall constitute a waiver of notice of such meeting
except when the Stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business on the
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7
ground that the meeting has not been lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the Stockholders need be specified in any written waiver of notice
unless so required by statute, the Certificate of Incorporation or these
By-laws.
2.8 LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
or cause to be prepared and made, at least ten 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. Such list shall be open to the examination of any Stockholder,
the Stockholder's agent, or attorney, at the Stockholder's expense, for any
purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where the meeting is to
be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
Stockholder who is present. The Corporation shall maintain the Stockholder
list in written form or in another form capable of conversion into written
form within a reasonable time. Upon the willful neglect or refusal of the
Directors to produce such a list at any meeting for the election of
Directors, they shall be ineligible for election to any office at such
meeting. The stock ledger shall be the only evidence as to who are the
Stockholders
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8
entitled to examine the stock ledger, the list of Stockholders or the books
of the Corporation, or to vote in person or by proxy at any meeting of
Stockholders.
2.9 QUORUM OF STOCKHOLDERS; ADJOURNMENT. Except as otherwise
provided by any statute, the Certificate of Incorporation or these By-laws,
the holders of one-third of all outstanding shares of stock entitled to vote
at any meeting of Stockholders, present in person or represented by proxy,
shall constitute a quorum for the transaction of any business at such
meeting. When a quorum is once present to organize a meeting of
Stockholders, it is not broken by the subsequent withdrawal of any
Stockholders. The holders of a majority of the shares of stock present in
person or represented by proxy at any meeting of Stockholders, including an
adjourned meeting, whether or not a quorum is present, may adjourn such
meeting to another time and place. Shares of its own stock belonging to the
Corporation or to another corporation, if a majority of the shares entitled
to vote in the election of directors of such other corporation is held,
directly or indirectly, by the Corporation, shall neither be entitled to vote
nor be counted for quorum purposes; PROVIDED, HOWEVER, that the foregoing
shall not limit the right of the Corporation to vote stock, including but not
limited to its own stock, held by it in a fiduciary capacity.
2.10 VOTING; PROXIES. Unless otherwise provided in the
Certificate of Incorporation, every Stockholder of record shall be entitled
at every meeting of Stockholders to one vote for each share of capital stock
standing in his or her name on the record of Stockholders determined in
accordance with Section 2.5 hereof. If the
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9
Certificate of Incorporation provides for more or less than one vote for any
share on any matter, each reference in the By-laws or the General Corporation
Law to a majority or other proportion of stock shall refer to such majority
or other proportion of the votes of such stock. The provisions of Sections
212 and 217 of the General Corporation Law shall apply in determining whether
any shares of capital stock may be voted and the persons, if any, entitled to
vote such shares; but the Corporation shall be protected in assuming that the
persons in whose names shares of capital stock stand on the stock ledger of
the Corporation are entitled to vote such shares. Holders of redeemable
shares of stock are not entitled to vote after the notice of redemption is
mailed to such holders and a sum sufficient to redeem the stocks has been
deposited with a bank, trust company, or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender
of the shares of stock. At any meeting of Stockholders (at which a quorum
was present to organize the meeting), all matters, except as otherwise
provided by statute or by the Certificate of Incorporation or by these
By-laws, shall be decided by a majority of the votes cast at such meeting by
the holders of shares present in person or represented by proxy and entitled
to vote thereon, whether or not a quorum is present when the vote is taken.
All elections of Directors shall be by written ballot unless otherwise
provided in the Certificate of Incorporation. In voting on any other
question on which a vote by ballot is required by law or is demanded by any
Stockholder entitled to vote, the voting shall be by ballot. Each ballot
shall be signed by the Stockholder voting or the
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10
Stockholder's proxy and shall state the number of shares voted. On all other
questions, the voting may be VIVA VOCE. Each Stockholder entitled to vote at
a meeting of Stockholders or to express consent or dissent to corporate
action in writing without a meeting may authorize another person or persons
to act for such Stockholder by proxy. The validity and enforceability of any
proxy shall be determined in accordance with Section 212 of the General
Corporation Law. A Stockholder may revoke any proxy that is not irrevocable
by attending the meeting and voting in person or by filing an instrument in
writing revoking the proxy or by delivering a proxy in accordance with
applicable law bearing a later date to the Secretary.
2.11 VOTING PROCEDURES AND INSPECTORS OF ELECTION AT MEETINGS OF
STOCKHOLDERS. The Board, in advance of any meeting of Stockholders, may
appoint one or more inspectors to act at the meeting and make a written
report thereof. The Board may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate has been appointed or is able to act at a meeting, the person
presiding at the meeting may appoint, and on the request of any Stockholder
entitled to vote thereat shall appoint, one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of his or her
ability. The inspectors shall (a) ascertain the number of shares outstanding
and the voting power of each, (b) determine the shares represented at the
meeting and the validity of proxies and ballots, (c) count all votes
<PAGE>
11
and ballots, (d) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors,
and (e) certify their determination of the number of shares represented at
the meeting and their count of all votes and ballots. The inspectors may
appoint or retain other persons or entities to assist the inspectors in the
performance of their duties. Unless otherwise provided by the Board, the
date and time of the opening and the closing of the polls for each matter
upon which the Stockholders will vote at a meeting shall be determined by the
person presiding at the meeting and shall be announced at the meeting. No
ballot, proxies or votes, or any revocation thereof or change thereto, shall
be accepted by the inspectors after the closing of the polls unless the Court
of Chancery of the State of Delaware upon application by a Stockholder shall
determine otherwise.
2.12 ORGANIZATION. At each meeting of Stockholders, the
President, or in the absence of the President, the Chairman, or if there is
no Chairman or if there be one and the Chairman is absent, a Vice President,
and in case more than one Vice President shall be present, that Vice
President designated by the Board (or in the absence of any such designation,
the most senior Vice President, based on age, present), shall act as chairman
of the meeting. The Secretary, or in his or her absence, one of the
Assistant Secretaries, shall act as secretary of the meeting. In case none
of the officers above designated to act as chairman or secretary of the
meeting, respectively, shall be present, a chairman or a secretary of the
meeting, as the case may be, shall be chosen by a majority of the votes cast
at such meeting by the holders of
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12
shares of capital stock present in person or represented by proxy and
entitled to vote at the meeting.
2.13 ORDER OF BUSINESS. The order of business at all meetings of
Stockholders shall be as determined by the chairman of the meeting, but the
order of business to be followed at any meeting at which a quorum is present
may be changed by a majority of the votes cast at such meeting by the holders
of shares of capital stock present in person or represented by proxy and
entitled to vote at the meeting.
2.14 WRITTEN CONSENT OF STOCKHOLDERS WITHOUT A MEETING. Unless
otherwise provided in the Certificate of Incorporation, any action required
by the General Corporation Law to 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 or consents 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 and shall be delivered (by hand or by certified or
registered mail, return receipt requested) to the Corporation by delivery to
its registered office in the State of Delaware, its principal place of
business, or an officer or agent of the Corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Every
written consent shall bear the date of signature of each stockholder who
signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within 60 days of the
<PAGE>
13
earliest dated consent delivered in the manner required by this Section 2.14,
written consents signed by a sufficient number of holders to take action are
delivered to the Corporation as aforesaid. 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.
ARTICLE 3
DIRECTORS
3.1 GENERAL POWERS. Except as otherwise provided in the
Certificate of Incorporation, the business and affairs of the Corporation
shall be managed by or under the direction of the Board. The Board may adopt
such rules and regulations, not inconsistent with the Certificate of
Incorporation or these By-laws or applicable laws, as it may deem proper for
the conduct of its meetings and the management of the Corporation. In
addition to the powers expressly conferred by these By-laws, the Board may
exercise all powers and perform all acts that are not required, by these
By-laws or the Certificate of Incorporation or by statute, to be exercised
and performed by the Stockholders.
3.2 NUMBER; QUALIFICATION; TERM OF OFFICE. The Board shall
consist of one or more members. The number of Directors shall be fixed
initially by the incorporator and may thereafter be changed from time to time
by action of the stockholders or by action of the Board. Directors need not
be stockholders. Each
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14
Director shall hold office until a successor is elected and qualified or
until the Director's death, resignation or removal.
3.3 ELECTION. Directors shall, except as otherwise required by
statute or by the Certificate of Incorporation, be elected by a plurality of
the votes cast at a meeting of stockholders by the holders of shares entitled
to vote in the election.
3.4 NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Unless otherwise
provided in the Certificate of Incorporation, newly created Directorships
resulting from an increase in the number of Directors and vacancies occurring
in the Board for any other reason, including the removal of Directors without
cause, may be filled by the affirmative votes of a majority of the entire
Board, although less than a quorum, or by a sole remaining Director, or may
be elected by a plurality of the votes cast by the holders of shares of
capital stock entitled to vote in the election at a special meeting of
stockholders called for that purpose. A Director elected to fill a vacancy
shall be elected to hold office until a successor is elected and qualified,
or until the Director's earlier death, resignation or removal.
3.5 RESIGNATION. Any Director may resign at any time by written
notice to the Corporation. Such resignation shall take effect at the time
therein specified, and, unless otherwise specified in such resignation, the
acceptance of such resignation shall not be necessary to make it effective.
3.6 REMOVAL. Subject to the provisions of Section 141(k) of the
General Corporation Law, any or all of the Directors may be removed with or
without
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15
cause by vote of the holders of a majority of the shares then entitled to
vote at an election of Directors.
3.7 COMPENSATION. Each Director, in consideration of his or her
service as such, shall be entitled to receive from the Corporation such
amount per annum or such fees for attendance at Directors' meetings, or both,
as the Board may from time to time determine, together with reimbursement for
the reasonable out-of-pocket expenses, if any, incurred by such Director in
connection with the performance of his or her duties. Each Director who
shall serve as a member of any committee of Directors in consideration of
serving as such shall be entitled to such additional amount per annum or such
fees for attendance at committee meetings, or both, as the Board may from
time to time determine, together with reimbursement for the reasonable
out-of-pocket expenses, if any, incurred by such Director in the performance
of his or her duties. Nothing contained in this Section 3.7 shall preclude
any Director from serving the Corporation or its subsidiaries in any other
capacity and receiving proper compensation therefor.
3.8 TIMES AND PLACES OF MEETINGS. The Board may hold meetings,
both regular and special, either within or without the State of Delaware.
The times and places for holding meetings of the Board may be fixed from time
to time by resolution of the Board or (unless contrary to a resolution of the
Board) in the notice of the meeting.
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16
3.9 ANNUAL MEETINGS. On the day when and at the place where the
annual meeting of stockholders for the election of Directors is held, and as
soon as practicable thereafter, the Board may hold its annual meeting,
without notice of such meeting, for the purposes of organization, the
election of officers and the transaction of other business. The annual
meeting of the Board may be held at any other time and place specified in a
notice given as provided in Section 3.11 hereof for special meetings of the
Board or in a waiver of notice thereof.
3.10 REGULAR MEETINGS. Regular meetings of the Board may be held
without notice at such times and at such places as shall from time to time be
determined by the Board.
3.11 SPECIAL MEETINGS. Special meetings of the Board may be
called by the Chairman, the President or the Secretary or by any two or more
Directors then serving on at least one day's notice to each Director given by
one of the means specified in Section 3.14 hereof other than by mail, or on
at least three days' notice if given by mail. Special meetings shall be
called by the Chairman, President or Secretary in like manner and on like
notice on the written request of any two or more of the Directors then
serving.
3.12 TELEPHONE MEETINGS. Directors or members of any committee
designated by the Board may participate in a meeting of the Board or of such
committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and
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17
participation in a meeting pursuant to this Section 3.12 shall constitute
presence in person at such meeting.
3.13 ADJOURNED MEETINGS. A majority of the Directors present at
any meeting of the Board, including an adjourned meeting, whether or not a
quorum is present, may adjourn such meeting to another time and place. At
least one day's notice of any adjourned meeting of the Board shall be given
to each Director whether or not present at the time of the adjournment, if
such notice shall be given by one of the means specified in Section 3.14
hereof other than by mail, or at least three days' notice if by mail. Any
business may be transacted at an adjourned meeting that might have been
transacted at the meeting as originally called.
3.14 NOTICE PROCEDURE. Subject to Sections 3.11 and 3.17 hereof,
whenever, under the provisions of any statute, the Certificate of
Incorporation or these By-laws, notice is required to be given to any
Director, such notice shall be deemed given effectively if given in person or
by telephone, by mail addressed to such Director at such Director's address
as it appears on the records of the Corporation, with postage thereon
prepaid, or by telegram, telex, telecopy or similar means addressed as
aforesaid.
3.15 WAIVER OF NOTICE. Whenever the giving of any notice is
required by statute, the Certificate of Incorporation or these By-laws, a
waiver thereof, in writing, signed by the person or persons entitled to said
notice, whether before or after the event as to which such notice is
required, shall be deemed equivalent to notice.
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18
Attendance by a person at a meeting shall constitute a waiver of notice of
such meeting except when the person attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business on the ground that the meeting has not been lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Directors or a committee of Directors need
be specified in any written waiver of notice unless so required by statute,
the Certificate of Incorporation or these By-laws.
3.16 ORGANIZATION. At each meeting of the Board, the Chairman,
or in the absence of the Chairman, the President, or in the absence of the
President, a chairman chosen by a majority of the Directors present, shall
preside. The Secretary shall act as secretary at each meeting of the Board.
In case the Secretary shall be absent from any meeting of the Board, an
Assistant Secretary shall perform the duties of secretary at such meeting;
and in the absence from any such meeting of the Secretary and all Assistant
Secretaries, the person presiding at the meeting may appoint any person to
act as secretary of the meeting.
3.17 QUORUM OF DIRECTORS. The presence in person of a majority
of the entire Board shall be necessary and sufficient to constitute a quorum
for the transaction of business at any meeting of the Board, but a majority
of a smaller number may adjourn any such meeting to a later date.
3.18 ACTION BY MAJORITY VOTE. Except as otherwise expressly
required by statute, the Certificate of Incorporation or these By-laws, the
act of a majority of the
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19
Directors present at a meeting at which a quorum is present shall be the act
of the Board.
3.19 ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or
permitted to be taken at any meeting of the Board or of any committee thereof
may be taken without a meeting if all Directors or members of such committee,
as the case may be, consent thereto in writing, and the writing or writings
are filed with the minutes of proceedings of the Board or committee.
ARTICLE 4
COMMITTEES OF THE BOARD
The Board may, by resolution passed by a vote of a majority of the
entire Board, designate one or more committees, each committee to consist of
one or more of the Directors of the Corporation. The Board may designate one
or more Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of such committee. If a member
of a committee shall be absent from any meeting, or disqualified from voting
thereat, the remaining member or members present and not disqualified from
voting, whether or not such member or members constitute a quorum, may, by a
unanimous vote, appoint another member of the Board to act at the meeting in
the place of any such absent or disqualified member. Any such committee, to
the extent provided in the resolution of the Board passed as aforesaid, shall
have and may exercise all the powers and authority
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20
of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be impressed on
all papers that may require it, but no such committee shall have the power or
authority of the Board in reference to amending the Certificate of
Incorporation, adopting an agreement of merger or consolidation under section
251 or section 252 of the General Corporation Law, recommending to the
stockholders (a) the sale, lease or exchange of all or substantially all of
the Corporation's property and assets, or (b) a dissolution of the
Corporation or a revocation of a dissolution, or amending the By-laws of the
Corporation; and, unless the resolution designating it expressly so provides,
no such committee shall have the power and authority to declare a dividend,
to authorize the issuance of stock or to adopt a certificate of ownership and
merger pursuant to Section 253 of the General Corporation Law. Unless
otherwise specified in the resolution of the Board designating a committee,
at all meetings of such committee a majority of the total number of members
of the committee shall constitute a quorum for the transaction of business,
and the vote of a majority of the members of the committee present at any
meeting at which there is a quorum shall be the act of the committee. Each
committee shall keep regular minutes of its meetings. Unless the Board
otherwise provides, each committee designated by the Board may make, alter
and repeal rules for the conduct of its business. In the absence of such
rules each committee shall conduct its business in the same manner as the
Board conducts its business pursuant to Article 3 of these By-laws.
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21
ARTICLE 5
OFFICERS
5.1 POSITIONS. The officers of the Corporation shall be a
President, a Secretary, a Treasurer and such other officers as the Board may
appoint, including a Chairman, one or more Vice Presidents and one or more
Assistant Secretaries and Assistant Treasurers, who shall exercise such
powers and perform such duties as shall be determined from time to time by
the Board. The Board may designate one or more Vice Presidents as Executive
Vice Presidents and may use descriptive words or phrases to designate the
standing, seniority or areas of special competence of the Vice Presidents
elected or appointed by it. Any number of offices may be held by the same
person unless the Certificate of Incorporation or these By-laws otherwise
provide.
5.2 APPOINTMENT. The officers of the Corporation shall be
chosen by the Board at its annual meeting or at such other time or times as
the Board shall determine.
5.3 COMPENSATION. The compensation of all officers of the
Corporation shall be fixed by the Board. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that the
officer is also a Director.
5.4 TERM OF OFFICE. Each officer of the Corporation shall hold
office for the term for which he or she is elected and until such officer's
successor is chosen and qualifies or until such officer's earlier death,
resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. Such resignation shall
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22
take effect at the date of receipt of such notice or at such later time as is
therein specified, and, unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective. The resignation of
an officer shall be without prejudice to the contract rights of the
Corporation, if any. Any officer elected or appointed by the Board may be
removed at any time, with or without cause, by vote of a majority of the
entire Board. Any vacancy occurring in any office of the Corporation shall
be filled by the Board. The removal of an officer without cause shall be
without prejudice to the officer's contract rights, if any. The election or
appointment of an officer shall not of itself create contract rights.
5.5 FIDELITY BONDS. The Corporation may secure the fidelity of
any or all of its officers or agents by bond or otherwise.
5.6 CHAIRMAN. The Chairman, if one shall have been appointed,
shall preside at all meetings of the Board and shall exercise such powers and
perform such other duties as shall be determined from time to time by the Board.
5.7 PRESIDENT. The President shall be the Chief Executive Officer
of the Corporation and shall have general supervision over the business of the
Corporation, subject, however, to the control of the Board and of any duly
authorized committee of Directors. The President shall preside at all meetings
of the Stockholders and at all meetings of the Board at which the Chairman (if
there be one) is not present. The President may sign and execute in the name of
the Corporation deeds, mortgages, bonds, contracts and other instruments except
in cases in which the signing and
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23
execution thereof shall be expressly delegated by the Board or by these
By-laws to some other officer or agent of the Corporation or shall be
required by statute otherwise to be signed or executed and, in general, the
President shall perform all duties incident to the office of President of a
corporation and such other duties as may from time to time be assigned to the
President by the Board.
5.8 VICE PRESIDENTS. At the request of the President, or, in the
President's absence, at the request of the Board, the Vice Presidents shall (in
such order as may be designated by the Board, or, in the absence of any such
designation, in order of seniority based on age) perform all of the duties of
the President and, in so performing, shall have all the powers of, and be
subject to all restrictions upon, the President. Any Vice President may sign
and execute in the name of the Corporation deeds, mortgages, bonds, contracts or
other instruments, except in cases in which the signing and execution thereof
shall be expressly delegated by the Board or by these By-laws to some other
officer or agent of the Corporation, or shall be required by statute otherwise
to be signed or executed, and each Vice President shall perform such other
duties as from time to time may be assigned to such Vice President by the Board
or by the President.
5.9 SECRETARY. The Secretary shall attend all meetings of the
Board and of the Stockholders and shall record all the proceedings of the
meetings of the Board and of the stockholders in a book to be kept for that
purpose, and shall perform like duties for committees of the Board, when
required. The Secretary shall give, or
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24
cause to be given, notice of all special meetings of the Board and of the
stockholders and shall perform such other duties as may be prescribed by the
Board or by the President, under whose supervision the Secretary shall be.
The Secretary shall have custody of the corporate seal of the Corporation,
and the Secretary, or an Assistant Secretary, shall have authority to impress
the same on any instrument requiring it, and when so impressed the seal may
be attested by the signature of the Secretary or by the signature of such
Assistant Secretary. The Board may give general authority to any other
officer to impress the seal of the Corporation and to attest the same by such
officer's signature. The Secretary or an Assistant Secretary may also attest
all instruments signed by the President or any Vice President. The Secretary
shall have charge of all the books, records and papers of the Corporation
relating to its organization and management, shall see that the reports,
statements and other documents required by statute are properly kept and
filed and, in general, shall perform all duties incident to the office of
Secretary of a corporation and such other duties as may from time to time be
assigned to the Secretary by the Board or by the President.
5.10 TREASURER. The Treasurer shall have charge and custody of, and
be responsible for, all funds, securities and notes of the Corporation; receive
and give receipts for moneys due and payable to the Corporation from any sources
whatsoever; deposit all such moneys and valuable effects in the name and to the
credit of the Corporation in such depositaries as may be designated by the
Board; against proper vouchers, cause such funds to be disbursed by checks or
drafts on the authorized
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25
depositaries of the Corporation signed in such manner as shall be determined
by the Board and be responsible for the accuracy of the amounts of all moneys
so disbursed; regularly enter or cause to be entered in books or other
records maintained for the purpose full and adequate account of all moneys
received or paid for the account of the Corporation; have the right to
require from time to time reports or statements giving such information as
the Treasurer may desire with respect to any and all financial transactions
of the Corporation from the officers or agents transacting the same; render
to the President or the Board, whenever the President or the Board shall
require the Treasurer so to do, an account of the financial condition of the
Corporation and of all financial transactions of the Corporation; exhibit at
all reasonable times the records and books of account to any of the Directors
upon application at the office of the Corporation where such records and
books are kept; disburse the funds of the Corporation as ordered by the
Board; and, in general, perform all duties incident to the office of
Treasurer of a corporation and such other duties as may from time to time be
assigned to the Treasurer by the Board or the President.
5.11 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. Assistant
Secretaries and Assistant Treasurers shall perform such duties as shall be
assigned to them by the Secretary or by the Treasurer, respectively, or by the
Board or by the President.
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26
ARTICLE 6
CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC.
6.1 EXECUTION OF CONTRACTS. The Board, except as otherwise
provided in these By-laws, may prospectively or retroactively authorize any
officer or officers, employee or employees or agent or agents, in the name and
on behalf of the Corporation, to enter into any contract or execute and deliver
any instrument, and any such authority may be general or confined to specific
instances, or otherwise limited.
6.2 LOANS. The Board may prospectively or retroactively
authorize the President or any other officer, employee or agent of the
Corporation to effect loans and advances at any time for the Corporation from
any bank, trust company or other institution, or from any firm, corporation
or individual, and for such loans and advances the person so authorized may
make, execute and deliver promissory notes, bonds or other certificates or
evidences of indebtedness of the Corporation, and, when authorized by the
Board so to do, may pledge and hypothecate or transfer any securities or
other property of the Corporation as security for any such loans or advances.
Such authority conferred by the Board may be general or confined to specific
instances, or otherwise limited.
6.3 CHECKS, DRAFTS, ETC. All checks, drafts and other orders
for the payment of money out of the funds of the Corporation and all
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by
resolution of the Board.
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27
6.4 DEPOSITS. The funds of the Corporation not otherwise employed
shall be deposited from time to time to the order of the Corporation with such
banks, trust companies, investment banking firms, financial institutions or
other depositaries as the Board may select or as may be selected by an officer,
employee or agent of the Corporation to whom such power to select may from time
to time be delegated by the Board.
ARTICLE 7
STOCK AND DIVIDENDS
7.1 CERTIFICATES REPRESENTING SHARES. The shares of capital
stock of the Corporation shall be represented by certificates in such form
(consistent with the provisions of Section 158 of the General Corporation
Law) as shall be approved by the Board. Such certificates shall be signed by
the Chairman, the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer, and may be
impressed with the seal of the Corporation or a facsimile thereof. The
signatures of the officers upon a certificate may be facsimiles, if the
certificate is countersigned by a transfer agent or registrar other than the
Corporation itself or its employee. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon
any certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, such certificate may, unless
otherwise ordered by the Board, be issued by the
<PAGE>
28
Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
7.2 TRANSFER OF SHARES. Transfers of shares of capital stock of
the Corporation shall be made only on the books of the Corporation by the holder
thereof or by the holder's duly authorized attorney appointed by a power of
attorney duly executed and filed with the Secretary or a transfer agent of the
Corporation, and on surrender of the certificate or certificates representing
such shares of capital stock properly endorsed for transfer and upon payment of
all necessary transfer taxes. Every certificate exchanged, returned or
surrendered to the Corporation shall be marked "Cancelled," with the date of
cancellation, by the Secretary or an Assistant Secretary or the transfer agent
of the Corporation. A person in whose name shares of capital stock shall stand
on the books of the Corporation shall be deemed the owner thereof to receive
dividends, to vote as such owner and for all other purposes as respects the
Corporation. No transfer of shares of capital stock shall be valid as against
the Corporation, its stockholders and creditors for any purpose, except to
render the transferee liable for the debts of the Corporation to the extent
provided by law, until such transfer shall have been entered on the books of the
Corporation by an entry showing from and to whom transferred.
7.3 TRANSFER AND REGISTRY AGENTS. The Corporation may from time
to time maintain one or more transfer offices or agents and registry offices or
agents at such place or places as may be determined from time to time by the
Board.
<PAGE>
29
7.4 LOST, DESTROYED, STOLEN AND MUTILATED CERTIFICATES. The
holder of any shares of capital stock of the Corporation shall immediately
notify the Corporation of any loss, destruction, theft or mutilation of the
certificate representing such shares, and the Corporation may issue a new
certificate to replace the certificate alleged to have been lost, destroyed,
stolen or mutilated. The Board may, in its discretion, as a condition to the
issue of any such new certificate, require the owner of the lost, destroyed,
stolen or mutilated certificate, or his or her legal representatives, to make
proof satisfactory to the Board of such loss, destruction, theft or mutilation
and to advertise such fact in such manner as the Board may require, and to give
the Corporation and its transfer agents and registrars, or such of them as the
Board may require, a bond in such form, in such sums and with such surety or
sureties as the Board may direct, to indemnify the Corporation and its transfer
agents and registrars against any claim that may be made against any of them on
account of the continued existence of any such certificate so alleged to have
been lost, destroyed, stolen or mutilated and against any expense in connection
with such claim.
7.5 RULES AND REGULATIONS. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these By-laws or
with the Certificate of Incorporation, concerning the issue, transfer and
registration of certificates representing shares of its capital stock.
7.6 RESTRICTION ON TRANSFER OF STOCK. A written restriction on
the transfer or registration of transfer of capital stock of the Corporation,
if permitted by
<PAGE>
30
Section 202 of the General Corporation Law and noted conspicuously on the
certificate representing such capital stock, may be enforced against the
holder of the restricted capital stock or any successor or transferee of the
holder, including an executor, administrator, trustee, guardian or other
fiduciary entrusted with like responsibility for the person or estate of the
holder. Unless noted conspicuously on the certificate representing such
capital stock, a restriction, even though permitted by Section 202 of the
General Corporation Law, shall be ineffective except against a person with
actual knowledge of the restriction. A restriction on the transfer or
registration of transfer of capital stock of the Corporation may be imposed
either by the Certificate of Incorporation or by an agreement among any
number of stockholders or among such stockholders and the Corporation. No
restriction so imposed shall be binding with respect to capital stock issued
prior to the adoption of the restriction unless the holders of such capital
stock are parties to an agreement or voted in favor of the restriction.
7.7 DIVIDENDS, SURPLUS, ETC. Subject to the provisions of the
Certificate of Incorporation and of law, the Board:
7.7.1 may declare and pay dividends or make other
distributions on the outstanding shares of capital stock in such amounts
and at such time or times as it, in its discretion, shall deem advisable
giving due consideration to the condition of the affairs of the
Corporation;
7.7.2 may use and apply, in its discretion, any of the
surplus of the Corporation in purchasing or acquiring any shares of capital
stock
<PAGE>
31
of the Corporation, or purchase warrants therefor, in accordance with
law, or any of its bonds, debentures, notes, scrip or other securities or
evidences of indebtedness; and
7.7.3 may set aside from time to time out of such surplus or
net profits such sum or sums as, in its discretion, it may think proper, as
a reserve fund to meet contingencies, or for equalizing dividends or for
the purpose of maintaining or increasing the property or business of the
Corporation, or for any purpose it may think conducive to the best
interests of the Corporation.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNITY UNDERTAKING. To the extent not prohibited by law,
the Corporation shall indemnify any person who is or was made, or threatened
to be made, a party to any threatened, pending or completed action, suit or
proceeding (a "Proceeding"), whether civil, criminal, administrative or
investigative, including, without limitation, an action by or in the right of
the Corporation to procure a judgment in its favor, by reason of the fact
that such person, or a person of whom such person is the legal
representative, is or was a Director or officer of the Corporation, or, at
the request of the Corporation, is or was serving as a director or officer of
any other corporation or in a capacity with comparable authority or
responsibilities for any partnership, joint venture, trust, employee benefit
plan or other enterprise (an "Other
<PAGE>
32
Entity"), against judgments, fines, penalties, excise taxes, amounts paid in
settlement and costs, charges and expenses (including attorneys' fees,
disbursements and other charges). Persons who are not directors or officers
of the Corporation (or otherwise entitled to indemnification pursuant to the
preceding sentence) may be similarly indemnified in respect of service to the
Corporation or to an Other Entity at the request of the Corporation to the
extent the Board at any time specifies that such persons are entitled to the
benefits of this Article 8.
8.2 ADVANCEMENT OF EXPENSES. The Corporation shall, from time to
time, reimburse or advance to any Director or officer or other person entitled
to indemnification hereunder the funds necessary for payment of expenses,
including attorneys' fees and disbursements, incurred in connection with any
Proceeding, in advance of the final disposition of such Proceeding; PROVIDED,
HOWEVER, that, if required by the General Corporation Law, such expenses
incurred by or on behalf of any Director or officer or other person may be paid
in advance of the final disposition of a Proceeding only upon receipt by the
Corporation of an undertaking, by or on behalf of such Director or officer (or
other person indemnified hereunder), to repay any such amount so advanced if it
shall ultimately be determined by final judicial decision from which there is no
further right of appeal that such Director, officer or other person is not
entitled to be indemnified for such expenses.
8.3 RIGHTS NOT EXCLUSIVE. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this
<PAGE>
33
Article 8 shall not be deemed exclusive of any other rights to which a person
seeking indemnification or reimbursement or advancement of expenses may have
or hereafter be entitled under any statute, the Certificate of Incorporation,
these By-laws, any agreement, any vote of stockholders or disinterested
Directors or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding such office.
8.4 CONTINUATION OF BENEFITS. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article 8 shall continue as to a person who has ceased to be a Director or
officer (or other person indemnified hereunder) and shall inure to the benefit
of the executors, administrators, legatees and distributees of such person.
8.5 INSURANCE. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who 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 an Other Entity,
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the Corporation would have the power to indemnify such person against such
liability under the provisions of this Article 8, the Certificate of
Incorporation or under section 145 of the General Corporation Law or any other
provision of law.
<PAGE>
34
8.6 BINDING EFFECT. The provisions of this Article 8 shall be a
contract between the Corporation, on the one hand, and each Director and officer
who serves in such capacity at any time while this Article 8 is in effect and
any other person entitled to indemnification hereunder, on the other hand,
pursuant to which the Corporation and each such Director, officer or other
person intend to be, and shall be legally bound. No repeal or modification of
this Article 8 shall affect any rights or obligations with respect to any state
of facts then or theretofore existing or thereafter arising or any proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts.
8.7 PROCEDURAL RIGHTS. The rights to indemnification and
reimbursement or advancement of expenses provided by, or granted pursuant to,
this Article 8 shall be enforceable by any person entitled to such
indemnification or reimbursement or advancement of expenses in any court of
competent jurisdiction. The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel and its stockholders) to have made a
determination prior to the commencement of such action that such indemnification
or reimbursement or advancement of expenses is proper in the circumstances nor
an actual determination by the Corporation (including its Board of Directors,
its independent legal counsel and its stockholders) that such person is not
entitled to such indemnification or reimbursement or advancement of expenses
shall
<PAGE>
35
constitute a defense to the action or create a presumption that such person
is not so entitled. Such a person shall also be indemnified for any expenses
incurred in connection with successfully establishing his or her right to
such indemnification or reimbursement or advancement of expenses, in whole or
in part, in any such proceeding.
8.8 SERVICE DEEMED AT CORPORATION'S REQUEST. Any Director or
officer of the Corporation serving in any capacity (a) another corporation of
which a majority of the shares entitled to vote in the election of its directors
is held, directly or indirectly, by the Corporation or (b) any employee benefit
plan of the Corporation or any corporation referred to in clause (a) shall be
deemed to be doing so at the request of the Corporation.
8.9 ELECTION OF APPLICABLE LAW. Any person entitled to be
indemnified or to reimbursement or advancement of expenses as a matter of right
pursuant to this Article 8 may elect to have the right to indemnification or
reimbursement or advancement of expenses interpreted on the basis of the
applicable law in effect at the time of the occurrence of the event or events
giving rise to the applicable Proceeding, to the extent permitted by law, or on
the basis of the applicable law in effect at the time such indemnification or
reimbursement or advancement of expenses is sought. Such election shall be
made, by a notice in writing to the Corporation, at the time indemnification or
reimbursement or advancement of expenses is sought; PROVIDED, HOWEVER, that if
no such notice is given, the right to indemnification or reimbursement
<PAGE>
36
or advancement of expenses shall be determined by the law in effect at the
time indemnification or reimbursement or advancement of expenses is sought.
ARTICLE 9
BOOKS AND RECORDS
9.1 BOOKS AND RECORDS. There shall be kept at the principal
office of the Corporation correct and complete records and books of account
recording the financial transactions of the Corporation and minutes of the
proceedings of the stockholders, the Board and any committee of the Board. The
Corporation shall keep at its principal office, or at the office of the transfer
agent or registrar of the Corporation, a record containing the names and
addresses of all stockholders, the number and class of shares held by each and
the dates when they respectively became the owners of record thereof.
9.2 FORM OF RECORDS. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
written form within a reasonable time. The Corporation shall so convert any
records so kept upon the request of any person entitled to inspect the same.
9.3 INSPECTION OF BOOKS AND RECORDS. Except as otherwise provided
by law, the Board shall determine from time to time whether, and, if allowed,
when
<PAGE>
37
and under what conditions and regulations, the accounts, books, minutes and
other records of the Corporation, or any of them, shall be open to the
stockholders for inspection.
ARTICLE 10
SEAL
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
ARTICLE 11
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and may be
changed, by resolution of the Board.
ARTICLE 12
PROXIES AND CONSENTS
Unless otherwise directed by the Board, the Chairman, the President,
any Vice President, the Secretary or the Treasurer, or any one of them, may
execute and deliver on behalf of the Corporation proxies respecting any and all
shares or other ownership interests of any Other Entity owned by the Corporation
appointing such person or persons as the officer executing the same shall deem
proper to represent and
<PAGE>
38
vote the shares or other ownership interests so owned at any and all meetings
of holders of shares or other ownership interests, whether general or
special, and/or to execute and deliver consents respecting such shares or
other ownership interests; or any of the aforesaid officers may attend any
meeting of the holders of shares or other ownership interests of such Other
Entity and thereat vote or exercise any or all other powers of the
Corporation as the holder of such shares or other ownership interests.
ARTICLE 13
EMERGENCY BY-LAWS
Unless the Certificate of Incorporation provides otherwise, the following
provisions of this Article 13 shall be effective during an emergency, which is
defined as when a quorum of the Corporation's Directors cannot be readily
assembled because of some catastrophic event. During such emergency:
13.1 NOTICE TO BOARD MEMBERS. Any one member of the Board or any
one of the following officers: Chairman, President, any Vice President,
Secretary, or Treasurer, may call a meeting of the Board. Notice of such
meeting need be given only to those Directors whom it is practicable to reach,
and may be given in any practical manner, including by publication and radio.
Such notice shall be given at least six hours prior to commencement of the
meeting.
13.2 TEMPORARY DIRECTORS AND QUORUM. One or more officers of the
Corporation present at the emergency Board meeting, as is necessary to achieve a
quorum, shall be considered to be Directors for the meeting, and shall so serve
in order
<PAGE>
39
of rank, and within the same rank, in order of seniority. In the event that
less than a quorum of the Directors are present (including any officers who
are to serve as Directors for the meeting), those Directors present
(including the officers serving as Directors) shall constitute a quorum.
13.3 ACTIONS PERMITTED TO BE TAKEN. The Board as constituted in
Section 13.2, and after notice as set forth in Section 13.1 may:
13.3.1 prescribe emergency powers to any officer of the
Corporation;
13.3.2 delegate to any officer or Director, any of the powers
of the Board;
13.3.3 designate lines of succession of officers and agents,
in the event that any of them are unable to discharge their duties;
13.3.4 relocate the principal place of business, or designate
successive or simultaneous principal places of business; and
13.3.5 take any other convenient, helpful or necessary action
to carry on the business of the Corporation.
ARTICLE 14
AMENDMENTS
These By-laws may be amended or repealed and new By-laws may be
adopted by a vote of the holders of shares entitled to vote in the election of
Directors or
<PAGE>
40
by the Board. Any By-laws adopted or amended by the Board may be amended or
repealed by the Stockholders entitled to vote thereon.
<PAGE>
EXECUTION COPY
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GROVE INVESTORS LLC
GROVE INVESTORS CAPITAL, INC.
-----------------------------------------------
141/2% SENIOR DEBENTURES DUE 2010
-----------------------------------------------
------------------------
INDENTURE
DATED AS OF APRIL 29, 1998
------------------------
-----------------------------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
<S> <C>
310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.03
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.03
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.07
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.06; 11.02
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.03; 11.02
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.02
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.05
(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . NA
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.05, 11.02
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12; 2.13
317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.01
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11.01
</TABLE>
- ----------------------
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE. . . . . . . . . . . . 1
Section 1.01. Definitions.. . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions.. . . . . . . . . . . . . . . . . . . .19
Section 1.03. Trust Indenture Act Terms.. . . . . . . . . . . . . . . .19
Section 1.04. Rules of Construction.. . . . . . . . . . . . . . . . . .20
ARTICLE 2. THE DEBENTURES. . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 2.01. Form and Dating.. . . . . . . . . . . . . . . . . . . . .21
Section 2.02. Execution and Authentication. . . . . . . . . . . . . . .22
Section 2.03. Registrar and Paying Agent. . . . . . . . . . . . . . . .22
Section 2.04. Paying Agent to Hold Money in Trust.. . . . . . . . . . .23
Section 2.05. Holder Lists. . . . . . . . . . . . . . . . . . . . . . .23
Section 2.06. Transfer and Exchange.. . . . . . . . . . . . . . . . . .23
Section 2.07. Replacement Debentures. . . . . . . . . . . . . . . . . .36
Section 2.08. Outstanding Debentures. . . . . . . . . . . . . . . . . .36
Section 2.09. Treasury Debentures.. . . . . . . . . . . . . . . . . . .36
Section 2.10. Temporary Debentures. . . . . . . . . . . . . . . . . . .36
Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . .37
Section 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . .37
Section 2.13. Record Date.. . . . . . . . . . . . . . . . . . . . . . .37
Section 2.14. Computation of Interest.. . . . . . . . . . . . . . . . .37
Section 2.15. CUSIP Number. . . . . . . . . . . . . . . . . . . . . . .37
ARTICLE 3. REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . . . .38
Section 3.02. Selection of Debentures to Be Redeemed. . . . . . . . . .38
Section 3.03. Notice of Redemption. . . . . . . . . . . . . . . . . . .38
Section 3.04. Effect of Notice of Redemption. . . . . . . . . . . . . .39
Section 3.05. Deposit of Redemption Price.. . . . . . . . . . . . . . .39
Section 3.06. Debentures Redeemed in Part.. . . . . . . . . . . . . . .40
Section 3.07. Optional Redemption.. . . . . . . . . . . . . . . . . . .40
Section 3.08. Mandatory Redemption. . . . . . . . . . . . . . . . . . .40
ARTICLE 4. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 4.01. Payment of Debentures.. . . . . . . . . . . . . . . . . .40
Section 4.02. Maintenance of Office or Agency.. . . . . . . . . . . . .41
Section 4.03. Reports.. . . . . . . . . . . . . . . . . . . . . . . . .41
Section 4.04. Compliance Certificate. . . . . . . . . . . . . . . . . .42
Section 4.05. Taxes.. . . . . . . . . . . . . . . . . . . . . . . . . .42
Section 4.06. Stay, Extension and Usury Laws. . . . . . . . . . . . . .43
Section 4.07. Restricted Payments.. . . . . . . . . . . . . . . . . . .43
Section 4.08. Limitation on Leases. . . . . . . . . . . . . . . . . . .46
i
<PAGE>
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Stock . . . . . . . . . . . . . . . . . . .46
Section 4.10. Transactions with Affiliates. . . . . . . . . . . . . . .49
Section 4.11. Liens.. . . . . . . . . . . . . . . . . . . . . . . . . .49
Section 4.12. Corporate Existence.. . . . . . . . . . . . . . . . . . .49
Section 4.13. Offer to Repurchase Upon Change of Control. . . . . . . .50
Section 4.14. Sales of Accounts Receivable. . . . . . . . . . . . . . .51
Section 4.15. Sale and Leaseback Transactions.. . . . . . . . . . . . .51
Section 4.16. Restriction on Preferred Stock of Subsidiaries. . . . . .52
Section 4.17. Restrictions on Activities of Grove Investors Capital.. .52
Section 4.18. Payments for Consent. . . . . . . . . . . . . . . . . . .52
ARTICLE 5. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Section 5.01. Merger, Consolidation or Sale of Assets.. . . . . . . . .52
Section 5.02. Successor Corporation Substituted.. . . . . . . . . . . .53
ARTICLE 6. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . .53
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . .53
Section 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . . .55
Section 6.03. Other Remedies. . . . . . . . . . . . . . . . . . . . . .55
Section 6.04. Waiver of Past Defaults.. . . . . . . . . . . . . . . . .56
Section 6.05. Control by Majority.. . . . . . . . . . . . . . . . . . .56
Section 6.06. Limitation on Suits.. . . . . . . . . . . . . . . . . . .56
Section 6.07. Rights of Holders of Debentures to Receive Payment. . . .57
Section 6.08. Collection Suit by Trustee. . . . . . . . . . . . . . . .57
Section 6.09. Trustee May File Proofs of Claim. . . . . . . . . . . . .57
Section 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . . .57
Section 6.11. Undertaking for Costs.. . . . . . . . . . . . . . . . . .58
ARTICLE 7. TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58
Section 7.01. Duties of Trustee.. . . . . . . . . . . . . . . . . . . .58
Section 7.02. Rights of Trustee.. . . . . . . . . . . . . . . . . . . .59
Section 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . .60
Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . .60
Section 7.05. Notice of Defaults. . . . . . . . . . . . . . . . . . . .60
Section 7.06. Reports by Trustee to Holders of the Debentures.. . . . .61
Section 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . .61
Section 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . .62
Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . . . . .63
Section 7.10. Eligibility; Disqualification.. . . . . . . . . . . . . .63
Section 7.11. Preferential Collection of Claims Against Issuers.. . . .63
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE. . . . . . . . . . . . .63
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance. . . . . . . . . . . . . . . . . . . . . . . .63
Section 8.02. Legal Defeasance and Discharge. . . . . . . . . . . . . .64
Section 8.03. Covenant Defeasance.. . . . . . . . . . . . . . . . . . .64
Section 8.04. Conditions to Legal or Covenant Defeasance. . . . . . . .64
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Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions . . . . . . . . . .66
Section 8.06. Repayment to Issuers. . . . . . . . . . . . . . . . . . .66
Section 8.07. Reinstatement.. . . . . . . . . . . . . . . . . . . . . .66
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER. . . . . . . . . . . . . . . . .67
Section 9.01. Without Consent of Holders of Debentures. . . . . . . . .67
Section 9.02. With Consent of Holders of Debentures.. . . . . . . . . .68
Section 9.03. Compliance with Trust Indenture Act.. . . . . . . . . . .69
Section 9.04. Revocation and Effect of Consents.. . . . . . . . . . . .69
Section 9.05. Notation on or Exchange of Debentures.. . . . . . . . . .69
Section 9.06. Trustee to Sign Amendments, etc.. . . . . . . . . . . . .69
ARTICLE 10. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . .70
Section 10.01. Trust Indenture Act Controls.. . . . . . . . . . . . . .70
Section 10.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . .70
Section 10.03. Communication by Holders of Debentures with Other
Holders of Debentures. . . . . . . . . . . . . . . . . .71
Section 10.04. Certificate and Opinion as to Conditions Precedent . . .71
Section 10.05. Statements Required in Certificate or Opinion. . . . . .71
Section 10.06. Rules by Trustee and Agents. . . . . . . . . . . . . . .72
Section 10.07. No Personal Liability of Directors, Officers,
Employees, Members and Stockholders. . . . . . . . . . .72
Section 10.08. Governing Law. . . . . . . . . . . . . . . . . . . . . .72
Section 10.09. No Adverse Interpretation of Other Agreements. . . . . .72
Section 10.10. Successors . . . . . . . . . . . . . . . . . . . . . . .72
Section 10.11. Severability . . . . . . . . . . . . . . . . . . . . . .72
Section 10.12. Counterpart Originals. . . . . . . . . . . . . . . . . .73
Section 10.13. Table of Contents, Headings, etc.. . . . . . . . . . . .73
</TABLE>
EXHIBITS
EXHIBIT A FORM OF DEBENTURE
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
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INDENTURE dated as of April 29, 1998 by and among Grove Investors LLC,
a Delaware limited liability company ("GROVE INVESTORS"), Grove Investors
Capital, Inc., a Delaware corporation ("GROVE INVESTORS CAPITAL", and together
with Grove Investors, the "ISSUERS") and United States Trust Company of New
York, as trustee (the "TRUSTEE").
The Issuers and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders of the 14
1/2% Senior Debentures due 2010 (the "SENIOR DEBENTURES") and the 14 1/2% New
Senior Debentures due 2010 (the "NEW SENIOR DEBENTURES" and, together with
the Senior Debentures, the "DEBENTURES"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A GLOBAL DEBENTURE" means a global Debenture in the form of
Exhibit A-1 hereof bearing the Global Debenture Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Debentures sold in reliance on Rule 144A.
"ACCOUNTS RECEIVABLE SUBSIDIARY" means a Wholly Owned Subsidiary of
Grove Investors (i) which is formed solely for the purpose of, and which
engages in no activities other than activities in connection with, financing
accounts receivable and/or Debentures receivable and related assets of Grove
Investors and/or its Restricted Subsidiaries, (ii) which is designated by the
Management Committee of Grove Investors as an Accounts Receivables Subsidiary
pursuant to a Management Committee resolution set forth in an Officers'
Certificate and delivered to the Trustee, (iii) that has total assets at the
time of such designation with a book value not exceeding $100,000 PLUS the
reasonable fees and expenses required to establish such Accounts Receivable
Subsidiary and any accounts receivable financing, (iv) no portion of
Indebtedness or any other obligation (contingent or otherwise) of which (a)
is at any time recourse to or obligates Grove Investors or any Restricted
Subsidiary of Grove Investors in any way, other than pursuant to (I)
representations and covenants entered into in the ordinary course of business
in connection with the sale of accounts receivable and/or Debentures
receivable to such Accounts Receivable Subsidiary or (II) any guarantee of
any such accounts receivable financing by Grove Investors that is permitted
to be incurred pursuant to Section 4.09 hereof, or (b) subjects any property
or asset of Grove Investors or any Restricted Subsidiary of Grove Investors,
directly or indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to (I) representations and covenants entered
into in the ordinary course of business in connection with sales of accounts
receivable and/or Debentures receivable or (II) any guarantee of any such
accounts receivable financing by Grove Investors that is permitted to be
incurred pursuant to Section 4.09 hereof, (v) with which neither Grove
Investors nor any Restricted Subsidiary of Grove Investors has any contract,
agreement, arrangement or understanding other than contracts, agreements,
arrangements and understandings entered into in the ordinary course of
business in connection with sales of accounts receivable and/or Debentures
receivable in accordance with Section 4.14 hereof and fees payable in the
ordinary course of business in connection with servicing accounts receivable
and/or Debentures receivable and (vi) with respect to which neither Grove
Investors nor any Restricted Subsidiary of Grove Investors has any obligation
(a) to subscribe for additional shares of Capital Stock or other Equity
Interests therein or make any additional capital contribution or similar
payment or transfer thereof other than in connection with the sale of
accounts receivable and/or Debentures receivable to such Accounts Receivable
Subsidiary in
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accordance with Section 4.14 hereof or (b) to maintain or preserve solvency or
any balance sheet item, financial condition, level of income or results of
operations thereof.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"AFFILIATE" of any specified Person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of the Voting Stock of a Person shall be
deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of beneficial interests in a Global Debenture, the rules and procedures
of the Depositary, Euroclear and Cedel that apply to such transfer and exchange.
"ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than (A) in the ordinary course of business or (B)
sales or other dispositions of accounts receivable and/or Debentures receivable
and related assets to (x) the Accounts Receivable Subsidiary in accordance with
Section 4.14 hereof and (y) one or more financial institutions in connection
with a Dealer Financing Program or factoring arrangements as in existence on the
date of this Indenture (PROVIDED that, in each case, the sale, lease, conveyance
or other disposition of all or substantially all of the assets of Grove
Investors and its Subsidiaries (determined on a consolidated basis) will be
governed by Section 4.13 and/or Section 4.08 hereof and (ii) the issue or sale
by Grove Investors or any of its Subsidiaries of Equity Interests of any of
Grove Investors' Subsidiaries, in the case of either clause (i) or (ii), whether
in a single transaction or a series of related transactions (a) that have a fair
market value in excess of $2.5 million or (b) for net proceeds in excess of $2.5
million. Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (i) a transfer of assets by an Issuer to a Wholly Owned
Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to an Issuer or
to another Wholly Owned Restricted Subsidiary, (ii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary to the Issuers or to another
Wholly Owned Restricted Subsidiary, (iii) a Restricted Payment that is permitted
by Section 4.07 hereof, (iv) the sale and leaseback of any assets within 90 days
of the acquisition of such assets; PROVIDED that such sale and leaseback
complies with Section 4.15 hereof, (v) foreclosures of assets, and (vi) the sale
at fair market value of property or equipment that has become worn out, obsolete
or damaged or otherwise unsuitable for use in connection with the business of
Grove Investors or any Restricted Subsidiary, as the case may be, in the
ordinary course of business.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined
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in accordance with GAAP) of the obligation of the lessee for net rental payments
during the remaining term of the lease included in such sale and leaseback
transaction (including any period for which such lease has been extended or may,
at the option of the lessor, be extended).
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BOARD OF DIRECTORS" means the Board of Directors of Grove Investors
Capital, or any authorized committee of the Board of Directors.
"BORROWING BASE" means,, as of any date, an amount equal to the sum of
85% of the face amount of all accounts receivable and Debentures receivable
owned by Grove Investors and its Restricted Subsidiaries as of such date that
are not more than 90 days past due, as calculated on a consolidated basis and in
accordance with GAAP. To the extent that information is not available as to the
amount of accounts receivable and Debentures receivable as of a specific date,
Grove Investors may utilize the most recent available information for purposes
of calculating the Borrowing Base.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than one year from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of one year
or less from the date of acquisition, bankers' acceptances with maturities not
exceeding one year and overnight bank deposits, in each case with any domestic
commercial bank having capital and surplus in excess of $500 million, (iv)
repurchase obligations with a term of not more than thirty days for underlying
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above, (v) obligations issued or fully guaranteed by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Moody's
Grove Investors Service, Inc., (vi) commercial paper having the highest rating
obtainable from Moody's Grove Investors Service, Inc. or Standard & Poor's
Corporation and in each case maturing within one year after the date of
acquisition and (vii) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) through (vi)
of this definition.
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"CEDEL" means Cedel Bank, S.A.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of Grove Investors and its Subsidiaries
(determined on a consolidated basis) to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than Grove Investors or a Wholly
Owned Restricted Subsidiary or any Permitted Holder or Permitted Holders, (ii)
the adoption of a plan relating to the liquidation or dissolution of one or both
of the Issuers (other than in a transaction which complies with the provisions
described under Section 5.01 hereof), (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than one or more Permitted
Holders, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of Grove Investors (measured by voting power rather than
number of shares) and the Permitted Holders do not beneficially own as much or
more of the Voting Stock of Grove Investors (measured by voting power rather
than by number of shares) than such person, (iv) the first day on which a
majority of the members of the Management Committee of Grove Investors are not
Continuing Members or (v) the first day on which Grove Investors fails to own
100% of the issued and outstanding Equity Interests of Grove Investors Capital
(other than by reason of the merger of Grove Investors Capital with and into a
corporate successor to Grove Investors).
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" or "GROVE" means Grove Worldwide LLC, a Delaware limited
liability company, and any and all successors thereof.
"COMMISSION" means the Securities and Exchange Commission.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary or nonrecurring loss plus any net loss
realized in connection with an Asset Sale or the extinguishment of any
Indebtedness (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits or the Tax Amount of such Person and its Subsidiaries for such period
or, following the reorganization of Grove Investors as a corporation, any tax
sharing payment made pursuant to a tax sharing agreement executed in connection
therewith, in each case, to the extent that such provision for taxes was
included in computing such Consolidated Net Income, plus (iii) consolidated
interest expense of such Person and its Subsidiaries for such period, whether
paid or accrued and whether or not capitalized (including, without limitation,
amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, imputed interest with respect to Attributable Debt, commissions,
discounts and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation, amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) and other non-cash
expenses (excluding any such non-cash
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expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, plus (v) any interest
expense on Indebtedness of another person that is guaranteed by such person or a
Subsidiary of such person or secured by a Lien on the assets of such person or
one of its Subsidiaries (to the extent that such interest expense was deducted
in computing Consolidated Net Income in such period), plus (vi) any charges of
up to $30.0 million relating to a facility closing, plus (vii) any charges of up
to $16.0 million resulting from fees payable to the George Group in connection
with the consulting arrangements with Grove Investors or its Restricted
Subsidiaries, plus (viii) one-time expenses associated with inventory, research
and development and other write-ups resulting from purchase accounting
adjustments at the time of the Transactions or any other permitted acquisition
(to the extent such expenses were deducted in computing Consolidated Net Income
in such period), plus (ix) any expenses or charges related to any Equity
Offering, Permitted Investment or Indebtedness permitted to be incurred by this
Indenture (including such expenses or charges related to the Transactions) and
deducted in such period in computing Consolidated Net Income, minus (x) non-cash
items increasing such Consolidated Net Income for such period, in each case, on
a consolidated basis and determined in accordance with GAAP. Notwithstanding
the foregoing, the provision for taxes based on the income or profits of, and
the depreciation and amortization and other non-cash charges of, a Subsidiary of
a Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to Grove Investors by such Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of is charter
and all judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"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 that (i) the Net Income (but not loss) of any Person that is not a
Subsidiary (other than Grove Investors) or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash (or converted into cash) to the referent
Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of
any Restricted Subsidiary shall be excluded to the extent that the declaration
or payment of dividends or similar distributions by that Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
stockholders, unless such restriction with respect to the payment of dividends
or in similar distributions has been legally waived, provided that Consolidated
Net Income of Grove Investors shall be increased by the amount of dividends or
other distributions or other payments paid in cash (or to the extent converted
into cash) to the referent person or a Wholly Owned Restricted Subsidiary
thereof in respect of such period, (iii) the Net Income of any Person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income (but not loss) of
any Unrestricted Subsidiary shall be excluded, whether or not distributed to
Grove Investors or one of its Subsidiaries.
"CONTINUING MEMBERS" means, as of any date of determination, any
member of the Management Committee of Grove Investors who (i) was a member of
such Management Committee on the date of this Indenture or (ii) was nominated
for election or elected to such Management Committee
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with the approval of a majority of the Continuing Management Committee Members
who were members of such Management Committee at the time of such nomination or
election.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to Grove Investors.
"CREDIT FACILITIES" means, with respect to the Issuers or their
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the New Credit Facility) or commercial paper facilities with banks
or other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale or factoring of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"CUSTODIAN" means the Trustee, as custodian with respect to the
Debentures in global form, or any successor entity thereof.
"DEALER FINANCING PROGRAM" means (x) that certain financing program
pursuant to which (i) distributors of Grove Investors and its Restricted
Subsidiaries can obtain up to 366-day inventory financing for the purchase of
the Grove Investors' Subsidiaries' products, (ii) units financed will generate
secured notes receivable, accounts receivable, chattel paper, instruments or
other intangibles (collectively, "Receivables"), which Grove Investors or its
Restricted Subsidiaries may sell, from time to time, to financial institutions
at 100% of face value and (iii) Grove Investors or its Restricted Subsidiaries
will insure (with a nationally recognized insurance company with at least $100.0
million in assets) at least 85% of the payment obligations relating to such
Receivables and (y) factoring or discounting arrangements as in effect on the
date of this Indenture or entered into in the ordinary course of business
consistent with past practice.
"DEBENTURES" has the meaning assigned to it in the preamble to this
Indenture (and includes any additional Debentures issued hereunder as payment of
interest on the Debentures).
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFINITIVE DEBENTURE" means Debentures that are in the form of
Exhibit A-1 attached hereto (but without including the text referred to in
footnotes 1 and 3 thereto).
"DEPOSITARY" means, with respect to the Debentures issuable or issued
in whole or in part in global form, the Person specified in Section 2.03 hereof
as the Depositary with respect to the Debentures, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Debentures mature; PROVIDED, HOWEVER, that any Capital Stock that
would constitute Disqualified Stock solely because the holders thereof have the
right to require the Issuers to repurchase such Capital Stock upon the
occurrence of a Change of Control or an
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Asset Sale shall not constitute Disqualified Stock if the terms of such Capital
Stock provide that the Issuers may not repurchase or redeem any such Capital
Stock pursuant to such provisions unless such repurchase or redemption complies
with Section 4.07 hereof; and PROVIDED FURTHER, that Capital Stock issued to any
plan for the benefit of employees of Grove Investors or its subsidiaries or by
any such plan to such employees shall not constitute Disqualified Stock solely
because it may be required to be repurchased by Grove Investors in order to
satisfy applicable statutory or regulatory obligations.
"EQUIPMENT FINANCING GUARANTEES" means guarantees (including but not
limited to repurchase or remarketing obligations, residual value guarantees,
conditional loss guarantees or first loss guarantees) by Grove Investors or a
Restricted Subsidiary incurred in the ordinary course of business consistent
with past practice of Indebtedness incurred by a distributor, or other purchaser
or lessor, for the purchase of inventory manufactured or sold by Grove Investors
or a Restricted Subsidiary, the proceeds of which Indebtedness is used solely to
pay the purchase price of such inventory to such distributor or other purchaser
or lessor and any related reasonable fees and expenses (including financing
fees); PROVIDED, HOWEVER, that (1) to the extent commercially practicable, the
Indebtedness so guaranteed is secured by a Lien on such inventory in favor of
the holder of such Indebtedness, and (2) if Grove Investors or such Restricted
Subsidiary is required to make payment with respect to such guarantee, Grove
Investors or such Restricted Subsidiary will have the right to receive either
(q) title to such inventory, (r) a valid assignment of a Lien in such inventory
or (s) the net proceeds of any resale of such inventory.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE DEBENTURES" means the Debentures issued in the Exchange
Offer pursuant to Section 2.06(f) hereof.
"EXISTING INDEBTEDNESS" means up to $15.0 million in aggregate
principal amount of Indebtedness of Grove Investors and its Subsidiaries (other
than Indebtedness under the New Credit Agreement) in existence on the date of
this Indenture, until such amounts are permanently repaid.
"FIXED CHARGES" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations;
PROVIDED, HOWEVER, that in no event shall any amortization of deferred
financing costs incurred in connection with the Transactions be included in
fixed charges), (ii) the consolidated interest of such Person and its
Restricted Subsidiaries that was capitalized during such period, (iii) any
interest expense on Indebtedness of another Person that is Guaranteed by such
Person or one of its
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Restricted Subsidiaries or secured by a Lien on assets of such Person or one
of its Subsidiaries (whether or not such Guarantee or Lien is called upon)
excluding, however, guarantees incurred in connection with (a) any Equipment
Financing Guarantee or (b) residual value guarantees, conditional loss
guarantees and similar financings allowed to be incurred pursuant to Section
4.09 hereof and (iv) if and for so long as such Person is taxed as a
partnership for federal income tax purposes, all cash dividend payments or
other distributions of property on any series of preferred stock of such
Person or, if such Person is taxed as a corporation for federal income tax
purposes, the product of (a) all cash dividend payments or other
distributions of property (and non-cash dividend payments in the case of a
Person that is a Subsidiary) on any series of preferred equity of such Person
times (b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state and local
statutory tax rate of such Person expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
referent Person or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit borrowings)
or issues or redeems preferred equity subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but prior
to the date on which the event for which the calculation of the Fixed Charge
Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage
Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred equity, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by Grove Investors or any of its Restricted Subsidiaries, including through
mergers or consolidations and including any related financing transactions,
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income and shall
reflect any pro forma adjustments for expenses and cost reductions attributable
to such acquisitions (to the extent such adjustments are (x) realizable within
twelve months of the date of the acquisition and (y) based on pro forma
financial statements reviewed by Grove Investors' accountants), (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date, (iv) the amount of interest expense attributable
to financings pursuant to the Dealer Financing Program shall be subtracted from
the numerator and excluded from the denominator in calculating the Fixed Charge
Coverage Ratio, provided that the interest income from such financings exceeds
interest expense and (v) Fixed Charges attributable to the Debentures shall be
excluded.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date hereof.
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"GEORGE GROUP" means The George Group, Inc., a Texas corporation, and
its successors.
"GLOBAL DEBENTURE LEGEND" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Debentures issued
under this Indenture.
"GLOBAL DEBENTURES" means, individually and collectively, each of the
Restricted Global Debentures and the Unrestricted Global Debentures, in the form
of Exhibit A-1 and Exhibit A-2 hereof issued in accordance with Section 2.01,
2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, (ii) other agreements
or arrangements designed to protect such Person against fluctuations in interest
or currency exchange rates and (iii) commodities purchase and sale agreements
and/or similar agreements designed to protect such Person against fluctuations
in the price of raw materials used by Grove Investors or its Restricted
Subsidiaries in the ordinary course of business.
"HOLDER" means a Person in whose name a Debenture is registered.
"HOLDINGS" means Grove Holdings LLC, a Delaware limited liability
company, and its successors.
"HOLDINGS CAPITAL" means Holdings Capital, Inc., a Delaware
corporation and wholly-owned subsidiary of Holdings.
"HOLDINGS DEBENTURES" means the 11 5/8% Senior Discount Debentures
due 2009 of Holdings and Holdings Capital.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, Debentures, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness (other than Hedging Obligations and guarantees) outstanding as of
any date shall be (i) the accreted value thereof, in the case of any
Indebtedness issued with original issue discount, and (ii) the
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principal amount thereof, together with any interest thereon that is more than
30 days past due, in the case of any other Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest
in a Global Debenture through a Participant.
"INSTITUTIONAL ACCREDITED INVESTOR" means an "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) of the Securities Act.
"INVESTMENT GRADE SECURITIES" means (i) securities issued or directly
and fully guaranteed or insured by the United States government or any agency or
instrumentality thereof (other than Cash Equivalents), (ii) debt securities or
debt instruments with a rating of BBB- or higher by Standard & Poor's
Corporation or Baa3 or higher by Moody's Investors Services, Inc. or the
equivalent of such rating by such rating organization, or, if no rating of
Standard & Poor's Corporation or Moody's Investors Services, Inc. then exists,
the equivalent of such rating by any other nationally recognized securities
rating agency, but excluding any debt securities or instruments constituting
loans or advances among Grove Investors and its Subsidiaries, and (iii)
investments in any fund that invests exclusively in investments of the type
described in clauses (i) and (ii), which fund may also hold immaterial amounts
of cash pending investment and/or distribution.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
PROVIDED that an acquisition of assets, Equity Interests or other securities by
the Issuers or any of their Restricted Subsidiaries for consideration consisting
solely of Equity Interests (other than Disqualified Stock) of Grove Investors
shall not be deemed to be an Investment. If Grove Investors or any Restricted
Subsidiary of Grove Investors sells or otherwise disposes of any Equity
Interests of any direct or indirect Restricted Subsidiary of Grove Investors
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of Grove Investors, Grove Investors shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Restricted
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.07 hereof.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared
by the Issuers and sent to all Holders of the Debentures for use by such Holders
in connection with the Exchange Offer.
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"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" shall have the meaning set forth in the
Registration Rights Agreement.
"MANAGEMENT COMMITTEE" means (i) for so long as Grove Investors is a
limited liability company, the Management Committee of Grove Investors and (ii)
otherwise, the Board of Directors of Grove Investors.
"NET INCOME" means, with respect to any Person for any period, (i) the
net income (loss) of such Person, determined in accordance with GAAP and before
any reduction in respect of dividends on preferred interests, excluding,
however, (a) any gain (but not loss), together with any related provision for
taxes or Tax Distributions on such gain (but not loss), realized in connection
with (1) any Asset Sale (including, without limitation, dispositions pursuant to
sale and leaseback transactions) or (2) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (b) any
extraordinary or nonrecurring gain (but not loss), together with any related
provision for taxes or Tax Distributions on such extraordinary or nonrecurring
gain (but not loss) less (ii) in the case of any Person that is a partnership or
limited liability company, the Tax Amount of such person for such period.
"NEW CREDIT AGREEMENT" means that certain New Credit Agreement, dated
as of the date of this Indenture, by and among the Company, Grove Capital and
Chase Bank of Texas, National Association, as administrative agent, BankBoston,
N.A., as syndication agent and Donaldson, Lufkin & Jenrette Securities
Corporation, as documentation agent, and certain other lenders party thereto,
providing for up to $125.0 million of revolving credit borrowings and $200.0
million of term borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, modified, renewed, refunded, replaced or refinanced from
time to time.
"NEW CREDIT FACILITY" means, with respect to the Issuers and the
Restricted Subsidiaries, one or more debt facilities (including, without
limitation, the New Credit Agreement) or commercial paper facilities with banks
or other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special-purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither Grove
Investors nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise) or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other
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than the Debentures being offered hereby) of Grove Investors or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity;
and (iii) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of Grove Investors or any of its
Restricted Subsidiaries.
"NON-U.S. PERSON" means a Person who is not a U.S. Person.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities and obligations
payable under the documentation governing any Indebtedness.
"OFFERING" means the offering of the Debentures by the Issuers.
"OFFICER" means, with respect to any Person, the Chairman of the Board
of Directors or Management Committee, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of Grove
Investors by two Officers of Grove Investors, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of Grove Investors, that meets the requirements of
Section 10.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.05 hereof. The counsel may be an employee of or counsel to the Issuers, any
Subsidiary of the Issuers or the Trustee.
"PARTICIPANT" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to DTC, which is the Depositary as of the date
hereof, shall include Euroclear and Cedel).
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"PERMITTED BUSINESS" means any of the businesses and any other
businesses related to the businesses engaged in by Grove Investors and its
respective Restricted Subsidiaries on the date hereof.
"PERMITTED GEORGE GROUP TRANSACTIONS" means, for purposes of Section
4.11 hereof, consulting arrangements with the George Group and its affiliates
and any payments for fees and expenses thereunder made, provided that such
payments shall not exceed $8.0 million in any fiscal year (with such amount
being subject to reasonable adjustments in connection with advisory and
consulting services rendered in connection with Permitted Investments).
"PERMITTED HOLDERS" means (i) any of Keystone, Inc., FW Grove
Coinvestors, L.P., FW Strategic Partners, L.P., George Group Employee
Partners--Grove, L.P. and Michael George and their
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respective Affiliates on the date hereof; (ii) any of the Permitted Transferees
of the Persons referred to in clause (i); and (iii) any person or group which
holds, directly or indirectly, Equity Interests in Investors so long as a
majority of the Equity Interests in Investors are beneficially owned by the
Persons referred to in clauses (i) and (ii).
"PERMITTED INVESTMENTS" means (a) any Investment in Grove Investors or
in a Restricted Subsidiary of Grove Investors that is engaged in a Permitted
Business; (b) any Investment in Cash Equivalents and Investment Grade
Securities; (c) any Investment by Grove Investors or any Restricted Subsidiary
of Grove Investors in a Person, if as a result of such Investment (i) such
Person becomes a Wholly Owned Restricted Subsidiary of Grove Investors and is
engaged in a Permitted Business or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, Grove Investors or a Wholly Owned Restricted
Subsidiary of Grove Investors that is engaged in Permitted Business; (d) any
Investment made as a result of the receipt of assets not constituting Cash
Equivalents from an Asset Sale; (e) any acquisition of assets solely in exchange
for the issuance of Equity Interests (other than Disqualified Stock) of Grove
Investors; (f) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without giving
effect to subsequent changes in value), when taken together with all other
Investments made pursuant to this clause (f) that are at the time outstanding,
not to exceed $10 million; (g) Investments in securities of customers received
in settlement of obligations or pursuant to a plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers; (h) Investments existing on the date of this Indenture or made in
connection with the Transactions; (i) Investments consisting of receivables
owing to Grove Investors and its Restricted Subsidiaries and advances or loans
to or the receipt of notes or drafts from, distributors and customers, in each
case in connection with the sale or lease of inventory in the ordinary course of
business and consistent with past practices, including such Investments made
pursuant to or in connection with a Dealer Financing Program; (j) loans and
advances to officers, directors, members and employees for business related
travel expenses, moving expenses and other similar expenses, in each case
incurred in the ordinary course of business and consistent with past practices
not to exceed $1.0 million; (k) any Hedging Obligation; (l) Investments in an
Accounts Receivable Subsidiary made in connection with the formation of an
Accounts Receivable Subsidiary or received in consideration of sales of accounts
receivable, in each case, in accordance with Section 4.14 hereof; (m)
Investments consisting of intercompany loans from Grove Investors and its
Restricted Subsidiaries to Restricted Subsidiaries, including Restricted
Subsidiaries that are not Subsidiary Guarantors; (n) Investments consisting of
capital contributions from Grove Investors or any Restricted Subsidiaries to
Restricted Subsidiaries in an aggregate amount at any one time outstanding not
to exceed $25.0 million; (o) Equipment Financing Guarantees permitted by the
terms of clause (xv) of Section 4.09 hereof; and (p) loans made to managers and
officers of Grove Investors, and promissory notes or other instruments issued to
managers and officers of Grove Investors, in each case, in connection with the
purchase of Equity Interests of Grove Investors or Holdings.
"PERMITTED LIENS" means (i) Liens securing Senior Debt (as defined in
the Senior Subordinated Note Indenture) and Liens on assets of Restricted
Subsidiaries securing Senior Debt permitted by the terms of the Senior
Subordinated Note Indenture to be incurred; (ii) Liens in favor of the Issuers
or a Restricted Subsidiary; (iii) Liens on property of a Person existing at the
time such Person becomes a Restricted Subsidiary of Grove Investors or is merged
into or consolidated with one of Grove Investors or any Subsidiary of Grove
Investors; PROVIDED that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the
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Person merged into or consolidated with Grove Investors or any Subsidiary of
Grove Investors; (iv) Liens on property existing at the time of acquisition
thereof by Grove Investors or any Subsidiary of Grove Investors, provided that
such Liens were in existence prior to the contemplation of such acquisition; (v)
Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
clause (v) of the second paragraph of Section 4.09 hereof covering only the
assets acquired, constructed or improved with such Indebtedness; (vi) Liens
existing on the date of this Indenture; (vii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor;
(viii) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries; (ix) Liens incurred in the ordinary course of
business of the Issuers or any Subsidiary of the Issuers with respect to
obligations that do not exceed $5.0 million at any one time outstanding and that
(a) are not incurred in connection with the borrowing of money or the obtaining
of advances or credit (other than trade credit in the ordinary course of
business) and (b) do not in the aggregate materially detract from the value of
the property or materially impair the use thereof in the operation of business
by the Issuers or such Subsidiary; (x) liens on assets of the Subsidiary
Guarantors (as defined in the Senior Subordinated Note Indenture) to secure
Senior Debt of such Subsidiary Guarantors that was permitted to be incurred
under this Indenture; (xi) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business; (xii) Liens incurred
or deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or
similar obligations, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return of money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money); (xiii) judgment or attachment
Liens not giving rise to an Event of Default; (xiv) easements, rights of way,
zoning restrictions and other similar charges or encumbrances in respect of real
property not interfering in any material respect with the ordinary course of the
business of Grove Investors or any of its Restricted Subsidiaries; (xv) any
interest or title of a lessor under any lease, whether or not characterized as
capital or operating; PROVIDED that such Liens do not extend to any property or
assets which is not leased property subject to such lease; (xvi) Liens upon
specific items of inventory or other goods and proceeds of any Person securing
such Person's obligations in respect of bankers' acceptances issued or created
for the account of such Person to facilitate the purchase, shipment or storage
of such inventory or other goods; (xvii) Liens securing reimbursement
obligations with respect to letters of credit and products and proceeds thereof;
(xviii) Liens securing Hedging Obligations which Hedging Obligations relate to
Indebtedness that is otherwise permitted under this Indenture; (xix) Liens
arising out of consignment, conditional sale or similar arrangements for the
purchase of goods entered into by Grove Investors or any Restricted Subsidiary
in the ordinary course of business; (xx) Liens securing Permitted Refinancing
Indebtedness which is incurred to refinance any Indebtedness which has been
secured by a Lien permitted under this Indenture and which has been incurred in
accordance with the provisions of this Indenture; (xxi) Liens with respect to
Equipment Financing Guarantees and related inventory and equipment; (xxii) Liens
incurred in connection with the Dealer Financing Program; and (xxiii) Liens
incurred in the ordinary course of business on equipment and inventory held for
lease by Grove Investors or any of its Restricted Subsidiaries.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Issuers or any of their Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used within 60 days after the incurrence thereof to
extend, refinance, renew, replace, defease or refund other Indebtedness of the
Issuers or any of their Restricted Subsidiaries (other than intercompany
Indebtedness); PROVIDED that:
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(i) the principal amount (or accreted value, if applicable) of such permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses, premiums, penalties, fees and interest incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to Maturity
of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
Debentures, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Debentures on terms at least as favorable to the Holders of Debentures
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Issuers or by the Restricted Subsidiary
who is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
"PERMITTED TRANSFEREE" means, with respect to any Person: (a) in the
case of any Person who is a natural person, such individual's spouse or
children, any trust for such individual's benefit or the benefit of such
individual's spouse or children, or any corporation, partnership, limited
liability company or similar entity in which the direct and beneficial owner or
owners of 80% or more of the Equity Interests in such Person or such
individual's spouse or children or any trust for the benefit of such Persons;
and (b) in the case of any Person who is a natural person, the heirs, executors,
administrators or personal representatives upon death of such Person or upon the
incompetence or disability of such Person for purposes of the protection and
management of such individual's assets.
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
2.06(g)(i) to be placed on all Debentures issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"RECEIVABLES FEES" means distributions or payments made directly or by
means of discounts with respect to any participation interests issued or sold in
connection with, and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any receivables financing permitted pursuant to
Section 4.14 hereof.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of April 29, 1998, by and among the Issuers and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.
"REGULATION S" means Regulation S promulgated under the Securities
Act.
"REGULATION S GLOBAL DEBENTURE" means a global Debenture bearing the
Private Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Debentures
initially sold in reliance on Rule 903 of Regulation S or a Regulation S
Temporary Global Debenture or Regulation S Permanent Global Debenture, as
appropriate.
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"REGULATION S PERMANENT GLOBAL DEBENTURE" means a permanent global
Debenture in the form of Exhibit A/A-1 hereto bearing the Global Debenture
Legend and the Private Placement Legend and deposited with or on behalf of and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Regulation S
Temporary Global Debenture upon expiration of the Restricted Period.
"REGULATION S TEMPORARY GLOBAL DEBENTURE" means a temporary global
Debenture in the form of Exhibit A-2 hereto bearing the Private Placement Legend
and deposited with or on behalf of and registered in the name of the Depositary
or its nominee, issued in a denomination equal to the outstanding principal
amount of the Debentures initially sold in reliance on Rule 903 of Regulation S.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration 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 DEFINITIVE DEBENTURE" means one or more Definitive
Debentures that bear and are required to bear the Private Placement Legend.
"RESTRICTED GLOBAL DEBENTURE" means a Global Debenture bearing the
Private Placement Legend.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED PERIOD" means the 40-day distribution compliance period as
defined in Regulation S.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR SUBORDINATED NOTE INDENTURE" means the Indenture relating to
the Senior Subordinated Notes.
"SENIOR SUBORDINATED NOTES" means the 9 1/4% Senior Subordinated
Notes due 2008 of Grove Worldwide LLC and Grove Capital, Inc.
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"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"STATED MATURITY" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TAX AMOUNT" means, with respect to Grove Investors for any period,
the product of (i) the taxable income of Grove Investors for such period and
(ii) the maximum combined Federal, state and local income tax rates applicable
to an individual resident in New York City or California, whichever is higher;
PROVIDED, HOWEVER, that in determining the Tax Amount, the effect thereon of any
net operating loss carryforwards or other carryforwards or tax attributes
attributable to Grove Investors, such as alternative minimum tax carryforwards
shall be taken into account, and adjusted to take into account any applicable
credits, deductions or other adjustments allowed under both New York and
California law to a direct or indirect owner of an interest in Grove Investors
for state and local income tax purposes.
"TAX DISTRIBUTION" means a distribution in respect of taxes to the
members of Grove Investors pursuant to clause (vi) of Section 4.07 hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA; PROVIDED, HOWEVER, that, in the event the Trust Indenture Act of
1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendments, the Trust Indenture Act of 1939 as so amended.
"TRANSACTIONS" means each of (i) the acquisition by the Company
through certain of its subsidiaries of the mobile hydraulic crane, aerial work
platform and truck mounted crane businesses of Hanson Funding (G) PLC and
certain of its subsidiaries, for aggregate cash consideration of approximately
$583.0 million plus certain assumed liabilities (the "Acquisition"); (ii)
approximately $203.0 million of borrowings under the New Credit Facility; (iii)
approximately $225.0 million of estimated gross proceeds from the Offering; and
(iv) an approximately $168.0 million equity contribution to the Company by Grove
Investors LLC, a Delaware limited liability company (the "Equity Contribution").
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"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"UNRESTRICTED DEFINITIVE DEBENTURE" means one or more Definitive
Debentures that do not bear and are not required to bear the Private Placement
Legend.
"UNRESTRICTED GLOBAL DEBENTURE" means a permanent global Debenture in
the form of Exhibit A-1 and Exhibit A-2 attached hereto that bears the Global
Debenture Legend and that has the "Schedule of Exchanges of Interests in the
Global Debenture" attached thereto, and that is deposited with or on behalf of
and registered in the name of the Depositary, representing a series of
Debentures that do not bear the Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary (other than Grove
Investors Capital) or any successor to any of them that is designated by the
Management Committee as an Unrestricted Subsidiary pursuant to a resolution of
the Management Committee; but only to the extent that such Subsidiary: (a) has
no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with Grove Investors or any Restricted
Subsidiary of Grove Investors unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to Grove Investors or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of Grove Investors; (c) is a Person with respect to which
neither Grove Investors nor any of its Restricted Subsidiaries has any direct or
indirect obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
Grove Investors or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of Grove Investors or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of Grove Investors
or any of its Restricted Subsidiaries. Any such designation by the Management
Committee shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution of the Management Committee giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by Section 4.07 hereof.
If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
Grove Investors as of such date (and, if such Indebtedness is not permitted to
be incurred as of such date under Section 4.09 hereof, the Issuers shall be in
default of such covenant). The Management Committee of Grove Investors may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary,
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of Grove Investors of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default or Event of
Default would be in existence following such designation.
"U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
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"VOTING STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the
Management Committee of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than (x) directors' qualifying shares and
(y) shares required to be held by a second shareholder pursuant to the laws of
France in an amount not to exceed one-tenth of one percent of the outstanding
shares) shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
TERM DEFINED IN
SECTION
<S> <C>
"AFFILIATE TRANSACTION". . . . . . . . . . . . . . . . . . . . . . . . . .4.11
"ASSET SALE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.10
"ASSET SALE OFFER" . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.09
"AUTHENTICATION ORDER" . . . . . . . . . . . . . . . . . . . . . . . . . .2.02
"BANKRUPTCY LAW" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.01
"CHANGE OF CONTROL OFFER". . . . . . . . . . . . . . . . . . . . . . . . .4.15
"CHANGE OF CONTROL PAYMENT". . . . . . . . . . . . . . . . . . . . . . . .4.15
"CHANGE OF CONTROL PAYMENT DATE" . . . . . . . . . . . . . . . . . . . . .4.15
"COMMISSION" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.03
"COVENANT DEFEASANCE". . . . . . . . . . . . . . . . . . . . . . . . . . .8.03
"DTC". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.03
"EVENT OF DEFAULT" . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.01
"EXCESS PROCEEDS". . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.10
"FINANCIER". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.14
"INCUR". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.09
"LEGAL DEFEASANCE" . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.02
"OFFER AMOUNT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.09
"OFFER PERIOD" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.09
"PAYING AGENT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.03
"PERMITTED DEBT" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.09
"PROMISSORY NOTE". . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.14
"PURCHASE DATE". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.09
"REGISTRAR". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.03
"RELEVANT ENTITY". . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.01
"RESTRICTED PAYMENTS". . . . . . . . . . . . . . . . . . . . . . . . . . .4.07
</TABLE>
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SECTION 1.03. TRUST INDENTURE ACT TERMS.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Debentures;
"INDENTURE SECURITY HOLDER" means a Holder of a Debenture;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and
"OBLIGOR" on the Debentures means the Issuers and any successor
obligor upon the Debentures.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in
the plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement
or successor sections or rules adopted by the Commission from
time to time.
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ARTICLE 2.
THE DEBENTURES
SECTION 2.01. FORM AND DATING.
(a) GENERAL. The Debentures and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and Exhibit A-2
hereto. The Debentures may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Debenture shall be dated the date of
its authentication. The Debentures shall be in denominations of $1,000 and
integral multiples thereof.
The terms and provisions contained in the Debentures shall constitute,
and are hereby expressly made, a part of this Indenture and the Issuers and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. However, to the extent any
provision of any Debenture conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) GLOBAL DEBENTURES. Debentures issued in global form shall be
substantially in the form of Exhibits A-1 or A-2 attached hereto (including the
Global Debenture Legend thereon and the "Schedule of Exchanges of Interests in
the Global Debenture" attached thereto). Debentures issued in definitive form
shall be substantially in the form of Exhibit A-1 attached hereto (but without
the Global Debenture Legend thereon and without the "Schedule of Exchanges of
Interests in the Global Debenture" attached thereto). Each Global Debenture
shall represent such of the outstanding Debentures as shall be specified therein
and each shall provide that it shall represent the aggregate principal amount of
outstanding Debentures from time to time endorsed thereon and that the aggregate
principal amount of outstanding Debentures represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Debenture to reflect the amount of any
increase or decrease in the aggregate principal amount of outstanding Debentures
represented thereby shall be made by the Trustee or the Debenture Custodian, at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.06 hereof.
(c) TEMPORARY GLOBAL DEBENTURES. Debentures offered and sold in reliance
on Regulation S shall be issued initially in the form of the Regulation S
Temporary Global Debenture, which shall be deposited on behalf of the purchasers
of the Debentures represented thereby with the Trustee, at its New York office,
as custodian for the Depositary, and registered in the name of the Depositary or
the nominee of the Depositary for the accounts of designated agents holding on
behalf of Euroclear or Cedel Bank, duly executed by the Issuers and
authenticated by the Trustee as hereinafter provided. The Restricted Period
shall be terminated upon the receipt by the Trustee of (i) a written certificate
from the Depositary, together with copies of certificates from Euroclear and
Cedel Bank certifying that they have received certification of non-United States
beneficial ownership of 100% of the aggregate principal amount of the Regulation
S Temporary Global Debenture (except to the extent of any beneficial owners
thereof who acquired an interest therein during the Restricted Period pursuant
to another exemption from registration under the Securities Act and who will
take delivery of a beneficial ownership interest in a 144A Global Debenture, all
as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers'
Certificate from the Issuers. Following the termination of the Restricted
Period, beneficial interests in the Regulation S Temporary Global Debenture
shall be exchanged for beneficial interests in Regulation S Permanent Global
Debentures pursuant to the Applicable Procedures. Simultaneously with the
authentication of
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Regulation S Permanent Global Debentures, the Trustee shall cancel the
Regulation S Temporary Global Debenture. The aggregate principal amount of the
Regulation S Temporary Global Debenture and the Regulation S Permanent Global
Debentures may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee, as the case may
be, in connection with transfers of interest as hereinafter provided.
(d) EUROCLEAR AND CEDEL PROCEDURES APPLICABLE. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Temporary Global Debenture and the
Regulation S Permanent Global Debentures that are held by Participants through
Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Debentures for each of the Issuers by
manual or facsimile signature.
If an Officer whose signature is on a Debenture no longer holds that
office at the time a Debenture is authenticated, the Debenture shall
nevertheless be valid.
A Debenture shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Debenture has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Issuers signed by an
Officer of each Issuer (an "AUTHENTICATION ORDER"), authenticate Debentures for
original issue up to the aggregate principal amount stated in paragraph 4 of the
Debentures plus Debentures issued to pay Liquidated Damages pursuant to
paragraphs 1 and 2 of the Debentures. The aggregate principal amount of
Debentures outstanding at any time pursuant to this Indenture may not exceed
$300,000,000 except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate Debentures. An authenticating agent may authenticate
Debentures 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 Holders or an
Affiliate of the Issuers.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Issuers shall maintain an office or agency where Debentures may be
presented for registration of transfer or for exchange (the "REGISTRAR") and an
office or agency where Debentures may be presented for payment (the "PAYING
AGENT"). The Registrar shall keep a register of the Debentures and of their
transfer and exchange. The Issuers may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Issuers may change any Paying Agent or Registrar without notice to any
Holder. The Issuers shall notify the Trustee in writing of the name and address
of any Agent not a party to this Indenture. If the Issuers fail to appoint or
maintain another entity as Registrar or
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Paying Agent, the Trustee shall act as such. The Issuers or any of their
Subsidiaries may act as Paying Agent or Registrar.
The Issuers initially appoint The Depository Trust Company (the "DTC")
to act as Depositary with respect to the Global Debentures.
The Issuers initially appoint the Trustee to act as the Registrar and
Paying Agent and to act as Debenture Custodian with respect to the Global
Debentures.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Issuers shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, and interest on the
Debentures, and shall notify the Trustee of any default by the Issuers in making
any such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Issuers at any
time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Issuers)
shall have no further liability for the money. If any of the Issuers acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Issuers, the Trustee
shall serve as Paying Agent for the Debentures.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Issuers shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Debentures and the Issuers shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE. A Global Debenture may not be transferred as a
whole except by the Depositary to a nominee of the Depositary, by a nominee of
the Depositary to the Depositary or to another nominee of the Depositary, the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. All Global Debentures shall be exchanged by the Issuers
for Definitive Debentures if (i) the Issuers deliver to the Trustee notice from
the Depositary that it is unshalling or unable to continue to act as Depositary
or that it is no longer a clearing agency registered under the Exchange Act and,
in either case, a successor Depositary is not appointed by the Issuers within
120 days after the date of such notice from the Depositary or (ii) the Issuers
in their sole discretion determine that the Global Debentures (in whole but not
in part) should be exchanged for Definitive Debentures and delivers a written
notice to such effect to the Trustee; PROVIDED that in no event shall the
Regulation S Temporary Global Debenture be exchanged by the Issuers for
Definitive Debentures prior to (x) the expiration of the Restricted Period and
(y) the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Debentures shall be issued in
such names as the
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Depositary shall instruct the Trustee. Global Debentures also may be exchanged
or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Debenture authenticated and delivered in exchange for, or in lieu of, a
Global Debenture or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Debenture. A Global Debenture may not be exchanged
for another Debenture other than as provided in this Section 2.06(a), however,
beneficial interests in a Global Debenture may be transferred and exchanged as
provided in Section 2.06(b),(c) or (f) hereof.
(b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL
DEBENTURES. The transfer and exchange of beneficial interests in the Global
Debentures shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Debentures shall be subject to restrictions
on transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Debentures also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL DEBENTURE.
Beneficial interests in any Restricted Global Debenture may be transferred
to Persons who take delivery thereof in the form of a beneficial interest
in the same Restricted Global Debenture in accordance with the transfer
restrictions set forth in the Private Placement Legend; PROVIDED, HOWEVER,
that prior to the expiration of the Restricted Period, transfers of
beneficial interests in the Temporary Regulation S Global Debenture may not
be made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Debenture may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Debenture. No written orders or instructions shall be required to
be delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(i).
(ii) ALL OTHER TRANSFERS AND EXCHANGES OF BENEFICIAL INTERESTS IN
GLOBAL DEBENTURES. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.06(b)(i) above, the
transferor of such beneficial interest must deliver to the Registrar either
(A) (1) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing
the Depositary to credit or cause to be credited a beneficial interest in
another Global Debenture in an amount equal to the beneficial interest to
be transferred or exchanged and (2) instructions given in accordance with
the Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Debenture in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Debenture shall be registered to effect the
transfer or exchange referred to in (1) above; PROVIDED that in no event
shall Definitive Debentures be issued upon the transfer or exchange of
beneficial interests in the Regulation S Temporary Global Debenture prior
to (x) the expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903 under the
Securities Act. Upon consummation of an Exchange Offer by the Issuers in
accordance with Section 2.06(f) hereof, the requirements of this Section
2.06(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal
delivered by the
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Holder of such beneficial interests in the Restricted Global Debentures.
Upon satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Debentures contained in this Indenture and
the Debentures or otherwise applicable under the Securities Act, the
Trustee shall adjust the principal amount of the relevant Global Debentures
pursuant to Section 2.06(h) hereof.
(iii) TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER RESTRICTED GLOBAL
DEBENTURE. A beneficial interest in any Restricted Global Debenture may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Debenture if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee shall take delivery in the form
of a beneficial interest in the 144A Global Debenture, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (1) thereof;
(B) if the transferee shall take delivery in the form
of a beneficial interest in the Regulation S Temporary Global
Debenture or the Regulation S Global Debenture, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee shall take delivery in the form
of a beneficial interest in the IAI Global Debenture, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications and certificates and Opinion
of Counsel required by item (3) thereof, if applicable.
(iv) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN A RESTRICTED
GLOBAL DEBENTURE FOR BENEFICIAL INTERESTS IN THE UNRESTRICTED GLOBAL
DEBENTURE. A beneficial interest in any Restricted Global Debenture may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Debenture or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Debenture if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal all matters required to be certified by it under
Section 5(a)(ii) of the Registration Rights Agreement;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
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(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Debenture proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Debenture, a certificate from such holder in the form of Exhibit
C hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Debenture proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Debenture, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Debenture has not yet been issued,
the Issuers shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Debentures in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Debenture cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Debenture.
(c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR DEFINITIVE
DEBENTURES.
(i) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL DEBENTURES TO
RESTRICTED DEFINITIVE DEBENTURES. If any holder of a beneficial interest
in a Restricted Global Debenture proposes to exchange such beneficial
interest for a Restricted Definitive Debenture or to transfer such
beneficial interest to a Person who takes delivery thereof in the form of a
Restricted Definitive Debenture, then, upon receipt by the Registrar of the
following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Debenture proposes to exchange such beneficial
interest for a Restricted Definitive Debenture, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under
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the Securities Act, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred
to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the Securities
Act other than those listed in subparagraphs (B) through (D)
above, a certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred
to one of the Issuers or any of their Subsidiaries, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Debenture to be reduced accordingly pursuant to Section 2.06(h)
hereof, and the Issuers shall execute and the Trustee shall authenticate
and deliver to the Person designated in the instructions a Definitive
Debenture in the appropriate principal amount. Any Definitive Debenture
issued in exchange for a beneficial interest in a Restricted Global
Debenture pursuant to this Section 2.06(c) shall be registered in such name
or names and in such authorized denomination or denominations as the holder
of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Debentures to the
Persons in whose names such Debentures are so registered. Any Definitive
Debenture issued in exchange for a beneficial interest in a Restricted
Global Debenture pursuant to this Section 2.06(c)(i) shall bear the Private
Placement Legend and shall be subject to all restrictions on transfer
contained therein.
Notwithstanding Sections 2.06(c)(i)(A) and (c) hereof, a beneficial
interest in the Regulation S Temporary Global Debenture may not be exchanged for
a Definitive Debenture or transferred to a Person who takes delivery thereof in
the form of a Definitive Debenture prior to (x) the expiration of the Restricted
Period and (y) the receipt by the Registrar of any certificates required
pursuant to Rule 903(3)(ii)(B) under the Securities Act, except in the case of a
transfer pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 903 or Rule 904.
(ii) BENEFICIAL INTERESTS IN RESTRICTED GLOBAL DEBENTURES TO
UNRESTRICTED DEFINITIVE DEBENTURES. A holder of a beneficial interest in a
Restricted Global Debenture may exchange such beneficial interest for an
Unrestricted Definitive Debenture or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Debenture only if:
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(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the case
of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal all matters
required to be certified by it under Section 5(a)(ii) of the
Registration Rights Agreement;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Debenture proposes to exchange such beneficial
interest for a Definitive Debenture that does not bear the
Private Placement Legend, a certificate from such holder in the
form of Exhibit C hereto, including the certifications in item
(1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Debenture proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Debenture that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
(iii) BENEFICIAL INTERESTS IN UNRESTRICTED GLOBAL DEBENTURES TO
UNRESTRICTED DEFINITIVE DEBENTURES. If any holder of a beneficial interest
in an Unrestricted Global Debenture proposes to exchange such beneficial
interest for a Definitive Debenture or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Debenture, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount
of the applicable Global Debenture to be reduced accordingly pursuant to
Section 2.06(h) hereof, and the Issuers shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Definitive Debenture in the appropriate principal amount. Any Definitive
Debenture issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Debentures to the Persons in whose names such
Debentures are so registered. Any Definitive Debenture issued in exchange
for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not
bear the Private Placement Legend.
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(d) TRANSFER AND EXCHANGE OF DEFINITIVE DEBENTURES FOR BENEFICIAL
INTERESTS.
(i) RESTRICTED DEFINITIVE DEBENTURES TO BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL DEBENTURES. If any Holder of a Restricted Definitive
Debenture proposes to exchange such Debenture for a beneficial interest in
a Restricted Global Debenture or to transfer such Restricted Definitive
Debentures to a Person who takes delivery thereof in the form of a
beneficial interest in a Restricted Global Debenture, then, upon receipt by
the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive
Debenture proposes to exchange such Debenture for a beneficial
interest in a Restricted Global Debenture, a certificate from
such Holder in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Debenture is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Debenture is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Debenture is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(a)
thereof;
(E) if such Restricted Definitive Debenture is being
transferred to an Institutional Accredited Investor in reliance
on an exemption from the registration requirements of the
Securities Act other than those listed in subparagraphs (B)
through (D) above, a certificate to the effect set forth in
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Debenture is being
transferred to an Issuer or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Debenture is being
transferred pursuant to an effective registration statement under
the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(c)
thereof,
the Trustee shall cancel the Restricted Definitive Debenture, increase
or cause to be increased the aggregate principal amount of, in the
case of clause (A) above, the appropriate Restricted Global Debenture,
in the case of clause (B) above, the 144A
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Global Debenture, in the case of clause (c) above, the Regulation S
Global Debenture, and in all other cases, the IAI Global Debenture.
(ii) RESTRICTED DEFINITIVE DEBENTURES TO BENEFICIAL INTERESTS IN
UNRESTRICTED GLOBAL DEBENTURES. A Holder of a Restricted Definitive
Debenture may exchange such Debenture for a beneficial interest in an
Unrestricted Global Debenture or transfer such Restricted Definitive
Debenture to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Debenture only if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal all matters required to be
certified by it under Section 5(a)(ii) of the Registration Rights
Agreement;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Debentures
proposes to exchange such Debentures for a beneficial interest in
the Unrestricted Global Debenture, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications in
item (1)(c) thereof; or
(2) if the Holder of such Definitive Debentures
proposes to transfer such Debentures to a Person who shall take
delivery thereof in the form of a beneficial interest in the
Unrestricted Global Debenture, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Debentures and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Debenture.
(iii) UNRESTRICTED DEFINITIVE DEBENTURES TO BENEFICIAL INTERESTS IN
UNRESTRICTED GLOBAL DEBENTURES. A Holder of an Unrestricted Definitive
Debenture may exchange such Debenture for a beneficial interest in an
Unrestricted Global Debenture or transfer such Definitive
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Debentures to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Debenture at any time. Upon
receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Debenture and increase or
cause to be increased the aggregate principal amount of one of the
Unrestricted Global Debentures.
If any such exchange or transfer from a Definitive Debenture to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Debenture has not yet been
issued, the Issuers shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or more
Unrestricted Global Debentures in an aggregate principal amount equal to the
principal amount of Definitive Debentures so transferred.
(e) TRANSFER AND EXCHANGE OF DEFINITIVE DEBENTURES FOR DEFINITIVE
DEBENTURES. Upon request by a Holder of Definitive Debentures and such
Holder's compliance with the provisions of this Section 2.06(e), the Registrar
shall register the transfer or exchange of Definitive Debentures. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Debentures duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney, duly authorized in
writing. In addition, the requesting Holder shall provide any additional
certifications, documents and information, as applicable, required pursuant to
the following provisions of this Section 2.06(e).
(i) RESTRICTED DEFINITIVE DEBENTURES TO RESTRICTED DEFINITIVE
DEBENTURES. Any Restricted Definitive Debenture may be transferred to and
registered in the name of Persons who take delivery thereof in the form of
a Restricted Definitive Debenture if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903
or Rule 904, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications in
item (2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications, certificates
and Opinion of Counsel required by item (3) thereof, if
applicable.
(ii) RESTRICTED DEFINITIVE DEBENTURES TO UNRESTRICTED DEFINITIVE
DEBENTURES. Any Restricted Definitive Debenture may be exchanged by the
Holder thereof for an Unrestricted Definitive Debenture or transferred to a
Person or Persons who take delivery thereof in the form of an Unrestricted
Definitive Debenture if:
(A) such exchange or transfer is effected pursuant to
the Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
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applicable Letter of Transmittal all matters required to be certified
by it under Section 5(a)(ii) of the Registration Rights Agreement;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the Registration
Rights Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive
Debentures proposes to exchange such Debentures for an
Unrestricted Definitive Debenture, a certificate from such Holder
in the form of Exhibit C hereto, including the certifications in
item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive
Debentures proposes to transfer such Debentures to a Person who
shall take delivery thereof in the form of an Unrestricted
Definitive Debenture, a certificate from such Holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the Registrar
so requests, an Opinion of Counsel in form reasonably acceptable to the
Issuers to the effect that such exchange or transfer is in compliance with
the Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iii) UNRESTRICTED DEFINITIVE DEBENTURES TO UNRESTRICTED DEFINITIVE
DEBENTURES. A Holder of Unrestricted Definitive Debentures may transfer
such Debentures to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Debenture. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted Definitive
Debentures pursuant to the instructions from the Holder thereof.
(f) EXCHANGE OFFER. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Issuers shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Debentures in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Debentures tendered for acceptance by Persons
that certify in the applicable Letters of Transmittal all matters required to be
certified by it under Section 5(a)(ii) of the Registration Rights Agreement, and
accepted for exchange in the Exchange Offer and (ii) Definitive Debentures in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Debentures accepted for exchange in the Exchange Offer. Concurrently
with the issuance of such Debentures, the Trustee shall cause the aggregate
principal amount of the applicable Restricted Global Debentures to be reduced
accordingly, and the Issuers shall execute and the Trustee shall authenticate
and deliver to the Persons designated by the Holders of Definitive Debentures so
accepted Definitive Debentures in the appropriate principal amount.
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(g) LEGENDS. The following legends shall appear on the face of all
Global Debentures and Definitive Debentures issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) PRIVATE PLACEMENT LEGEND.
(A) Except as permitted by subparagraph (B) below,
each Global Debenture and each Definitive Debenture (and all
Debentures issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A OR REGULATION S THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) IN THE UNITED STATES 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, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE WITH A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER
IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN
$250,000, AN OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), (2) TO THE
ISSUERS OR (3) 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 AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER FROM IT OF THE
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SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any Global
Debenture or Definitive Debenture issued pursuant to
subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii),
(e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Debentures
issued in exchange therefor or substitution thereof) shall not
bear the Private Placement Legend.
(ii) GLOBAL DEBENTURE LEGEND. Each Global Debenture shall bear a
legend in substantially the following form:
"THIS GLOBAL DEBENTURE IS HELD BY THE DEPOSITARY (AS DEFINED IN
THIS INDENTURE GOVERNING THIS DEBENTURE) OR ITS NOMINEE IN
CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS
NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT
THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE
REQUIRED PURSUANT TO SECTION 2.07 OF THIS INDENTURE, (II) THIS
GLOBAL DEBENTURE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.06(a) OF THIS INDENTURE, (III) THIS GLOBAL
DEBENTURE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THIS INDENTURE AND (IV) THIS GLOBAL
DEBENTURE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE ISSUERS."
(iii) REGULATION S TEMPORARY GLOBAL DEBENTURE LEGEND. The Regulation
S Temporary Global Debenture shall bear a legend in substantially the
following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL
DEBENTURE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS
EXCHANGE FOR CERTIFICATED DEBENTURES, ARE AS SPECIFIED IN THIS
INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL DEBENTURE
SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL DEBENTURES. At such time as
all beneficial interests in a particular Global Debenture have been exchanged
for Definitive Debentures or a particular Global Debenture has been redeemed,
repurchased or cancelled in whole and not in part, each such Global Debenture
shall be returned to or retained and cancelled by the Trustee in accordance with
Section 2.11 hereof. At any time prior to such cancellation, if any beneficial
interest in a Global Debenture is exchanged for or transferred to a Person who
will take delivery thereof in the form of a beneficial interest in another
Global Debenture or for Definitive Debentures, the principal amount of
Debentures represented by such Global Debenture shall be reduced accordingly and
an endorsement shall be made on such Global Debenture by the Trustee or by the
Depositary at the direction of the Trustee to reflect such reduction; and if the
beneficial interest is being exchanged for or transferred to a Person who will
take
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delivery thereof in the form of a beneficial interest in another Global
Debenture, such other Global Debenture shall be increased accordingly and an
endorsement shall be made on such Global Debenture by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate Global Debentures
and Definitive Debentures upon the Issuers' order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Debenture or to a Holder of a Definitive Debenture for
any registration of transfer or exchange, but the Issuers may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.06, and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Debenture selected for redemption in whole or in part,
except the unredeemed portion of any Debenture being redeemed in part.
(iv) All Global Debentures and Definitive Debentures issued upon
any registration of transfer or exchange of Global Debentures or Definitive
Debentures shall be the valid obligations of the Issuers, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Global Debentures or Definitive Debentures surrendered upon such
registration of transfer or exchange.
(v) The Issuers shall not be required (A) to issue, to register
the transfer of or to exchange any Debentures during a period beginning at
the opening of business 15 days before the day of any selection of
Debentures for redemption under Section 3.02 hereof and ending at the close
of business on the day of selection, (B) to register the transfer of or to
exchange any Debenture so selected for redemption in whole or in part,
except the unredeemed portion of any Debenture being redeemed in part or
(C) to register the transfer of or to exchange a Debenture between a record
date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Debenture, the Trustee, any Agent and the Issuers may deem and treat
the Person in whose name any Debenture is registered as the absolute owner
of such Debenture for the purpose of receiving payment of principal of and
interest on such Debentures and for all other purposes, and none of the
Trustee, any Agent or the Issuers shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Global Debentures and
Definitive Debentures in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by
facsimile.
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SECTION 2.07. REPLACEMENT DEBENTURES
If any mutilated Debenture is surrendered to the Trustee, or the
Issuers and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Debenture, the Issuers shall issue and the
Trustee, upon receipt of an Authentication Order, shall authenticate a
replacement Debenture if the Trustee's requirements are met. If required by the
Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Issuers to protect the
Issuers, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Debenture is replaced. The Issuers may charge for
their expenses in replacing a Debenture.
Every replacement Debenture is an additional obligation of the Issuers
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Debentures duly issued hereunder.
SECTION 2.08. OUTSTANDING DEBENTURES.
The Debentures outstanding at any time are all the Debentures
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Debenture
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.09 hereof, a Debenture does not cease to be outstanding because the Issuers or
an Affiliate of the Issuers holds the Debenture.
If a Debenture is replaced pursuant to Section 2.07 hereof, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Debenture is held by a bona fide purchaser.
If the principal amount of any Debenture is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Issuers, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Debentures payable on that date, then on and after that date
such Debentures shall be deemed to be no longer outstanding and shall cease to
accrue interest.
SECTION 2.09. TREASURY DEBENTURES.
In determining whether the Holders of the required principal amount of
Debentures have concurred in any direction, waiver or consent, Debentures owned
by an Issuer, or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with an Issuer, shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Debentures that the Trustee knows are so
owned shall be so disregarded.
SECTION 2.10. TEMPORARY DEBENTURES.
Until certificates representing Debentures are ready for delivery, the
Issuers may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Debentures.
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Temporary Debentures shall be substantially in the form of certificated
Debentures but may have variations that the Issuers consider appropriate for
temporary Debentures and as shall be reasonably acceptable to the Trustee.
Without unreasonable delay, the Issuers shall prepare and the Trustee shall
authenticate definitive Debentures in exchange for temporary Debentures.
Holders of temporary Debentures shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Issuers at any time may deliver Debentures to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Debentures surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Debentures surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy cancelled Debentures (subject to the record retention requirement
of the Exchange Act). Certification of the destruction of all cancelled
Debentures shall be delivered to the Issuers. The Issuers may not issue new
Debentures to replace Debentures that they have paid or that have been delivered
to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Issuers default in a payment of interest on the Debentures,
they shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Debentures and in Section 4.01 hereof. The Issuers shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Debenture and the date of the proposed payment. The Issuers shall fix or
cause to be fixed each such special record date and payment date, provided that
no such special record date shall be less than 3 days prior to the related
payment date for such defaulted interest. At least 7 days before the special
record date, the Issuers (or, upon the written request of the Issuers, the
Trustee in the name and at the expense of the Issuers) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders of
the Debentures entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA Section 316(c).
SECTION 2.14. COMPUTATION OF INTEREST.
Interest on the Debentures shall be computed on the basis of a 360-day
year comprised of twelve 30-day months.
SECTION 2.15. CUSIP NUMBER.
The Issuers in issuing the Debentures may use a "CUSIP" number, and if
they do so, the Trustee shall use the CUSIP number 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
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the CUSIP number printed in the notice or on the Debentures and that reliance
may be placed only on the other identification numbers printed on the
Debentures. The Issuers shall promptly notify the Trustee of any change in the
CUSIP number.
ARTICLE 3.
REDEMPTION
SECTION 3.01. NOTICES TO TRUSTEE.
If the Issuers elect to redeem Debentures pursuant to the optional
redemption provisions of Section 3.07 hereof, they shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Debentures to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF DEBENTURES TO BE REDEEMED.
If less than all of the Debentures are to be redeemed or purchased in
an offer to purchase at any time, the Trustee shall select the Debentures to be
redeemed or purchased among the Holders of the Debentures in compliance with the
requirements of the principal national securities exchange, if any, on which the
Debentures are listed or, if the Debentures are not so listed, on a PRO RATA
basis, by lot or in accordance with any other method the Trustee considers fair
and appropriate. In the event of partial redemption by lot, the particular
Debentures to be redeemed shall be selected, unless otherwise provided herein,
not less than 30 nor more than 60 days prior to the redemption date by the
Trustee from the outstanding Debentures not previously called for redemption.
The Trustee shall promptly notify the Issuers in writing of the
Debentures selected for redemption and, in the case of any Debenture selected
for partial redemption, the principal amount thereof to be redeemed. Debentures
and portions of Debentures selected shall be in amounts of $1,000 or whole
multiples of $1,000; except that if all of the Debentures of a Holder are to be
redeemed, the entire outstanding amount of Debentures held by such Holder, even
if not a multiple of $1,000, shall be redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Debentures called
for redemption also apply to portions of Debentures called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Issuers shall mail or cause
to be mailed, by first-class mail, a notice of redemption to each Holder whose
Debentures are to be redeemed at its registered address.
The notice shall identify the Debentures to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Debenture is being redeemed in part, the portion of the
principal amount of such Debenture to be redeemed and that, after the redemption
date upon surrender of such Debenture, a new
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Debenture or Debentures in principal amount equal to the unredeemed portion
shall be issued upon cancellation of the original Debenture;
(d) the name and address of the Paying Agent;
(e) that Debentures called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Issuers default in making such redemption payment,
interest on Debentures called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Debentures and/or Section of this Indenture
pursuant to which the Debentures called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Debentures.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' names and at their expense; PROVIDED, HOWEVER, that
the Issuers shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph and the date on which the Issuers wish the Trustee to
mail such notice.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Debentures called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Issuers shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Debentures to be redeemed on
that date. The Trustee or the Paying Agent shall promptly return to the Issuers
any money deposited with the Trustee or the Paying Agent by the Issuers in
excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Debentures to be redeemed.
If the Issuers comply with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the
Debentures or the portions of Debentures called for redemption. If a Debenture
is redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to the
Person in whose name such Debenture was registered at the close of business on
such record date. If any Debenture called for redemption shall not be so paid
upon surrender for redemption because of the failure of the Issuers to comply
with the preceding paragraph, interest shall be paid on the unpaid principal,
from the redemption date until such principal is paid, and to the extent lawful
on any interest not paid on such unpaid principal, in each case at the rate
provided in the Debentures and in Section 4.01 hereof.
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SECTION 3.06. DEBENTURES REDEEMED IN PART.
Upon surrender of a Debenture that is redeemed in part, the Issuers
shall issue and, upon the Issuers' written request, the Trustee shall
authenticate for the Holder at the expense of the Issuers, a new Debenture equal
in principal amount to the unredeemed portion of the Debenture surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) The Debentures shall be redeemable at any time at the option of the
Issuers, in whole or in part upon not less than 30 nor more than 60 days'
notice, in cash at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on May 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------- -------------
<S> <C>
2003............................107.250%
2004............................104.833%
2005............................102.417%
2006 and thereafter.............100.000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to May 1, 2003, the
Issuers may redeem all but not less than all of the aggregate principal amount
of Debentures originally issued at a redemption price equal to 114.5% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Issuers shall not be required to make mandatory redemption or
sinking fund payments with respect to the Debentures.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF DEBENTURES.
The Issuers shall pay or cause to be paid the principal of, premium,
if any, and interest on the Debentures on the dates and in the manner provided
in the Debentures. Principal, premium, if any, and interest shall be considered
paid on the date due if the Paying Agent, if other than the Issuers or a
Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date, money
deposited by the Issuers in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. The
Issuers shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement and in
the Debentures.
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The Issuers shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Debentures
to the extent lawful; they shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace period) at the
same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuers shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Debentures may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Issuers in respect of the Debentures and this Indenture
may be served. The Issuers shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Issuers shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Issuers may also from time to time designate one or more other
offices or agencies where the Debentures may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Issuers of their obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Issuers shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the Trustee
as one such office or agency of the Issuers in accordance with Section 2.03.
SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations of the Securities
and Exchange Commission (the "Commission"), so long as any Debentures are
outstanding, Grove Investors shall furnish to the Holders of Debentures (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if Grove
Investors was required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that describes
the financial condition and results of operations of Grove Investors and its
consolidated Subsidiaries and, with respect to the annual information only, a
report thereon by Grove Investors' certified independent accountants and (ii)
all current reports that would be required to be filed with the Commission on
Form 8-K if Grove Investors was required to file such reports, in each case
within the time periods specified in the Commission's rules and regulations. In
addition, following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the Commission, Grove Investors shall file a copy of all such
information and reports with the Commission for public availability within the
time periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. In addition, (i) at
all times the Commission does not accept the filings provided for in the
preceding sentence or (ii) such filings provided for in the preceding sentence
do not contain the information required to be delivered upon request pursuant to
Rule 144A(d)(4) under the Securities Act,
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then, in each case, Grove Investors, for so long as any Debentures remain
outstanding, shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act. The Issuers
shall at all times comply with TIA Section 314(a).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Issuers shall deliver to the Trustee, within 90 days after the end
of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Issuers and their Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Issuers 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
Issuers have kept, observed, performed and fulfilled each and every covenant
contained in this Indenture and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Indenture (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 the Issuers have 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 Debentures is prohibited or if such event has occurred,
a description of the event and what action the Issuers have taking or propose to
take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Issuers' 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 that would lead them to believe that the Issuers have violated
any provisions of Article 4 (other than Sections 4.02, 4.03, 4.04 and 4.06, as
to which no belief need be expressed) or Article 5 hereof or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation. In the Event that such written statement of the Issuers' independent
public accountants cannot be obtain, the Issuers shall deliver an Officer's
Certificate certifying that they have used their best efforts to obtain such
statement but were unable to do so.
(c) The Issuers shall, so long as any of the Debentures 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 Issuers have taken or propose to take with
respect thereto
SECTION 4.05. TAXES.
The Issuers shall pay, and shall cause each of their Subsidiaries to
pay, prior to delinquency, all material taxes, assessments and governmental
levies, except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Debentures
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SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Issuers covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Issuers (to the extent
that they may lawfully do so) hereby expressly waive all benefit or advantage of
any such law, and covenants that they shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as though
no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
Grove Investors shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of Grove Investors' or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving Grove Investors
or any of its Restricted Subsidiaries) or to the direct or indirect holders of
Grove Investors' or any of its Restricted Subsidiaries' Equity Interests in
their capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of Grove Investors or dividends or
distributions payable to Grove Investors or a Restricted Subsidiary of Grove
Investors); (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Issuers) any Equity Interests of Grove Investors (other than
Equity Interests owned by Grove Investors or any Restricted Subsidiary of Grove
Investors) or any direct or indirect parent of Grove Investors; (iii) make any
payment on or with respect to, or purchase, redeem, defease or otherwise acquire
or retire for value any Indebtedness that is subordinated to the Debentures
(other than any subordinated indebtedness held by Grove Investors), except a
payment of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "RESTRICTED PAYMENTS"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) Grove Investors would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by Grove Investors and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (vi), (viii), (x), (xi), and (xiii) of
the next succeeding paragraph), is less than the sum, without duplication, of
(i) 50% of the Consolidated Net Income of Grove Investors for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
commencing after the date of this Indenture to the end of Grove Investors' most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus (ii) 100%
of the aggregate net cash proceeds received by Grove Investors since the date of
Indenture as a contribution to its equity capital or from the issue or sale of
Equity Interests of Grove Investors (other
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than Disqualified Stock) or from the issue or sale of Disqualified Stock or debt
securities of Grove Investors that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or convertible
debt securities) sold to a Subsidiary of Grove Investors), plus (iii) to the
extent that any Restricted Investment that was made after the date of this
Indenture is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the initial amount of
such Restricted Investment, plus (iv) 50% of any dividends received by Grove
Investors or a Wholly Owned Restricted Subsidiary after the date hereto from an
Unrestricted Subsidiary of Grove Investors, to the extent that such dividends
were not otherwise included in Consolidated Net Income of Grove Investors for
such period, plus (v) to the extent that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary after the date of this Indenture, the
lesser of (A) the fair market value of Grove Investors' Investment in such
Subsidiary as of the date of such redesignation or (B) such fair market value as
of the date on which such Subsidiary was originally designated as an
Unrestricted Subsidiary.
The foregoing provisions shall not prohibit: (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any PARI PASSU or subordinated Indebtedness or Equity Interests
of Grove Investors in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of Grove Investors)
of, other Equity Interests of Grove Investors (other than any Disqualified
Stock); PROVIDED that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) the
defeasance, redemption, repurchase or other acquisition of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness; (iv) the payment of any dividend or making of any
distribution by a Subsidiary of Grove Investors to the holders of its Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of Grove Investors
or any Subsidiary of Grove Investors held by any former member of Grove
Investors' (or any of their Subsidiaries') Management Committee or any former
officer, employee or director of Grove Investors or any of its Subsidiaries
pursuant to the Grove Investors' or Holdings Operating Agreements or any equity
subscription agreement, stock option agreement, employment agreement or other
similar agreements and any dividends or distributions to Grove Investors to fund
such purchase, redemption or other acquisition or retirement; PROVIDED that (A)
the aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed (1) $5.0 million in any calendar year (with
unused amounts in any calendar year being carried over to succeeding calendar
years subject to a maximum (without giving effect to clause (2)) of $10.0
million plus (2) the aggregate cash proceeds received by Grove Investors,
Holdings or the Company during such calendar year from any reissuance of Equity
Interests by Grove Investors, Holdings or the Company to members of management
of Grove Investors and its Restricted Subsidiaries and (B) no Default or Event
of Default shall have occurred and be continuing immediately after such
transaction; PROVIDED, FURTHER that the aggregate cash proceeds referred to in
(2) above shall be excluded from clause (c)(ii) of the preceding paragraph; (vi)
so long as Grove Investors is a limited liability company either treated as a
partnership or disregarded as an entity separate from its owner for U.S. federal
income tax purposes (as evidenced by a certificate of an officer of Grove
Investors, prepared based on such officer's best knowledge, at least annually),
distributions to members of Grove Investors in an amount with respect to any
period after December 31, 1997 not to exceed the Tax Amount of Grove Investors
for such period; PROVIDED, HOWEVER, that such distributions shall be allowed to
be made quarterly based on an estimation and after the end of a taxable year
based on the partnership tax return of Grove Investors (or, if
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Grove Investors is disregarded as an entity separate from its owner, its nearest
owner that is not so disregarded) for such taxable year (or at such other times
as reasonably appropriate including in connection with an audit adjustment),
taking into account any previous payments of Tax Amount for such taxable year
or, if Grove Investors becomes included in a consolidated tax group for U.S.
federal income tax purposes, payments to the common parent of the taxable group
in an amount, with respect to any period after December 31, 1997, not to exceed
the tax liability attributable to Grove Investors and its Subsidiaries on a
stand-alone basis for such period; (vii) any Investment to the extent that the
consideration therefor consists of the net cash proceeds of the concurrent issue
and sale (other than to a Restricted Subsidiary) of Equity Interests of Grove
Investors (other than any Disqualified Stock); (viii) so long as no Default or
Event of Default has occurred and is continuing and Grove Investors can incur at
least $1.00 of additional indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the first paragraph of Section 4.09 hereof, the
declaration and payment of dividends to holders of any class or series of
Disqualified Stock of Grove Investors issued after the date hereof in accordance
with Section 4.09 hereof; (ix) Investments made by Grove Investors or any of its
Restricted Subsidiaries within 30 days of the date hereof, the proceeds of which
are used to fund the Transactions or capitalize Restricted Subsidiaries; (x)
repurchases of Equity Interests deemed to occur upon exercise of stock options
if such Equity Interests represent a portion of the exercise price of such
options; (xi) Restricted Investments having an aggregate fair market value,
taken together with all other Restricted Investments made pursuant to this
clause (xi) that are at that time outstanding, not to exceed $100.0 million
(with the fair market value of each Investment being measured at the time made
and without giving effect to subsequent changes in value); (xii) distributions
or payments of Receivables Fees; and (xiii) Restricted Payments not to exceed
$50.0 million since the date hereof.
The Management Committee may designate any Restricted Subsidiary,
other than Grove Investors Capital, to be an Unrestricted Subsidiary if such
designation would not cause a Default. For purposes of making such
determination, all outstanding Investments by Grove Investors and its Restricted
Subsidiaries (except to the extent repaid in cash) in the Subsidiary so
designated shall be deemed to be Restricted Payments at the time of such
designation and shall reduce the amount available for Restricted Payments under
the first paragraph of this Section 4.07. All such outstanding Investments shall
be deemed to constitute Investments in an amount equal to the fair market value
of such Investments at the time of such designation. Such designation shall only
be permitted if such Restricted Payment would be permitted at such time and if
such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
For purposes of determining compliance with this Section 4.07, in the
event that a Restricted Payment meets the criteria of more than one of the
exceptions described in (i) through (xiii) above or is entitled to be made
pursuant to the first paragraph of this Section 4.07, Grove Investors shall, in
its sole discretion, classify such Restricted Payment in any manner that
complies with this Section 4.07. The amount of all Restricted Payments (other
than cash) shall be the fair market value on the date of the Restricted Payment
of the asset(s) or securities proposed to be transferred or issued by Grove
Investors or such Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment. The fair market value of any non-cash Restricted Payment
shall be determined by the Management Committee whose resolution with respect
thereto shall be delivered to the Trustee, such determination to be based upon
an opinion or appraisal issued by an accounting, appraisal or investment banking
firm of national standing if such fair market value exceeds $5.0 million. Not
later than the date of making any Restricted Payment, the Issuers shall deliver
to the Trustee an Officers' Certificate stating that such Restricted
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Payment is permitted and setting forth the basis upon which the calculations
required by this Section 4.07 were computed, together with a copy of any
fairness opinion or appraisal required by this Indenture
SECTION 4.08. LIMITATION ON LEASES.
Grove Investors shall not, directly or indirectly, lease all or
substantially all of its properties or assets to any Person.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK.
Grove Investors shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "INCUR") any Indebtedness (including Acquired
Debt) and that Grove Investors shall not issue any Disqualified Stock and shall
not permit any of its Subsidiaries to issue any shares of Disqualified Stock;
PROVIDED, HOWEVER, that the Issuers may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock and Grove Investors' Subsidiaries
may incur Indebtedness or issue preferred equity if the Fixed Charge Coverage
Ratio for Grove Investors' most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the date
on which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 1.75 to 1, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four quarter period.
The provisions of the first paragraph of this Section 4.09 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "PERMITTED DEBT"):
(i) the incurrence by the Issuers and their Restricted Subsidiaries of
Indebtedness under the New Credit Facility; PROVIDED that the aggregate
principal amount of all term Indebtedness outstanding under the New Credit
Facility after giving effect to such incurrence does not exceed an amount equal
to $200.0 million plus (in the case of any refinancing thereof) the aggregate
amount of fees, underwriting discounts, premiums and other costs and expenses
incurred in connection with such refinancing less the aggregate amount of all
scheduled or mandatory repayments of the principal of any term Indebtedness
under the New Credit Facility (other than repayments that are immediately
reborrowed) that have been made since the date of this Indenture;
(ii) the incurrence by an Issuer and its Restricted Subsidiaries of
Indebtedness and letters of credit under Credit Facilities; PROVIDED that the
aggregate principal amount of all revolving credit Indebtedness (with letters of
credit being deemed to have a principal amount equal to the maximum face amount
thereunder) outstanding under all Credit Facilities after giving effect to such
incurrence does not exceed an amount equal to the greater of (A) the amount of
the Borrowing Base and (B) $125.0 million, less, in the case of clause (B), the
aggregate amount of all Net Proceeds of Asset Sales applied to permanently
reduce revolving credit commitments under the Credit Facility pursuant to
Section 4.10 hereof;
(iii) the incurrence by Grove Investors and its Restricted Subsidiaries
of the Existing Indebtedness;
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(iv) (A) the incurrence by the Issuers of Indebtedness represented by
the Debentures sold in the Offering, (B) the incurrence by Holdings and Holdings
Capital of Indebtedness represented by the Holdings Debentures and (C) the
incurrence by Grove and Grove Capital of Indebtedness represented by the Senior
Subordinated Notes and the incurrence by the Subsidiary Guarantors (as defined
in the Senior Subordinated Note Indenture) of Indebtedness represented by the
guarantees of such Senior Subordinated Notes;
(v) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations or similar financings, in each case
incurred for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property, plant or equipment used in the
business of Grove Investors or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $20.0 million at any time outstanding;
(vi) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition of assets or a
new Subsidiary; PROVIDED that such Indebtedness was incurred by the prior owner
of such assets or such Subsidiary prior to such acquisition by Grove Investors
or one of its Restricted Subsidiaries and was not incurred in connection with,
or in contemplation of, such acquisition by Grove Investors or one of its
Restricted Subsidiaries; and PROVIDED further that the principal amount (or
accreted value, as applicable) of such Indebtedness, together with any other
outstanding Indebtedness incurred pursuant to this clause (vi) and any Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (vi), does not exceed $10.0
million;
(vii) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by this Indenture to be
incurred under the first paragraph hereof or clauses (iii), (iv), (v), (vi) or
(x) of this paragraph;
(viii) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among Grove Investors and
any of its Wholly Owned Subsidiaries, including a pledge of assets in connection
therewith; PROVIDED, HOWEVER, that (i) if one of the Issuers is the obligor on
such Indebtedness, such Indebtedness is expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the Debentures and
(ii)(A) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than Grove Investors or a
Restricted Subsidiary thereof and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either Grove Investors or a Wholly Owned
Restricted Subsidiary thereof shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by Grove Investors or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause (viii);
(ix) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging (i) interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of this Indenture to be outstanding, (ii) the
value of foreign currencies purchased or received by Grove Investors or its
Restricted Subsidiaries in the ordinary course of business as conducted by Grove
Investors or its Restricted Subsidiaries or (iii) commodity risk relating to
commodity agreements to the extent entered into in the ordinary course of
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business to protect Grove Investors and its Restricted Subsidiaries from
fluctuations in the prices of raw materials used in its business;
(x) the incurrence by Grove Investors or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (x), not to exceed $80.0 million;
(xi) the incurrence by Grove Investors' Unrestricted Subsidiaries of
Non-Recourse Debt, PROVIDED, HOWEVER, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of Grove
Investors that was not permitted by this clause (xi);
(xii) the Guarantee by the Issuers or any of their Restricted
Subsidiaries of Indebtedness of Grove Investors or a Subsidiary of Grove
Investors, which Indebtedness was permitted to be incurred by another provision
of this Section 4.09;
(xiii) the incurrence of Indebtedness (including letters of credit) in
respect of workers' compensation claims, self insurance obligations,
performance, surety, bid or similar bonds and completion guarantees provided by
Grove Investors or a Restricted Subsidiary in the ordinary course of business
and consistent with past practices;
(xiv) the incurrence of Indebtedness, including Guarantees, by Grove
Investors or any of its Restricted Subsidiaries in connection with a Dealer
Financing Program;
(xv) the incurrence of Equipment Financing Guarantees; and
(xvi) the incurrence of Indebtedness arising from agreements of Grove
Investors or any Restricted Subsidiary providing for indemnification, adjustment
of purchase price or similar obligations, in each case, incurred or assumed in
connection with the disposition or acquisition of any business, assets or
Capital Stock of a Subsidiary; PROVIDED that the maximum aggregate liability of
such Indebtedness shall at no time exceed the gross proceeds actually received
by Grove Investors and its Restricted Subsidiaries in connection with any such
disposition or the gross proceeds actually paid by Grove Investors and its
Restricted Subsidiaries in connection with any such acquisition.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xvi) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Issuers shall, in their sole discretion, classify such item of Indebtedness
in any manner that complies with this Section 4.09. Accrual of interest,
accretion or amortization of original issue discount, the payment of interest on
any Indebtedness in the form of additional Indebtedness with the same terms, and
the payment of dividends on Disqualified Stock in the form of additional shares
of the same class of Disqualified Stock shall not be deemed to be an incurrence
of Indebtedness or an issuance of Disqualified Stock for purposes of this
Section 4.09; PROVIDED, in each such case, that the amount thereof is included
in Fixed Charges of Grove Investors as accrued.
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SECTION 4.10. TRANSACTIONS WITH AFFILIATES.
Grove Investors shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to Grove
Investors or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by Grove Investors or such Restricted
Subsidiary with an unrelated Person and (ii) the Issuers deliver to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $2.0 million, a
resolution of the Management Committee set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Management Committee and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing. Notwithstanding the foregoing, the following items shall not be deemed
to be Affiliate Transactions: (i) any employment agreement, compensation or
employee benefit arrangements and incentive arrangements with any officer,
director, member or employee entered into by Grove Investors or any of its
Restricted Subsidiaries in the ordinary course of business of Grove Investors or
such Restricted Subsidiary, as well as customary change of control and severance
payments, (ii) transactions between or among the Issuers and/or their Restricted
Subsidiaries, (iii) payment of reasonable managers' and directors' fees to
Persons who are not otherwise Affiliates of the Issuers, (iv) Restricted
Payments, Permitted Investments and other payments and distributions that are
permitted by Section 4.07 hereof; (v) any Permitted George Group Transaction;
(vi) loans and advances to officers, directors and employees of Grove Investors
or any Restricted Subsidiary for travel, entertainment, moving and other
relocation expenses, in each case made in the ordinary course of business; (vii)
transactions permitted by the provisions of Section 4.14 hereof; (viii)
transactions permitted by clauses (xii) and (xiv) of Section 4.09 hereof; and
(ix) transactions pursuant to any contract or agreement in effect on the date of
this Indenture as the same may be amended, modified or replaced from time to
time so long as such amendment, modification or replacement is no less favorable
to Grove Investors and its Restricted Subsidiaries than the contract or
agreement as in effect on the date of this Indenture.
SECTION 4.11. LIENS.
The Issuers shall not, directly or indirectly, create, incur, assume
or suffer to exist any Lien securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens
SECTION 4.12. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Issuers shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) their
corporate existence, and the corporate, limited liability company or other
existence of each of their Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Issuers or any such Subsidiary and (ii)
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the rights (charter and statutory), licenses and franchises of the Issuers and
their Subsidiaries; PROVIDED, HOWEVER, that the Issuers shall not be required to
preserve any such right, license or franchise, or the corporate, limited
liability company or other existence of any of their Subsidiaries, if the
Management Committee or Board of Directors, as applicable, shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Issuers and their Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Debentures.
SECTION 4.13. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Debentures
shall have the right to require the Issuers to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Debentures pursuant
to the offer described below (the "CHANGE OF CONTROL OFFER") at an offer price
in cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of purchase
(the "CHANGE OF CONTROL PAYMENT"). Within 30 days following any Change of
Control, the Issuers shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Debentures on the date specified in such notice, which date shall
be no earlier than 30 days and no later than 60 days from the date such notice
is mailed (the "CHANGE OF CONTROL PAYMENT DATE"), pursuant to the procedures
required by this Indenture and described in such notice. The Issuers shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Debentures
as a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations directly conflict with the provisions of this
Indenture relating to such Change of Control Offer, the Issuers shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in this Indenture by virtue thereof.
On the Change of Control Payment Date, the Issuers shall, to the
extent lawful, (1) accept for payment all Debentures or portions thereof
properly tendered pursuant to the Change of Control Offer, (2) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Debentures or portions thereof so tendered and (3) deliver or cause to be
delivered to the Trustee the Debentures so accepted together with an Officers'
Certificate stating the aggregate principal amount of Debentures or portions
thereof being purchased by the Issuers. The Paying Agent shall promptly mail to
each Holder of Debentures so tendered the Change of Control Payment for such
Debentures, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Debenture equal in principal
amount to any unpurchased portion of the Debentures surrendered, if any;
PROVIDED that each such new Debenture will be in a principal amount of $1,000 or
an integral multiple thereof. The Issuers shall publicly announce the results
of the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.
(b) Notwithstanding anything to the contrary in this Section 4.13, the
Issuers shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in this
Section 4.13 hereof and purchases all Debentures validly tendered and not
withdrawn under such Change of Control Offer.
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SECTION 4.14. SALES OF ACCOUNTS RECEIVABLE.
Grove Investors may, and any of its Restricted Subsidiaries may, sell
at any time and from time to time, accounts receivable and or Debentures
receivables and related assets to an Accounts Receivable Subsidiary; PROVIDED
that (i) the aggregate consideration received in each such sale is a least equal
to the aggregate fair market value of the receivables sold, as determined by the
Management Committee in good faith, (ii) no less than 80% of the consideration
received in each such sale consists of either cash or a promissory note (a
"PROMISSORY NOTE") which is subordinated to no Indebtedness or obligation other
than the financial institution or other entity providing the financing to the
Accounts Receivable Subsidiary with respect to such accounts receivable (the
"FINANCIER") or an Equity Interest in such Accounts Receivable Subsidiary;
PROVIDED FURTHER that the initial sale shall include all accounts receivable of
Grove Investors and/or its Restricted Subsidiaries that are party to such
arrangements that constitute eligible receivables under such arrangements, and
(iii) Grove Investors and its Restricted Subsidiaries shall sell all accounts
receivables that constitute eligible receivables under such arrangements to the
Accounts Receivable Subsidiary no less frequently than on a weekly basis.
Grove Investors (i) shall not permit any Accounts Receivable
Subsidiary to sell any accounts receivable purchased from Grove Investors or any
of its Restricted Subsidiaries to any other person except on an arms-length
basis and solely for consideration in the form of cash or Cash Equivalents, (ii)
shall not permit the Accounts Receivable Subsidiary to engage in any business or
transaction other than the purchase, financing and sale of accounts receivable
of Grove Investors and its Restricted Subsidiaries and activities incidental
thereto, (iii) shall not permit any Accounts Receivable Subsidiary to incur
Indebtedness in an amount in excess of the book value of such Accounts
Receivable Subsidiary's total assets, as determined in accordance with GAAP,
(iv) shall, at least as frequently as monthly, cause the Accounts Receivable
Subsidiary to remit to Grove Investors as payment on the Promissory Notes or a
dividend, all available cash or Cash Equivalents not held in a collection
account pledged to a Financier, to the extent not applied to pay or maintain
reserves for reasonable operating expenses of the Accounts Receivable Subsidiary
or to satisfy reasonable minimum operating capital requirements and (v) shall
not, and shall not permit any of its Subsidiaries to, sell accounts receivable
to any Accounts Receivable Subsidiary upon (1) the occurrence of a Default with
respect to Grove Investors and its Restricted Subsidiaries and (2) the
occurrence of certain events of bankruptcy or insolvency with respect to such
Accounts Receivable Subsidiary.
SECTION 4.15. SALE AND LEASEBACK TRANSACTIONS.
Grove Investors shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; PROVIDED that
Grove Investors or any of its Restricted Subsidiaries may enter into a sale and
leaseback transaction if (i) Grove Investors or such Restricted Subsidiary could
have (a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof and
(b) incurred a Lien to secure such Indebtedness pursuant to Section 4.11 hereof
and (ii) the gross cash proceeds of such sale and leaseback transaction are at
least equal to the fair market value (as determined in good faith by the
Management Committee and set forth in an Officers' Certificate delivered to the
Trustee) of the property that is the subject of such sale and leaseback
transaction. Notwithstanding the foregoing, Delta Manlift, S.A. and Grove
France, S.A. and its successor may enter into any sale and leaseback
transaction; PROVIDED that such sale and leaseback transaction is in the
ordinary course of business consistent with past practices as in effect on the
date of this Indenture and
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the aggregate amount of any Attributable Debt in connection with such
transactions does not exceed $4.0 million in any calendar year.
SECTION 4.16. RESTRICTION ON PREFERRED STOCK OF SUBSIDIARIES.
Grove Investors shall not permit any of its Restricted Subsidiaries to
issue any preferred stock (other than Holdings or the Company, which may issue
preferred stock that is not Disqualified Stock), or permit any Person to own or
hold an interest in any preferred stock of any such Subsidiary, except for
preferred stock issued to Grove Investors.
SECTION 4.17. RESTRICTIONS ON ACTIVITIES OF GROVE INVESTORS CAPITAL.
Grove Investors Capital shall not hold any assets, become liable for
any obligations or engage in any business activities; PROVIDED that Grove
Investors Capital may be a co-obligor with respect to Debentures issued pursuant
to this Indenture and engage in any activities directly related or necessary in
connection therewith.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither Grove Investors nor any of its Restricted 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 Debentures for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Debentures unless such consideration is offered to be
paid or is paid to all Holders of the Debentures that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or agreement.
ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
Neither Issuer shall consolidate or merge with or into (whether or not
such Issuer is the surviving corporation), or sell, assign, transfer, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another Person unless (i) such Issuer is the
surviving Person formed by or surviving any such consolidation or merger (if
other than one of the Issuers) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a Person or other
entity organized or existing under the laws of the United States, any state
thereof or the District of Columbia; (ii) the entity or Person formed by or
surviving any such consolidation or merger (if other than one of the Issuers) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of such
Issuer under the Registration Rights Agreement, the Debentures and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; (iv) except in the case of a merger of one of the Issuers with
or into a Wholly Owned Subsidiary of Grove Investors or the Person formed by or
surviving any such consolidation or merger (if other than one of the Issuers),
or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made shall, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be
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permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.09 hereof; and (v) Grove Investors has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition and
such supplemental indenture complies with this Indenture and that all conditions
precedent provided for in this Indenture relating to such transaction have been
complied with. Notwithstanding the foregoing, Grove Investors is permitted to
reorganize as a corporation in accordance with the procedures established in
this Indenture (and Grove Investors Capital may thereafter liquidate); PROVIDED
that Grove Investors shall have delivered to the Trustee an Opinion of Counsel
in the United States reasonably acceptable to the Trustee confirming that such
reorganization (and, if applicable, liquidation of Grove Investors Capital) is
not adverse to Holders of the Debentures (it being recognized that such
reorganization shall not be deemed adverse to the Holders of the Debentures
solely because (i) of the accrual of deferred tax liabilities resulting from
such reorganization or (ii) the successor or surviving corporation (a) is
subject to income tax as a corporate entity or (b) is considered to be an
"includible corporation" of an affiliated group of corporations within the
meaning of the Code or any similar state or local law) and certain other
conditions are satisfied.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Issuers in accordance with Section 5.01 hereof, the successor Person
formed by such consolidation or into or with which an Issuer is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to such "Issuer" shall refer instead to
the successor Person and not to such Issuer), and may exercise every right and
power of the Issuers under this Indenture with the same effect as if such
successor Person had been named as such Issuer herein; PROVIDED, HOWEVER, that
the predecessor Issuer shall not be relieved from the obligation to pay the
principal of and interest on the Debentures except in the case of a sale of all
of an Issuer's assets that meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
The following constitute an "EVENT OF DEFAULT":
(a) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Debentures;
(b) default in payment when due of the principal of or premium, if any, on
the Debentures;
(c) failure by Grove Investors or any of its Restricted Subsidiaries for
30 days after receipt by the Issuers of notice from the Trustee or by the
Issuers and the Trustee of notice from the Holders of at least 25% in principal
amount of Debentures then outstanding to comply with the provisions described
under Sections 4.07, 4.09 or 4.13;
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(d) failure by Grove Investors or any of its Restricted Subsidiaries for
60 days after receipt by the Issuers of notice from the Trustee or by the
Issuers and the Trustee of notice from the Holders of at least 25% in principal
amount of Debentures then outstanding to comply with any of its other agreements
in this Indenture or the Debentures;
(e) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by Grove Investors or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by Grove Investors or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of this Indenture, which default
(i) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "PAYMENT
DEFAULT") or
(ii) results in the acceleration of such Indebtedness prior to its stated
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more and provided that in the case
of any guarantees, a default shall not be deemed to occur unless Grove
Investors or such Restricted Subsidiary, as applicable, defaults in its
payment obligations under such guarantee after demand has been made in
accordance with the terms of such guarantee;
(f) failure by Grove Investors or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $10.0 million (net of any amount
with respect to which a reputable insurance company with assets over $100.0
million has acknowledged liability in writing), which judgments are not paid,
discharged or stayed for a period of 60 days;
(g) failure by the Company or its subsidiaries to apply the proceeds from
the Offering as set forth under the caption "Use of Proceeds" in the Offering
Memorandum prior to the 10th Business Day after the date hereof;
(h) (1) Grove Investors, (2) any Significant Subsidiary which is a
Restricted Subsidiary (other than an Accounts Receivable Subsidiary) or (3) any
group of Restricted Subsidiaries (other than an Accounts Receivable Subsidiary)
that, taken as a whole, would constitute a Significant Subsidiary (each, a
"RELEVANT ENTITY") pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due, or
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(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against a Relevant Entity in an involuntary case;
(ii) appoints a Custodian of a Relevant Entity; or
(iii) orders the liquidation of a Relevant Entity;
and the order or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Debentures
may declare all the Debentures to be due and payable immediately; PROVIDED that
so long as any Indebtedness permitted to be incurred by any of Grove Investors'
Restricted Subsidiaries shall be outstanding, such acceleration shall not be
effective until the earlier of (i) an acceleration of any such Indebtedness of
Grove Investors' Restricted Subsidiaries or (ii) ten Business Days after receipt
by the Issuers of written notice of such acceleration. Notwithstanding the
foregoing, in the case of an Event of Default described in 6.01(h) herein, all
outstanding Debentures shall become due and payable without further action or
notice.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Debentures or to enforce the performance of any
provision of the Debentures or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Debentures or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Debenture in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Debentures by notice to the Trustee may on behalf of the
Holders of all of the Debentures waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Debentures (including in connection with an offer to purchase)
(PROVIDED, HOWEVER, that the Holders of a majority in aggregate principal amount
of the then outstanding Debentures may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Debentures may direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Debentures or that may
involve the Trustee in personal liability. The Trustee may take any other
action which it deems proper which is not inconsistent with any such discretion.
Notwithstanding any provisions to the contrary in this Indenture, the Trustee
shall not be obligated to take any action with respect to the provisions of the
last paragraph of Section 6.02 hereof unless directed to do so pursuant to this
Section 6.05.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Debenture may pursue a remedy with respect to this
Indenture or the Debentures only if:
(a) the Holder of a Debenture gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Debentures make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Debenture or Holders of Debentures offer and,
if requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Debentures do not give the Trustee a
direction inconsistent with the request.
A Holder of a Debenture may not use this Indenture to prejudice the
rights of another Holder of a Debenture or to obtain a preference or priority
over another Holder of a Debenture.
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SECTION 6.07. RIGHTS OF HOLDERS OF DEBENTURES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Debenture to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Debenture, on or after the
respective due dates expressed in the Debenture (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Issuers for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Debentures and interest on overdue principal and, to the extent
lawful, interest and such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel and
all other amounts due to the Trustee pursuant to Section 7.07 hereof.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Debentures allowed in any judicial proceedings relative to the
Issuers (or any other obligor upon the Debentures), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder, or to authorize the Trustee to vote in respect of
the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
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FIRST: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
SECOND: to Holders of Debentures for amounts due and unpaid on the
Debentures for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Debentures for principal, premium and Liquidated Damages,
if any and interest, respectively; and
THIRD: to the Issuers or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Debentures pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Debenture pursuant to Section 6.07 hereof, or a suit by Holders of more than 10%
in principal amount of the then outstanding Debentures.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
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(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(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 Issuers. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or documents, but the Trustee, in its discretion may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuers, personally or by agent or attorney.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
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(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from an Issuer shall be sufficient if signed by an
Officer of such Issuer. A permissive right granted to the Trustee hereunder
shall not be deemed to be an obligation to act.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
(g) The Trustee shall not be charged with the knowledge of any Default or
Event of Default unless either (i) a Responsible Officer of the Trustee shall
have actual knowledge of such Default or Event of Default, or (ii) written
notice of Default of such Event of Default shall have been given to the Trustee
by the Issuers or by any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee, in its individual or any other capacity, may become the
owner or pledgee of Debentures and may otherwise deal with the Issuers or any
Affiliate of the Issuers with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the Commission
for permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04. 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 Debentures, it shall not
be accountable for the Issuers' use of the proceeds from the Debentures or any
money paid to the Issuers or upon the Issuers' direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the
Debentures or any other document in connection with the sale of the Debentures
or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Debentures a notice
of the Default or Event of Default within 90 days after it occurs. Except in
the case of a Default or Event of Default in payment of principal of, premium,
if any, or interest on any Debenture, the Trustee may withhold the notice if and
so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Debentures.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE DEBENTURES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Debentures remain outstanding,
the Trustee shall mail to the Holders of the Debentures a brief report dated as
of such reporting date that complies with TIA Section 313(a) (but if no event
described in TIA Section 313(a) has occurred within the twelve months preceding
the reporting date, no report need be transmitted). The Trustee also shall
comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Debentures shall be mailed to the Issuers and filed with the Commission and each
stock exchange on which the Debentures are listed in accordance with TIA Section
313(d). The Issuers shall promptly notify the Trustee when the Debentures are
listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Issuers shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuers shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Issuers shall, jointly and severally, indemnify the Trustee
against any and all losses, liabilities or expenses incurred by it arising out
of or in connection with the acceptance or administration of its duties under
this Indenture, including the costs and expenses of enforcing this Indenture
against the Issuers (including this Section 7.07) and defending itself against
any claim (whether asserted by the Issuers or any Holder or any other Person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Trustee shall notify the
Issuers promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Issuers shall not relieve the Issuers of their
obligations hereunder. The Issuers shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Issuers
shall pay the reasonable fees and expenses of such counsel. The Issuers need
not pay for any settlement made without their consent, which consent shall not
be unreasonably withheld.
The obligations of the Issuers under this Section 7.07 shall survive
the resignation and removal of the Trustee and the satisfaction and discharge of
this Indenture.
To secure the Issuers' payment obligations in this Section, the
Trustee shall have a Lien prior to the Debentures on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Debentures. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
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The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Issuers. The Holders of Debentures
of a majority in principal amount of the then outstanding Debentures may remove
the Trustee by so notifying the Trustee and the Issuers in writing. The Issuers
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Debentures may appoint
a successor Trustee to replace the successor Trustee appointed by the Issuers.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or
the Holders of Debentures of at least 10% in principal amount of the then
outstanding Debentures may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Debenture who
has been a Holder of a Debenture for at least six months, fails to comply with
Section 7.10, such Holder of a Debenture 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 Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Debentures. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, PROVIDED
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Issuers' obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST ISSUERS.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Issuers may, at the option of their Management Committee or Board
of Directors, as applicable, evidenced by a resolution set forth in an Officers'
Certificate, at any time, elect to have either Section 8.02 or 8.03 hereof be
applied to all outstanding Debentures upon compliance with the conditions set
forth below in this Article Eight.
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SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from their obligations with respect to all outstanding Debentures on
the date the conditions set forth below are satisfied (hereinafter, "LEGAL
DEFEASANCE"). For this purpose, Legal Defeasance means that the Issuers shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Debentures, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all their
other obligations under such Debentures and this Indenture (and the Trustee, on
demand of and at the expense of the Issuers, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders
of outstanding Debentures to receive solely from the trust fund described in
Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest on such Debentures
when such payments are due, (b) the Issuers' obligations with respect to such
Debentures under Article 2 and Section 4.02 hereof, (c) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and the Issuers'
obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Article Eight, the Issuers may exercise their option under
this Section 8.02 notwithstanding the prior exercise of its option under Section
8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from their
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.13, 4.14, 4.15, 4.16, 4.17 and 4.18 hereof with respect to the
outstanding Debentures on and after the date the conditions set forth in Section
8.04 are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Debentures
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Debentures shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding
Debentures, the Issuers may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such
Debentures shall be unaffected thereby. In addition, upon the Issuers' exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Debentures:
In order to exercise either Legal Defeasance or Covenant Defeasance:
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(a) the Issuers must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium and Liquidated Damages, if any,
and interest on the outstanding Debentures on the stated date for payment
thereof or on the applicable redemption date, as the case may be;
(b) in the case of an election under Section 8.02 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Issuers have
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable U.S. federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Debentures will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of such Legal Defeasance and will be subject to
U.S. federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Debentures will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to U.S. 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;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Debentures pursuant to this Article Eight
concurrently with such incurrence) or insofar as Sections 6.01(h) or 6.01(i)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Issuers or any of their
Subsidiaries is a party or by which the Issuers or any of their Subsidiaries is
bound;
(f) the Issuers shall have delivered to the Trustee an Opinion of Counsel
(which may be subject to customary exceptions) to the effect that on the 91st
day following the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuers with the intent
of preferring the Holders over any other creditors of the Issuers or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Issuers; and
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(h) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"TRUSTEE") pursuant to Section 8.04 hereof in respect of the outstanding
Debentures shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Debentures and this Indenture, to the payment, either
directly or through any Paying Agent (including the Issuers acting as Paying
Agent) as the Trustee may determine, to the Holders of such Debentures of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Issuers shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received 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
Debentures.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the request
of the Issuers any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO ISSUERS.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuers, in trust for the payment of the principal of, premium, if any,
or interest on any Debenture and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Issuers on their request or (if then held by the Issuers) shall be
discharged from such trust; and the Holder of such Debenture shall thereafter,
as an unsecured creditor, look only to the Issuers for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Issuer as trustee thereof, shall thereupon cease;
PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Issuers cause to be
published once, in THE NEW YORK TIMES and THE WALL STREET JOURNAL (national
edition), 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
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Issuers.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by
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reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Issuers' obligations under this Indenture and the Debentures shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.02 or
8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply
all such money in accordance with Section 8.02 or 8.03 hereof, as the case may
be; PROVIDED, HOWEVER, that, if the Issuers make any payment of principal of,
premium, if any, or interest on any Debenture following the reinstatement of
their obligations, the Issuers shall be subrogated to the rights of the Holders
of such Debentures to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF DEBENTURES.
Notwithstanding Section 9.02 of this Indenture, the Issuers and the
Trustee may amend or supplement this Indenture or the Debentures without the
consent of any Holder of a Debenture:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Debentures in addition to or in place of
certificated Debentures or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially
adversely affect any Holder;
(c) to provide for the assumption of the Issuers' obligations to the
Holders of the Debentures by a successor to the Issuers pursuant to Article 5
hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Debentures or that does not adversely affect the
legal rights hereunder of any Holder of the Debenture;
(e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to provide for the issuance of additional Debentures in accordance
with the limitations set forth in this Indenture as of the date hereof.
Upon the request of the Issuers accompanied by a resolutions of their
Management Committee or Board of Directors, as applicable, authorizing the
execution of any such amended or supplemental indenture, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Issuers in the execution of any amended or supplemental indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such amended or supplemental
indenture that affects its own rights, duties or immunities under this Indenture
or otherwise.
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SECTION 9.02. WITH CONSENT OF HOLDERS OF DEBENTURES.
Except as provided below in this Section 9.02, the Issuers and the
Trustee may amend or supplement this Indenture (including Section 4.13 hereof)
and the Debentures may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Debentures (including
additional Debentures, if any) then outstanding voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Debentures), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Debentures, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture or the
Debentures may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Debentures (including additional
Debentures, if any) voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, the
Debentures).
Upon the request of the Issuers accompanied by a resolution of their
Management Committee or Board of Directors, as applicable, authorizing the
execution of any such amended or supplemental indenture, and upon the filing
with the Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of Debentures as aforesaid, and upon receipt by the Trustee of the
documents described in Section 7.02 hereof, the Trustee shall join with the
Issuers in the execution of such amended or supplemental indenture unless such
amended or supplemental indenture directly affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Debentures
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders of Debentures affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Debentures (including additional
Debentures, if any) then outstanding voting as a single class may waive
compliance in a particular instance by the Issuers with any provision of this
Indenture or the Debentures. However, without the consent of each Holder
affected, an amendment or waiver under this Section 9.02 may not (with respect
to any Debentures held by a non-consenting Holder):
(a) reduce the principal amount of Debentures whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Debenture
or alter or waive any of the provisions with respect to the redemption of the
Debentures except as provided above with respect to Sections 4.13 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Debenture;
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(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Debentures (except a rescission of
acceleration of the Debentures by the Holders of at least a majority in
aggregate principal amount of the then outstanding Debentures (including
additional Debentures, if any) and a waiver of the payment default that resulted
from such acceleration);
(e) make any Debenture payable in money other than that stated in the
Debentures;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Debentures to receive
payments of principal of or interest on the Debentures; or
(g) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Debentures
shall be set forth in a amended or supplemental indenture that complies with the
TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Debenture is a continuing consent by the Holder of a
Debenture and every subsequent Holder of a Debenture or portion of a Debenture
that evidences the same debt as the consenting Holder's Debenture, even if
notation of the consent is not made on any Debenture. However, any such Holder
of a Debenture or subsequent Holder of a Debenture may revoke the consent as to
its Debenture if the Trustee receives written notice of revocation before the
date the waiver, supplement or amendment becomes effective. An amendment,
supplement or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF DEBENTURES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Debenture thereafter authenticated. The Issuers in
exchange for all Debentures may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Debentures that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Debenture
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 amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Issuers may not sign an amendment or supplemental Indenture until the
Management Committee or Board of Directors, as applicable, approves it. In
executing any amended or supplemental indenture, the Trustee shall be entitled
to receive and (subject to Section 7.01 hereof) shall
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be fully protected in relying upon, in addition to the documents required by
Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10.
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 10.02. NOTICES.
Any notice or communication by the Issuers or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by
first-class mail (registered or certified, return receipt requested), telecopier
or overnight air courier guaranteeing next day delivery, to the others' address:
If to the Issuers:
Grove Investors LLC
201 Main Street
Fort Worth, Texas 76102
Telecopier No.: (717) 593-5120
Attention: Keith Simmons, Esq.
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Telecopier No. (212) 757-3990
Attention: Mark S. Bergman
If to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036-1532
Telecopier No. (212) 852-1626
Attention: John Guiliano
The Issuers or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
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next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next-day delivery.
Any notice or communication to a Holder shall be mailed by first-class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next-day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Issuers mail a notice or communication to Holders, they shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03. COMMUNICATION BY HOLDERS OF DEBENTURES WITH OTHER HOLDERS OF
DEBENTURES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Debentures.
The Issuers, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers to the Trustee to take
any action under this Indenture, the Issuers shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 10.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the
provisions of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES, MEMBERS
AND STOCKHOLDERS.
No director, officer, employee, incorporator, member or stockholder of
the Issuers, as such, shall have any liability for any obligations of the
Issuers under the Debentures or this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Debentures by accepting a Debenture waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Debentures.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
SECTION 10.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE DEBENTURES WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Issuers or their Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 10.10. SUCCESSORS.
All agreements of the Issuers in this Indenture and the Debentures
shall bind their successors. All agreements of the Trustee in this Indenture
shall bind its successors.
SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Debentures shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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SECTION 10.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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Dated as of April 29, 1998
SIGNATURES
Very truly yours,
GROVE INVESTORS, LLC
By: /s/ John R. Monsky
------------------------------
Name: John R. Monsky
Title:
GROVE INVESTORS CAPITAL, INC.
By: /s/ John R. Monsky
------------------------------
Name: John R. Monsky
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
AS TRUSTEE
By: /s/ Edward Biggins
-----------------------------------
Name: Edward Biggins
Title:
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EXHIBIT A-1
(Face of Debenture)
141/2% Senior Debentures due 2010
No. ___ $____________________
CUSIP NO. 39958R AA8
Grove Investors LLC and Grove Investors Capital, Inc. promise to pay
to ______________________________ or registered assigns, the principal sum of
________________ Dollars on May 1, 2010.
Interest Payment Dates: February 1, May 1, August 1 and November 1
Record Dates: January 15, April 15, July 15 and October 15
GROVE INVESTORS LLC
By:
-----------------------------------
Name:
Title:
GROVE INVESTORS CAPITAL, INC.
By:
-----------------------------------
Name:
Title:
Dated:
-------------
This is one of the [Global]
Debentures referred to in the
within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
-----------------------------------
Authorized Signatory
A-1-1
<PAGE>
(Back of Debenture)
14 1/2% Senior Debentures due 2010
[Unless and until it is exchanged in whole or in part for Debentures
in definitive form, this Debenture may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("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 such other name as may be requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or such other entity as may be 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 in as much as the
registered owner hereof, Cede & Co., has an interest herein.](1)
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S THEREUNDER. THE HOLDER OF
THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) IN
THE UNITED STATES 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, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR") THAT PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE WITH A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN
OPINION OF COUNSEL THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF
- -----------------
(1) THIS PARAGRAPH SHOULD BE INCLUDED ONLY IF THE DEBENTURE IS ISSUED IN GLOBAL
FORM.
A-1-2
<PAGE>
THE ISSUERS SO REQUEST), (2) TO THE ISSUERS OR (3) 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 AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.](2)
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Grove Investors LLC, a Delaware limited liability company
("Grove Investors") and Grove Investors Capital, Inc., a Delaware corporation
("Grove Investors Capital" and together with Grove Investors, the "Issuers"),
promise to pay interest on the principal amount of this Debenture at 14 1/2% per
annum from April 29, 1998 until maturity and shall pay the Liquidated Damages
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Issuers will pay interest and Liquidated Damages, if any, quarterly
on February 1, May 1, August 1 and November 1 (each an "Interest Payment Date")
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day. Interest on the Debentures will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the date
of issuance; PROVIDED that if there is no existing Default in the payment of
interest, and if this Debenture is authenticated between a record date referred
to on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; PROVIDED FURTHER,
that the first Interest Payment Date shall be August 1, 1998. The Issuers shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time on
demand at a rate that is 1% per annum in excess of the rate then in effect; it
shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Debentures
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Debentures at the close of business on the January 15,
April 15, July 15 or October 15 next preceding the Interest Payment Date, even
if such Debentures are cancelled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Debentures will be payable as to principal,
premium and Liquidated Damages, if any, and interest at the office or agency of
the Issuers maintained for such purpose within or without the City and State of
New York, or, at the option of the Issuers, payment of interest and Liquidated
Damages may be made by check mailed to the Holders at their addresses set forth
in the register of Holders; PROVIDED that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest, premium and Liquidated Damages on, all Global Debentures and all other
Debentures the Holders of which shall have provided wire transfer instructions
to the Issuers or the Paying Agent. Such payment, shall be made, at the option
of the Issuers, in the form of additional Debentures or cash, and if made in
cash, in
- ------------------
(2) THIS PARAGRAPH SHOULD BE REMOVED UPON THE EXCHANGE OF DEBENTURES FOR NEW
DEBENTURES IN THE EXCHANGE OFFER OR UPON THE REGISTRATION OF THE DEBENTURES
PURSUANT TO THE TERMS OF THE REGISTRATION RIGHTS AGREEMENT.
A-1-3
<PAGE>
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, United States Trust Company of
New York, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Issuers may change any Paying Agent or Registrar without notice
to any Holder. The Issuers or any of their Subsidiaries may act in any such
capacity.
4. INDENTURE. The Issuers issued the Debentures under an Indenture dated
as of April 29, 1998 ("Indenture") by and among the Issuers and the Trustee.
The terms of the Debentures include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Debentures are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. To the extent any provision of this Debenture
conflicts with the express provisions of the Indenture, the provisions of the
indenture shall govern and be controlling. The Debentures are general unsecured
Obligations of the Issuers limited to $300,000,000 in aggregate principal
amount.
5. OPTIONAL REDEMPTION.
(a) The Issuers shall have the option to redeem the Debentures, in
whole or in part, upon not less than 30 nor more than 60 days' notice, in cash
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on May 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2003 . . . . . . . . . . . . . . . . . . . . . . . . 107.250%
2004 . . . . . . . . . . . . . . . . . . . . . . . . 104.833%
2005 . . . . . . . . . . . . . . . . . . . . . . . . 102.417%
2006 and thereafter . . . . . . . . . . . . . . . . . 100.000 %
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to May 1, 2003, the Issuers may redeem all but
not less than all of the aggregate principal amount of Debentures originally
issued at a redemption price equal to 114.5% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Issuers shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Debentures.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Issuers shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Debentures at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Issuers shall mail a
A-1-4
<PAGE>
notice to each Holder setting forth the procedures governing the Change of
Control Offer as required by the Indenture.
(b) Holders of Debentures that are the subject of an offer to
purchase will receive a Change of Control Offer or Asset Sale Offer from the
Issuers prior to any related purchase date and may elect to have such Debentures
purchased by completing the form titled "Option of Holder to Elect Purchase"
appearing below.
8. 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 whose
Debentures are to be redeemed at its registered address. Debentures in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Debentures held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on
Debentures or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Debentures are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Debentures may be registered and Debentures may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Issuers may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Issuers need not
exchange or register the transfer of any Debenture or portion of a Debenture
selected for redemption, except for the unredeemed portion of any Debenture
being redeemed in part. Also, the Issuers need not exchange or register the
transfer of any Debentures for a period of 15 days before a selection of
Debentures to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Debenture may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, or the Debentures may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Debentures and additional Debentures, if any, voting as a single class, and any
existing default or compliance with any provision of the Indenture, the
Subsidiary Guarantees or the Debentures may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Debentures and
additional Debentures, if any, voting as a single class. Without the consent of
any Holder of a Debenture, the Indenture, or the Debentures may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Debentures in addition to or in place of certificated Debentures,
to provide for the assumption of the Issuers' obligations to Holders of the
Debentures in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Debentures or
that does not adversely affect the legal rights under the Indenture of any such
Holder, to comply with the requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act, or to
provide for the issuance of additional Debentures in accordance with the
limitations set forth in the Indenture.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages on the
Debentures; (ii) default in payment when due of principal of or premium, if any,
on the Debentures when the same becomes due and payable at
A-1-5
<PAGE>
maturity, upon redemption (including in connection with an offer to purchase) or
otherwise, (iii) failure by the Issuers to comply with Section 4.07, 4.09, or
4.13 of the Indenture; (iv) failure by the Issuers or any of their Restricted
Subsidiaries for 30 days after notice to the Issuers by the Trustee or the
Holders of at least 25% in principal amount of the Debentures (including
additional Debentures, if any) then outstanding voting as a single class to
comply with certain other agreements in the Indenture or the Debentures; (v)
default under certain other agreements relating to Indebtedness of the Issuers
or any of its Restricted Subsidiaries which default results in the acceleration
of such Indebtedness prior to its express maturity; (vi) certain final judgments
for the payment of money that remain undischarged for a period of 60 days; (vii)
failure by the Company or its Subsidiaries to apply the proceeds from the
Offering as set forth under the caption "Use of Proceeds" in the Offering
Memorandum relating to the Debentures prior to the 10th Business Day after the
date of the Indenture; and (viii) certain events of bankruptcy or insolvency
with respect to the Issuers or any of their Significant Subsidiaries. If any
Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Debentures may declare all
the Debentures to be due and payable immediately; PROVIDED that so long as any
Indebtedness permitted to be incurred by any of Grove Investors' Restricted
Subsidiaries shall be outstanding, such acceleration shall not be effective
until the earlier of (i) an acceleration of any such Indebtedness of Grove
Investors' Restricted Subsidiaries or (ii) ten Business Days after receipt by
the Issuers of written notice of such acceleration. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Debentures will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Debentures except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Debentures may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Debentures notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the
Debentures then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Debentures waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Debentures. The
Issuers are required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Issuers are required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Issuers or their Affiliates, and may otherwise deal with the Issuers or
their Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A member, director, officer, employee,
incorporator or stockholder of the Issuers, as such, shall not have any
liability for any obligations of the Issuers under the Debentures or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debentures.
15. AUTHENTICATION. This Debenture shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT
A-1-6
<PAGE>
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).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL DEBENTURES AND
RESTRICTED DEFINITIVE DEBENTURES. In addition to the rights provided to Holders
of Debentures under the Indenture, Holders of Restricted Global Debentures and
Restricted Definitive Debentures shall have all the rights set forth in the
Registration Rights Agreement dated as of April 29, 1998, between the Issuers
and the parties named on the signature pages thereof or, in the case of
additional Debentures, Holders of Restricted Global Debentures and Restricted
Definitive Debentures shall have the rights set forth in one or more
registration rights agreements, if any, between the Issuers and the other
parties thereto, relating to rights given by the Issuers to the purchasers of
any additional Debentures (collectively, the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Debentures and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Debentures
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Grove Investors LLC
201 Main Street
Fort Worth, Texas 76102
Attention: Keith Simmons, Esq.
A-1-7
<PAGE>
ASSIGNMENT FORM
To assign this Debenture, fill in the form below: (I) or (we) assign
and transfer this Debenture to (Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
to transfer this Debenture on the books of the Issuers. The agent may
substitute another to act for him.
Date:
----------------
Your Signature:
--------------------------------------------
(Sign exactly as your name appears on the face of this Debenture)
Signature Guarantee:
------------------------------
A-1-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Debenture purchased by the Issuers
pursuant to Section 4.10 of the Indenture, check the box below:
/ / Section 4.10
If you want to elect to have only part of the Debenture purchased by
the Issuers pursuant to Section 4.10 of the Indenture, state the amount you
elect to have purchased: $________
Date:
---------------------
Your Signature:
---------------------------------------------
(Sign exactly as your name appears on the face of this Debenture)
Signature Guarantee:
------------------------------------------
A-1-9
<PAGE>
SCHEDULE OF TRANSFERS OR EXCHANGES OF INTERESTS IN THE GLOBAL DEBENTURE (3)
The following transfers or exchanges of a part of this Global
Debenture for an interest in another Global Debenture or for a Definitive
Debenture, or transfers or exchanges of a part of another Global Debenture or
Definitive Debenture for an interest in this Global Debenture, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of this Global Signature of
decrease in increase in Debenture authorized officer
Principal Amount Principal Amount following such of Trustee or
of this Global of this Global decrease (or Debenture
Date of Exchange Debenture Debenture increase) Custodian
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ---------------------------------
(3) THIS SCHEDULE SHOULD BE INCLUDED ONLY IF THE DEBENTURE IS ISSUED IN GLOBAL
FORM.
A-1-10
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Debenture)
14 1/2% Senior Debentures due 2010
No. ___ $___________________
CUSIP NO.
Grove Investors LLC and Grove Investors Capital, Inc., promise to pay
to _____________________ or registered assigns, the principal sum of ________
Dollars on __________, 2010.
Interest Payment Dates: January 1, May 1, August 1 and November 1
Record Dates: January 15, April 15, July 15 and October 15
GROVE INVESTORS LLC
BY:
-----------------------------
Name:
Title:
GROVE INVESTORS CAPITAL, INC.
BY:
-----------------------------
Name:
Title:
Dated:
-------------------
This is one of the [Global]
Senior Subordinated Debentures referred to in the
within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:
-----------------------------
A-2-1
<PAGE>
(Back of Regulation S Temporary Global Debenture)
14 1/2% Senior Debentures due 2010
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL DEBENTURE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED DEBENTURES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR
THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL DEBENTURE SHALL BE
ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR DEBENTURES IN
DEFINITIVE FORM, THIS DEBENTURE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC"), TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER
ENTITY AS MAY BE 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.
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A OR REGULATION S THEREUNDER. THE HOLDER OF
THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) IN
THE UNITED STATES 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, (b) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE
FORM OF WHICH CAN BE OBTAINED FROM
A-2-2
<PAGE>
THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL THAT SUCH
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), (2) TO THE ISSUERS
OR (3) 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 AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.](1)
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Grove Investors LLC, a Delaware limited liability company
("Grove Investors") and Grove Investors Capital, Inc., Delaware corporation
("Grove Investors Capital" and together with Grove Investors, the "Issuers"),
promise to pay interest on the principal amount of this Debenture at 141/2% per
annum from April 29, 1998 until maturity and shall pay the Liquidated Damages,
if any, payable pursuant to Section 5 of the Registration Rights Agreement
referred to below. The Issuers will pay interest and Liquidated Damages
quarterly on February 1, May 1, August 1 and November 1 (each an "Interest
Payment Date") of each year, or if any such day is not a Business Day, on the
next succeeding Business Day. Interest on the Debentures will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; PROVIDED that if there is no existing Default
in the payment of interest, and if this Debenture is authenticated between a
record date referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; PROVIDED, FURTHER, that the first Interest Payment Date shall be August 1,
1998. The Issuers shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Debenture is exchanged for
one or more Regulation S Permanent Global Debentures, the Holder hereof shall
not be entitled to receive payments of interest hereon; until so exchanged in
full, this Regulation S Temporary Global Debenture shall in all other respects
be entitled to the same benefits as other Debentures under the Indenture.
2. METHOD OF PAYMENT. The Issuers will pay interest on the Debentures
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Debentures at the close of business on the January 15,
April 15, July 15 and October 15 next preceding the Interest
- -----------------------------
(1) THIS PARAGRAPH SHOULD BE REMOVED UPON THE EXCHANGE OF DEBENTURES FOR NEW
DEBENTURES IN THE EXCHANGE OFFER OR UPON THE REGISTRATION OF THE DEBENTURES
PURSUANT TO THE TERMS OF THE REGISTRATION RIGHTS AGREEMENT.
A-2-3
<PAGE>
Payment Date, even if such Debentures are cancelled after such record date and
on or before such Interest Payment Date, except as provided in Section 2.12 of
the Indenture with respect to defaulted interest. The Debentures will be
payable as to principal, premium, interest and Liquidated Damages at the office
or agency of the Issuers maintained for such purpose within or without the City
and State of New York, or, at the option of the Issuers, payment of interest and
Liquidated Damages may be made by check mailed to the Holders at their addresses
set forth in the register of Holders; PROVIDED that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest, premium and Liquidated Damages on, all Global Debentures and all other
Debentures the Holders of which shall have provided wire transfer instructions
to the Issuers or the Paying Agent. Such payment shall be made, at the option
of the Issuers, in the form of additional Debentures or cash, and if made in
cash, in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, United States Trust Company of
New York, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Issuers may change any Paying Agent or Registrar without notice
to any Holder. The Issuers or any of their Subsidiaries may act in any such
capacity.
4. INDENTURE. The Issuers issued the Debentures under an Indenture dated
as of April 29, 1998 ("Indenture") between the Issuers and the Trustee. The
terms of the Debentures include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Debentures are subject to all
such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Debentures are general unsecured Obligations of
the Issuers limited to $300,000,000 in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) The Issuers shall have the option to redeem the Debentures, in
whole or in part, upon not less than 30 nor more than 60 days' notice, in cash
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on May 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2003 . . . . . . . . . . . . . 107.250%
2004 . . . . . . . . . . . . . 104.833%
2005 . . . . . . . . . . . . . 102.417%
2006 and thereafter . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to May 1, 2003, the Issuers may redeem all but
not less than all of the aggregate principal amount of Debentures originally
issued at a redemption price equal to 114.5% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date.
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<PAGE>
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Issuers shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Debentures.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Issuers shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Debentures at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Issuers shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) Holders of Debentures that are the subject of an offer to
purchase will receive a Change of Control Offer or Asset Sale Offer from the
Issuers prior to any related purchase date and may elect to have such Debentures
purchased by completing the form titled "Option of Holder to Elect Purchase"
appearing below.
8. 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 whose Debentures are to be redeemed at its registered address.
Debentures in denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000, unless all of the Debentures held by a Holder are
to be redeemed. On and after the redemption date interest ceases to accrue on
Debentures or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Debentures are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Debentures may be registered and
Debentures may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Issuers may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Issuers
need not exchange or register the transfer of any Debenture or portion of a
Debenture selected for redemption, except for the unredeemed portion of any
Debenture being redeemed in part. Also, it need not exchange or register the
transfer of any Debentures for a period of 15 days before a selection of
Debentures to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
This Regulation S Temporary Global Debenture is exchangeable in whole
or in part for one or more Global Debentures only (i) on or after the
termination of the 40-day restricted period (as defined in Regulation S) and
(ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if
applicable) required by Article 2 of the Indenture. Upon exchange of this
Regulation S Temporary Global Debenture for one or more Global Debentures, the
Trustee shall cancel this Regulation S Temporary Global Debenture.
10. PERSONS DEEMED OWNERS. The registered Holder of a Debenture may
be treated as its owner for all purposes.
A-2-5
<PAGE>
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Debentures may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the then
outstanding Debentures and additional Debentures, if any, voting as a single
class, and any existing default or compliance with any provision of the
Indenture or the Debentures may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Debentures and additional
Debentures, if any, voting as a single class. Without the consent of any Holder
of a Debenture, the Indenture or the Debentures may be amended or supplemented
to cure any ambiguity, defect or inconsistency, to provide for uncertificated
Debentures in addition to or in place of certificated Debentures, to provide for
the assumption of the Issuers' obligations to Holders of the Debentures in case
of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Debentures or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the Commission in order to effect or maintain
the qualification of the Indenture under the Trust Indenture Act, or to provide
for the issuance of additional Debentures in accordance with the limitations set
forth in the Indenture.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest or Liquidated Damages on the
Debentures; (ii) default in payment when due of principal of or premium, if any,
on the Debentures when the same becomes due and payable at maturity, upon
redemption (including in connection with an offer to purchase) or otherwise,
(iii) failure by the Issuers to comply with Section 4.07, 4.09, or 4.13 of the
Indenture; (iv) failure by the Issuers or any of their Restricted Subsidiaries
for 30 days after notice to the Issuers by the Trustee or the Holders of at
least 25% in principal amount of the Debentures (including additional
Debentures, if any) then outstanding voting as a single class to comply with
certain other agreements in the Indenture or the Debentures; (v) default under
certain other agreements relating to Indebtedness of the Issuers or any of their
Restricted Subsidiaries which default results in the acceleration of such
Indebtedness prior to its express maturity; (vi) certain final judgments for the
payment of money that remain undischarged for a period of 60 days; (vii) failure
by the Company or its Subsidiaries to apply the proceeds from the Offering as
set forth under the caption "Use of Proceeds" in the Offering Memorandum
relating to the Debentures prior to the 10th Business Day after the date of the
Indenture and (viii) certain events of bankruptcy or insolvency with respect to
Issuers or any of their Significant Subsidiaries. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Debentures may declare all the
Debentures to be due and payable immediately; PROVIDED that so long as any
Indebtedness permitted to be incurred by any of Grove Investors' Restricted
Subsidiaries shall be outstanding, such acceleration shall not be effective
until the earlier of (i) an acceleration of any such Indebtedness of Grove
Investors' Restricted Subsidiaries or (ii) ten Business Days after receipt by
the Issuers of written notice of such acceleration. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Debentures will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Debentures except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Debentures may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Debentures notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the
Debentures then outstanding by notice to the Trustee may on behalf of the
Holders of all of the Debentures waive any existing Default or Event of Default
and its consequences under the Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Debentures. The
Issuers are required to deliver to the Trustee annually a statement
A-2-6
<PAGE>
regarding compliance with the Indenture, and the Issuers are required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuers or their Affiliates, and may otherwise deal with the
Issuers or their Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A member, director, officer,
employee, incorporator or stockholder of the Issuers, as such, shall not have
any liability for any obligations of the Issuers under the Debentures or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debentures.
15. AUTHENTICATION. This Debenture shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL DEBENTURES AND
RESTRICTED DEFINITIVE DEBENTURES. In addition to the rights provided to Holders
of Debentures under the Indenture, Holders of Restricted Global Debentures and
Restricted Definitive Debentures shall have all the rights set forth in the
Registration Rights Agreement dated as of April 29, 1998, between the Issuers
and the parties named on the signature pages thereof or, in the case of
additional Debentures, Holders of Restricted Global Debentures and Restricted
Definitive Debentures shall have the rights set forth in one or more
registration rights agreements, if any, between the Issuers and the other
parties thereto, relating to rights given by the Issuers to the purchasers of
any additional Debentures (collectively, the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Debentures and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Debentures
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Grove Investors LLC
201 Main Street
Fort Worth, Texas 76102
Attention: Keith Simmons, Esq.
A-2-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Debenture purchased by the Issuers
pursuant to Section 4.10 of the Indenture, check the appropriate box below:
/ / Section 4.10
If you want to elect to have only part of the Debenture purchased by
the Issuers pursuant to Section 4.10 of the Indenture, state the amount you
elect to have purchased: $___________
Date: Your Signature:
-------- (Sign exactly as your name appears on the Debenture)
Tax Identification No.:
-----------------------------------
Signature Guarantee:
A-2-8
<PAGE>
SCHEDULE OF TRANSFERS OR EXCHANGES OF REGULATION S TEMPORARY GLOBAL DEBENTURE
The following transfers or exchanges of a part of this Regulation S
Temporary Global Debenture for an interest in another Global Debenture, or of
other Restricted Global Debentures for an interest in this Regulation S
Temporary Global Debenture, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of increase of this Global Signature of
decrease in in Principal Debenture authorized officer
Principal Amount Amount following such of Trustee or
of this Global of this Global decrease (or Debenture
Date of Exchange Debenture Debenture increase) Custodian
-------------------------- --------------------- --------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
A-2-9
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Grove Investors LLC
201 Main Street
Fort Worth, Texas 76102
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036-1532
Re: 14 1/2% SENIOR DEBENTURES DUE 2010
Reference is hereby made to the Indenture, dated as of April 29, 1998
(the "INDENTURE"), between Grove Investors LLC, a Delaware limited liability
company ("GROVE INVESTORS"), Grove Investors Capital, Inc. ("GROVE INVESTORS
CAPITAL" and, together with Grove Investors, the "ISSUERS") and United States
Trust Company of New York, as Trustee (the "TRUSTEE"). Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.
______________, (the "TRANSFEROR") owns and proposes to transfer the
Debenture[s] or interest in such Debenture[s] specified in Annex A hereto, in
the principal amount of $___________ in such Debenture[s] or interests (the
"TRANSFER"), to __________ (the "TRANSFEREE"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
144A GLOBAL DEBENTURE OR A DEFINITIVE DEBENTURE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "SECURITIES ACT"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Debenture is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Debenture for its own account, or for one or more
accounts with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A in a transaction meeting the requirements of
Rule 144A and such Transfer is in compliance with any applicable blue sky
securities laws of any state of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Debenture will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the 144A
Global Debenture and/or the Definitive Debenture and in the Indenture and the
Securities Act.
2. / / CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
TEMPORARY REGULATION S GLOBAL DEBENTURE, THE REGULATION S GLOBAL DEBENTURE OR A
DEFINITIVE DEBENTURE PURSUANT TO REGULATION S. The Transfer is being effected
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly, the Transferor hereby further certifies that (i) the Transfer
is not being made to a person in the United States and (x) at the time the buy
order was originated, the
B-1
<PAGE>
Transferee was outside the United States or such Transferor and any Person
acting on its behalf reasonably believed and believes that the Transferee was
outside the United States or (y) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than the Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive
Debenture will be subject to the restrictions on Transfer enumerated in the
Private Placement Legend printed on the Regulation S Global Debenture, the
Temporary Regulation S Global Debenture and/or the Definitive Debenture and in
the Indenture and the Securities Act.
3. / / CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE IAI GLOBAL DEBENTURE OR A DEFINITIVE DEBENTURE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Debentures and
Restricted Definitive Debentures and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of the
United States, and accordingly the Transferor hereby further certifies that
(check one):
(a) / / such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) / / such Transfer is being effected to the Issuers or a subsidiary
thereof;
or
(c) / / such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) / / such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Debenture or Restricted Definitive Debentures and the
requirements of the exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the Indenture
and (2) if such Transfer is in respect of a principal amount of Debentures at
the time of transfer of less than $250,000, an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has attached to
this certification), to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Debenture will be subject to the restrictions on transfer
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<PAGE>
enumerated in the Private Placement Legend printed on the IAI Global Debenture
and/or the Definitive Debentures and in the Indenture and the Securities Act.
4. / / Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Debenture or of an Unrestricted Definitive Debenture.
(a) / / Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Debenture will no longer be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Debentures, on
Restricted Definitive Debentures and in the Indenture.
(b) / / Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Debenture will no longer be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the Restricted
Global Debentures, on Restricted Definitive Debentures and in the Indenture.
(c) / / Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Debenture will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Debentures or Restricted Definitive Debentures and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuers.
---------------------------
[Insert Name of Transferor]
By:
---------------------------
Name:
Title:
Dated: ___________, 1998
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<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) / / a beneficial interest in the:
(i) / / 144A Global Debenture (CUSIP ), or
(ii) / / Regulation S Global Debenture (CUSIP ), or
(iii) / / IAI Global Debenture (CUSIP ); or
(b) / / a Restricted Definitive Debenture.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) / / a beneficial interest in the:
(i) / / 144A Global Debenture (CUSIP ), or
(ii) / / Regulation S Global Debenture (CUSIP ), or
(iii) / / IAI Global Debenture (CUSIP ); or
(iv) / / Unrestricted Global Debenture (CUSIP ); or
(b) / / a Restricted Definitive Debenture; or
(c) / / an Unrestricted Definitive Debenture,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Grove Investors LLC
201 Main Street
Fort Worth, Texas 76102
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036-1532
Re: 14 1/2% SENIOR DEBENTURES DUE 2010
(CUSIP 39958R AA8)
Reference is hereby made to the Indenture, dated as of April 29, 1998
(the "INDENTURE"), between Grove Investors LLC, a Delaware limited liability
company ("GROVE INVESTORS"), Grove Investors Capital, Inc. ("GROVE INVESTORS
CAPITAL" and, together with Grove Investors, the "ISSUERS") and United States
Trust Company of New York, as Trustee (the "TRUSTEE"). Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.
____________, (the "OWNER") owns and proposes to exchange the
Debenture[s] or interest in such Debenture[s] specified herein, in the principal
amount of $____________ in such Debenture[s] or interests (the "EXCHANGE"). In
connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Debentures or Beneficial Interests in a
Restricted Global Debenture for Unrestricted Definitive Debentures or Beneficial
Interests in an Unrestricted Global Debenture
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL DEBENTURE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL DEBENTURE. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Debenture for a beneficial interest in an Unrestricted Global Debenture
in an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Global Debentures and pursuant to and in accordance with the
United States Securities Act of 1933, as amended (the "SECURITIES ACT"), (iii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest in an Unrestricted Global
Debenture is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
(b) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL DEBENTURE TO UNRESTRICTED DEFINITIVE DEBENTURE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Debenture for
an Unrestricted Definitive Debenture, the Owner hereby certifies (i) the
Definitive Debenture is being acquired for the Owner's own account without
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<PAGE>
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Debentures and pursuant to and
in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the Definitive
Debenture is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
(c) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE DEBENTURE TO
BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL DEBENTURE. In connection with the
Owner's Exchange of a Restricted Definitive Debenture for a beneficial interest
in an Unrestricted Global Debenture, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to Restricted Definitive Debentures and pursuant to and
in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky securities
laws of any state of the United States.
(d) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE DEBENTURE TO
UNRESTRICTED DEFINITIVE DEBENTURE. In connection with the Owner's Exchange of a
Restricted Definitive Debenture for an Unrestricted Definitive Debenture, the
Owner hereby certifies (i) the Unrestricted Definitive Debenture is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Debentures and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive
Debenture is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
2. Exchange of Restricted Definitive Debentures or Beneficial Interests in
Restricted Global Debentures for Restricted Definitive Debentures or Beneficial
Interests in Restricted Global Debentures
(a) / / CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL DEBENTURE TO RESTRICTED DEFINITIVE DEBENTURE. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Debenture for
a Restricted Definitive Debenture with an equal principal amount, the Owner
hereby certifies that the Restricted Definitive Debenture is being acquired for
the Owner's own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Debenture issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Definitive Debenture and in the Indenture and the Securities Act.
(b) / / CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE DEBENTURE TO
BENEFICIAL INTEREST IN A RESTRICTED GLOBAL DEBENTURE. In connection with the
Exchange of the Owner's Restricted Definitive Debenture for a beneficial
interest in the [CHECK ONE] / / 44A Global Debenture, / / Regulation S Global
Debenture, / / IAI Global Debenture with an equal principal amount, the Owner
hereby certifies (i) the beneficial interest is being acquired for the Owner's
own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Debentures and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any state of the
United States. Upon
C-2
<PAGE>
consummation of the proposed Exchange in accordance with the terms of the
Indenture, the beneficial interest issued will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the relevant
Restricted Global Debenture and in the Indenture and the Securities Act.
C-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuers.
--------------------------------
[Insert Name of Owner]
By:
-----------------------------
Name:
Title:
Dated: ,
----------------- -----
C-4
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Grove Investors LLC
201 Main Street
Fort Worth, Texas 76102
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, New York 10036-1532
Re: 14 1/2% Senior Debentures due 2010
Reference is hereby made to the Indenture, dated as of April 29, 1998
(the "INDENTURE"), between Grove Investors LLC, a Delaware limited liability
company ("GROVE INVESTORS"), Grove Investors Capital, Inc. ("GROVE INVESTORS
CAPITAL" and, together with Grove Investors, the "ISSUERS") and United States
Trust Company of New York, as Trustee (the "TRUSTEE"). Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) / / a beneficial interest in a Global Debenture, or
(b) / / a Definitive Debenture,
we confirm that:
1. We understand that any subsequent transfer of the Debentures or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Debentures or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Debentures have not been
registered under the Securities Act, and that the Debentures and any interest
therein may not be offered or sold 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 the Debentures or
any interest therein, we will do so only (A) to the Issuers or any subsidiary
thereof, (B) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (c) 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 and to the
Issuers a signed letter substantially in the form of this letter and, if such
transfer is in respect of a principal amount of Debentures, at the time of
transfer of less than $250,000, an Opinion of Counsel in form reasonably
acceptable to the Issuers to the effect that such transfer is in compliance with
the Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of Rule
<PAGE>
144(k) under the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
person purchasing the Definitive Debenture or beneficial interest in a Global
Debenture from us in a transaction meeting the requirements of clauses (A)
through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Debentures or
beneficial interest therein, we will be required to furnish to you and the
Issuers such certifications, legal opinions and other information as you and the
Issuers may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Debentures purchased
by us will bear a legend to the foregoing effect. We further understand that
any subsequent transfer by us of the Debentures or beneficial interest therein
acquired by us must be effected through one of the Placement Agents.
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 Debentures, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or its investment.
5. We are acquiring the Debentures or beneficial interest therein
purchased by us for our own 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 Issuers 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.
------------------------------------
[Insert Name of Accredited Investor]
By:
-----------------------------------
Name:
Title:
Dated: ,
-------------- ----
<PAGE>
14 1/2% Senior Debentures due 2010
No. ______ $__________
CUSIP NO. _________
Grove Investors LLC and Grove Investors Capital, Inc. promise to pay
to Cede & Co. or registered assigns, the principal sum of __________________
on May 1, 2010.
Interest Payment Dates: February 1, May 1, August 1 and November 1
Record Dates: January 15, April 15, July 15 and October 15
GROVE INVESTORS LLC
By:____________________________
Name:
Title:
GROVE INVESTORS CAPITAL, INC.
By:____________________________
Name:
Title:
Dated: _______________________
This is one of the Global
Debentures referred to in the
within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:___________________________
Authorized Signatory
<PAGE>
14 1/2% Senior Debentures due 2010
Unless and until it is exchanged in whole or in part for Debentures
in definitive form, this Debenture may not be transferred except as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York,
New York) ("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 such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be 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 in as much as the registered owner hereof, Cede & Co., has
an interest herein.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Grove Investors LLC, a Delaware limited liability
company ("Grove Investors") and Grove Investors Capital, Inc., a Delaware
corporation ("Grove Investors Capital" and together with Grove Investors, the
"Issuers"), promise to pay interest on the principal amount of this Debenture
at 14 1/2% per annum from August 1, 1998 until maturity and shall pay the
Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Issuers will pay interest and Liquidated
Damages, if any, quarterly on February 1, May 1, August 1 and November 1
(each an "Interest Payment Date") of each year, or if any such day is not a
Business Day, on the next succeeding Business Day. Interest on the
Debentures will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; PROVIDED
that if there is no existing Default in the payment of interest, and if this
Debenture is authenticated between a record date referred to on the face
hereof and the next succeeding Interest Payment Date, interest shall accrue
from such next succeeding Interest Payment Date; PROVIDED FURTHER, that the
first Interest Payment Date shall be November 1, 1998. The Issuers shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time
on demand at a rate that is 1% per annum in excess of the rate then in
effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time
to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Issuers will pay interest on the
Debentures (except defaulted interest) and Liquidated Damages to the Persons
who are registered Holders of Debentures at the close of business on the
January 15, April 15, July 15 or October 15 next preceding the Interest
Payment Date, even if such Debentures are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section
2.12 of the Indenture with respect to defaulted interest. The Debentures
will be payable as to principal, premium and Liquidated Damages, if any, and
interest at the office or
<PAGE>
agency of the Issuers maintained for such purpose within or without the City
and State of New York, or, at the option of the Issuers, payment of interest
and Liquidated Damages may be made by check mailed to the Holders at their
addresses set forth in the register of Holders; PROVIDED that payment by wire
transfer of immediately available funds will be required with respect to
principal of and interest, premium and Liquidated Damages on, all Global
Debentures and all other Debentures the Holders of which shall have provided
wire transfer instructions to the Issuers or the Paying Agent. Such payment,
shall be made, at the option of the Issuers, in the form of additional
Debentures or cash, and if made in cash, in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, United States Trust Company of
New York, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Issuers may change any Paying Agent or Registrar without notice
to any Holder. The Issuers or any of their Subsidiaries may act in any such
capacity.
4. INDENTURE. The Issuers issued the Debentures under an Indenture
dated as of April 29, 1998 ("Indenture") by and among the Issuers and the
Trustee. The terms of the Debentures include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act
of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The Debentures are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. To the extent any provision of this
Debenture conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling. The Debentures
are general unsecured Obligations of the Issuers limited to $300,000,000 in
aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) The Issuers shall have the option to redeem the Debentures, in
whole or in part, upon not less than 30 nor more than 60 days' notice, in cash
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on May 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003 . . . . . . . . . . . . . . . . . . . . . . . . 107.250%
2004 . . . . . . . . . . . . . . . . . . . . . . . . 104.833%
2005 . . . . . . . . . . . . . . . . . . . . . . . . 102.417%
2006 and thereafter . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, at any time prior to May 1, 2003, the Issuers may redeem all but
not less than all of the aggregate principal amount of Debentures originally
issued at a redemption price equal to 114.5% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date.
<PAGE>
6. MANDATORY REDEMPTION. Except as set forth in paragraph 7 below,
the Issuers shall not be required to make mandatory redemption or sinking
fund payments with respect to the Debentures.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Issuers shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of each Holder's Debentures at a
purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Issuers shall mail a notice to each Holder setting forth
the procedures governing the Change of Control Offer as required by the
Indenture.
(b) Holders of Debentures that are the subject of an offer to
purchase will receive a Change of Control Offer or Asset Sale Offer from the
Issuers prior to any related purchase date and may elect to have such Debentures
purchased by completing the form titled "Option of Holder to Elect Purchase"
appearing below.
8. 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 whose
Debentures are to be redeemed at its registered address. Debentures in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Debentures held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on
Debentures or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Debentures are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Debentures may be registered and Debentures may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Issuers may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Issuers need not
exchange or register the transfer of any Debenture or portion of a Debenture
selected for redemption, except for the unredeemed portion of any Debenture
being redeemed in part. Also, the Issuers need not exchange or register the
transfer of any Debentures for a period of 15 days before a selection of
Debentures to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Debenture may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture, or the Debentures may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Debentures and additional Debentures, if any, voting as a single class, and any
existing default or compliance with any provision of the Indenture, the
Subsidiary Guarantees or the Debentures may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Debentures and
additional Debentures, if any, voting as a single class.
<PAGE>
Without the consent of any Holder of a Debenture, the Indenture, or the
Debentures may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Debentures in addition to or in
place of certificated Debentures, to provide for the assumption of the
Issuers' obligations to Holders of the Debentures in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Debentures or that does not adversely affect
the legal rights under the Indenture of any such Holder, to comply with the
requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act, or to provide
for the issuance of additional Debentures in accordance with the limitations
set forth in the Indenture.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Liquidated Damages on the
Debentures; (ii) default in payment when due of principal of or premium, if
any, on the Debentures when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise, (iii) failure by the Issuers to comply with Section 4.07, 4.09, or
4.13 of the Indenture; (iv) failure by the Issuers or any of their Restricted
Subsidiaries for 30 days after notice to the Issuers by the Trustee or the
Holders of at least 25% in principal amount of the Debentures (including
additional Debentures, if any) then outstanding voting as a single class to
comply with certain other agreements in the Indenture or the Debentures; (v)
default under certain other agreements relating to Indebtedness of the
Issuers or any of its Restricted Subsidiaries which default results in the
acceleration of such Indebtedness prior to its express maturity; (vi) certain
final judgments for the payment of money that remain undischarged for a
period of 60 days; (vii) failure by the Company or its Subsidiaries to apply
the proceeds from the Offering as set forth under the caption "Use of
Proceeds" in the Offering Memorandum relating to the Debentures prior to the
10th Business Day after the date of the Indenture; and (viii) certain events
of bankruptcy or insolvency with respect to the Issuers or any of their
Significant Subsidiaries. If any Event of Default occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Debentures may declare all the Debentures to be due and payable
immediately; PROVIDED that so long as any Indebtedness permitted to be
incurred by any of Grove Investors' Restricted Subsidiaries shall be
outstanding, such acceleration shall not be effective until the earlier of
(i) an acceleration of any such Indebtedness of Grove Investors' Restricted
Subsidiaries or (ii) ten Business Days after receipt by the Issuers of
written notice of such acceleration. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Debentures will become due and payable without
further action or notice. Holders may not enforce the Indenture or the
Debentures except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then
outstanding Debentures may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Debentures notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Debentures then outstanding by notice to
the Trustee may on behalf of the Holders of all of the Debentures waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest
on, or the principal of, the Debentures. The Issuers are required to deliver
to the Trustee annually a statement regarding compliance with the Indenture,
and the Issuers are required upon becoming aware of any Default or Event of
Default, to deliver to the Trustee a statement specifying such Default or
Event of Default.
<PAGE>
13. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Issuers or their Affiliates, and may otherwise deal with the Issuers or
their Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A member, director, officer, employee,
incorporator or stockholder of the Issuers, as such, shall not have any
liability for any obligations of the Issuers under the Debentures or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debentures.
15. AUTHENTICATION. This Debenture shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL DEBENTURES AND
RESTRICTED DEFINITIVE DEBENTURES. In addition to the rights provided to Holders
of Debentures under the Indenture, Holders of Restricted Global Debentures and
Restricted Definitive Debentures shall have all the rights set forth in the
Registration Rights Agreement dated as of April 29, 1998, between the Issuers
and the parties named on the signature pages thereof or, in the case of
additional Debentures, Holders of Restricted Global Debentures and Restricted
Definitive Debentures shall have the rights set forth in one or more
registration rights agreements, if any, between the Issuers and the other
parties thereto, relating to rights given by the Issuers to the purchasers of
any additional Debentures (collectively, the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Debentures and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Debentures
or as contained in any notice of redemption and reliance may be placed only on
the other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Grove Investors LLC
201 Main Street
Fort Worth, Texas 76102
Attention: Keith Simmons, Esq.
<PAGE>
ASSIGNMENT FORM
To assign this Debenture, fill in the form below: (I) or (we) assign
and transfer this Debenture to (Insert assignee's soc. sec. or tax I.D. no.)
_______________________________________________________________________________
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ______________________________________________________
to transfer this Debenture on the books of the Issuers. The agent may
substitute another to act for him.
Date: _______________
Your Signature: _________________________
(Sign exactly as your name appears on the face of this Debenture)
Signature Guarantee: ________________________
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Debenture purchased by the Issuers
pursuant to Section 4.10 of the Indenture, check the box below:
/ / Section 4.10
If you want to elect to have only part of the Debenture purchased by
the Issuers pursuant to Section 4.10 of the Indenture, state the amount you
elect to have purchased: $________
Date: _______________
Your Signature: _______________________
(Sign exactly as your name appears on the face of this Debenture)
Signature Guarantee: __________________________
<PAGE>
SCHEDULE OF TRANSFERS OR EXCHANGES
OF INTERESTS IN THE GLOBAL DEBENTURE
The following transfers or exchanges of a part of this Global
Debenture for an interest in another Global Debenture or for a Definitive
Debenture, or transfers or exchanges of a part of another Global Debenture or
Definitive Debenture for an interest in this Global Debenture, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of this Global Signature of
decrease in increase in Debenture authorized officer
Principal Amount Principal Amount following such of Trustee or
of this Global of this Global decrease (or Debenture
Date of Exchange Debenture Debenture increase) Custodian
- ---------------- ---------------- ---------------- ------------------ -------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXECUTION COPY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
DATED AS OF APRIL 29, 1998
by and among
GROVE INVESTORS LLC
GROVE INVESTORS CAPITAL, INC.
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of April 29, 1998 by and among Grove Investors LLC, a
Delaware limited liability company ("INVESTORS"), Grove Investors Capital,
Inc. a Delaware Corporation ("GROVE INVESTORS CAPITAL" and, together with
Investors, the "ISSUERS"), and Donaldson, Lufkin & Jenrette Securities
Corporation (the "INITIAL PURCHASER"), each of whom has agreed to purchase
the Issuers' 14 1/2% Senior Debentures due 2010 (the "SENIOR DEBENTURES")
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated April
23, 1998 (the "PURCHASE AGREEMENT"), by and among the Issuers and the Initial
Purchaser. In order to induce the Initial Purchaser to purchase the Senior
Debentures, the Issuers have agreed to provide the registration rights set forth
in this Agreement. The execution and delivery of this Agreement is a condition
to the obligations of the Initial Purchaser set forth in the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them in the Indenture, dated April 29, 1998, between the Issuers and
United States Trust Company of New York, as Trustee, relating to the Senior
Debentures and the New Senior Debentures (the "INDENTURE").
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
CERTIFICATED SECURITIES: Definitive Debentures, as defined in the
Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Senior Debentures to be issued in the Exchange Offer, (b)
the maintenance of such Exchange Offer Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the period required pursuant to Section 3(b) hereof and (c) the delivery by the
Issuers to the Registrar under the Indenture of New Senior Debentures in the
same aggregate principal amount as the aggregate principal amount of Senior
Debentures validly tendered by Holders thereof pursuant to the Exchange Offer.
1
<PAGE>
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Section 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The exchange and issuance by the Issuers of a
principal amount of New Senior Debentures (which shall be registered pursuant
to the Exchange Offer Registration Statement) equal to the outstanding
principal amount of Senior Debentures that are validly tendered by such
Holders in connection with such exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchaser
proposes to sell the Senior Debentures (i) to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the Act and
(ii) in offshore transactions pursuant to Regulation S under the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
NEW SENIOR DEBENTURES: The Issuers' 14 1/2% new Senior Debentures due
2010 to be issued pursuant to the Indenture: (i) in the Exchange Offer or
(ii) as contemplated by Section 4 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated
by reference into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Issuers
relating to (a) an offering of New Senior Debentures pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto
(including post-effective amendments) and all exhibits and material
incorporated by reference therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
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SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939, as amended, (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Senior Discount Debenture, until
the earliest to occur of (a) the date on which such Senior Discount Debenture
is exchanged in the Exchange Offer for a New Senior Discount Debenture which
is entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Act, (b) the date
on which such Senior Discount Debenture has been disposed of in accordance
with a Shelf Registration Statement (and the purchaser thereof has been
issued New Senior Debentures), or (c) the date on which such Senior Discount
Debenture is distributed to the public pursuant to Rule 144 under the Act or
is saleable pursuant to Rule 144(k) under the Act and each New Senior
Discount Debenture until the date on which such New Senior Discount Debenture
is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have
been complied with), the Issuers shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 60 days after the Closing
Date (such 60th day being the "FILING DEADLINE"), (ii) use their reasonable
best efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 180 days
after the Closing Date (such 180th day being the "EFFECTIVENESS DEADLINE"),
(iii) in connection with the foregoing, (A) file all pre-effective amendments
to such Exchange Offer Registration Statement as may be necessary in order to
cause it to become effective, (B) file, if applicable, a post-effective
amendment to such Exchange Offer Registration Statement pursuant to Rule 430A
under the Act and (C) cause all necessary filings, if any, in connection with
the registration and qualification of the New Senior Debentures to be made
under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting (i)
registration of the New Senior Debentures to be offered in exchange for the
Senior Debentures that are Transfer Restricted Securities and (ii) resales of
New Senior Debentures by Broker-Dealers that tendered into the Exchange Offer
Senior Debentures that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Senior Debentures acquired directly from the Issuers or any of its
Affiliates) as contemplated by Section 3(c) below.
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(b) The Issuers shall use their reasonable best efforts to cause
the Exchange Offer Registration Statement to be effective continuously, and
shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to
Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no event shall such
period be less than 20 Business Days. The Issuers shall cause the Exchange
Offer to comply with all applicable federal and state securities laws. No
securities other than the New Senior Debentures shall be included in the
Exchange Offer Registration Statement. The Issuers shall use their
reasonable best efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 30 business days thereafter
(such 30th day being the "CONSUMMATION DEADLINE").
(c) The Issuers shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any (i) Broker-Dealer who holds Transfer Restricted
Securities that were acquired for the account of such Broker-Dealer as a
result of market-making activities or other trading activities (other than
Senior Debentures acquired directly from the Issuers or any Affiliate of the
Issuers) may exchange such Transfer Restricted Securities pursuant to the
Exchange Offer; and (ii) such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of any New Senior Debentures received by such Broker-Dealer in the
Exchange Offer, which prospectus delivery requirement may be satisfied by
delivery of the Prospectus contained in the Exchange Offer Registration
Statement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales by such Broker-Dealers that the
Commission may require in order to permit such sales pursuant thereto, but
such "Plan of Distribution" section shall not name any such Broker-Dealer or
disclose the amount of Transfer Restricted Securities held by any such
Broker-Dealer, except to the extent required by law or by the Commission as a
result of a change in the Commission's policy, rules or regulations after the
date of this Agreement. See the Shearman & Sterling no-action letter
(available July 2, 1993).
To the extent necessary to ensure that the prospectus contained in the
Exchange Offer Registration Statement is available for sales of New Senior
Debentures by such Broker-Dealers, the Issuers agree to use their reasonable
best efforts to keep the Exchange Offer Registration Statement continuously
effective, supplemented, amended and current as required by and subject to
the provisions of Section 6(a) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
one year from the Consummation Deadline or such shorter period as will
terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. The Issuers shall
provide sufficient copies of the latest version of such Prospectus to such
Broker-Dealers, promptly upon request, and in no event later than one
business day after such request, at any time during such period in order to
facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Exchange Offer is not permitted
by applicable law (after the Issuers have complied with the procedures set
forth in Section 6(a)(i) below) or (ii) if any
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Holder of Transfer Restricted Securities shall notify the Issuers within 20
Business Days following the Consummation Deadline that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange
Offer or (B) such Holder may not resell the New Senior Debentures acquired by
it in the Exchange Offer to the public without delivering a prospectus and
the Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder
is a Broker-Dealer and holds Senior Debentures acquired directly from the
Issuers or any of its Affiliates, then the Issuers shall:
(x) cause to be filed, on or prior to 60 days after the earlier of (i) the
date on which the Issuers determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the
date on which the Issuers receives the notice specified in clause (a)(ii)
above, (such earlier date, the "FILING DEADLINE"), a shelf registration
statement pursuant to Rule 415 under the Act (which may be an amendment to
the Exchange Offer Registration Statement (the "SHELF REGISTRATION
STATEMENT")), relating to all Transfer Restricted Securities, and
(y) shall use their reasonable best efforts to cause such Shelf
Registration Statement to become effective on or prior to 120 days after the
Filing Deadline for the Shelf Registration Statement (such 120th day the
"EFFECTIVENESS DEADLINE").
If, after the Issuers have filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Issuers
are required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law
(i.e., clause (a)(i) above), then the filing of the Exchange Offer
Registration Statement shall be deemed to satisfy the requirements of clause
(x) above; PROVIDED that, in such event, the Issuers shall remain obligated
to meet the Effectiveness Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration
Statement is available for sales of Transfer Restricted Securities by the
Holders thereof entitled to the benefit of this Section 4(a) and the other
securities required to be registered therein pursuant to Section 6(b)(ii)
hereof, the Issuers shall use their reasonable best efforts to keep any Shelf
Registration Statement required by this Section 4(a) continuously effective,
supplemented, amended and current in all material respects as required by and
subject to the provisions of Sections 6(b) and (c) hereof and in conformity
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, in order to
permit the prospectus included therein to be lawfully delivered by the
Holders of the Transfer Restricted Securities, until the expiration of the
period referred to in Rule 144(k) under the Act after the Closing Date
expires, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such
Holder furnishes to the Issuers in writing, within 20 days after receipt of a
request therefor, the information specified in Item 507 or 508 of Regulation
S-K, as applicable, of the Act and any other applicable rules, regulations or
policies of the Commission for use in
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connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities
shall be entitled to liquidated damages pursuant to Section 5 hereof unless
and until such Holder shall have provided all such information. Each selling
Holder agrees to promptly furnish additional information required to be
disclosed in order to make the information previously furnished to the
Issuers by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated on or prior to the Consummation
Deadline or (iv) any Registration Statement required by this Agreement is
filed and declared effective but (A) shall thereafter cease to be effective
prior to completion of the Exchange Offer or the sale of all the Transfer
Restricted Securities registered pursuant to the Shelf Registration
Statement, as the case may be, (except as permitted in paragraph (b) of this
Section 5) or (B) such Registration Statement ceases to be usable in
connection with resales of Transfer Restricted Securities during the periods
specified in this Agreement (except as permitted in paragraph (b) of this
Section 5) because either (1) any event occurs as a result of which the
related prospectus forming part of such Registration Statement would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made, not misleading or (2) it shall be necessary to
amend such Registration Statement, or supplement the related prospectus, to
comply with the Act or the Exchange Act or the respective rules thereunder,
and, in each case, such Registration Statement is not succeeded by a
post-effective amendment to such Registration Statement that cures such
failure and that is itself declared effective as soon as practicable and in
no event to exceed 5 business days (each such event referred to in clauses
(i) through (iv), a "REGISTRATION DEFAULT"), then the Issuers hereby jointly
and severally agree to pay to each Holder of Transfer Restricted Securities
affected thereby liquidated damages in an amount equal to $.05 per week per
$1,000 in principal amount of Transfer Restricted Securities held by such
Holder for each week or portion thereof that the Registration Default
continues for the first 90-day period immediately following the occurrence of
such Registration Default. The amount of the liquidated damages shall
increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.50 per week per $1,000 in principal amount of
Transfer Restricted Securities; PROVIDED that the Issuers shall in no event
be required to pay liquidated damages for more than one Registration Default
at any given time. Notwithstanding anything to the contrary set forth herein,
(1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or,
if applicable, the Shelf Registration Statement), in the case of (ii) above,
(3) upon Consummation of the Exchange Offer, in the case of (iii) above, or
(4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement) to again be declared effective or made usable in the case of (iv)
above, the liquidated
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damages payable with respect to the Transfer Restricted Securities as a
result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture,
on each Interest Payment Date, as more fully set forth in the Indenture and
the Debentures. Notwithstanding the fact that any securities for which
liquidated damages are due cease to be Transfer Restricted Securities, all
obligations of the Issuers to pay liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Issuers shall (x) comply with all applicable provisions
of Section 6(c) below, (y) use their best efforts to effect such exchange and
to permit the resale of New Senior Debentures by Broker-Dealers that tendered
in the Exchange Offer Senior Debentures that such Broker-Dealer acquired for
its own account as a result of its market making activities or other trading
activities (other than Senior Debentures acquired directly from the Issuers
or any of its Affiliates) being sold in accordance with the intended method
or methods of distribution thereof, and (z) comply with all of the following
provisions:
(i) If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, that in the reasonable opinion of counsel to the Issuers
raises a substantial question as to whether the Exchange Offer is
permitted by applicable federal law, the Issuers hereby agree to seek a
no-action letter or other favorable decision from the Commission
allowing the Issuers to Consummate an Exchange Offer for such Transfer
Restricted Securities. The Issuers hereby agree to pursue the issuance
of such a decision to the Commission staff level. In connection with
the foregoing, the Issuers hereby agree to take all such other actions
as may be requested by the Commission or otherwise required in
connection with the issuance of such decision, including without
limitation (A) participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an analysis prepared
by counsel to the Issuers setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not be
favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including, without
limitation, any Holder who is a Broker Dealer) shall furnish, upon the
request of the Issuers, prior to the Consummation of the Exchange Offer,
a written representation to the Issuers (which may be contained in the
letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of the Issuers,
(B) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any Person to participate in, a
distribution of the New Senior Debentures to be issued in the Exchange
Offer and (C) it is acquiring the New Senior Debentures in its ordinary
course of business and (D) if such
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Holder is a Broker Dealer, that it will receive New Senior Debentures
for its own account in exchange for Senior Debentures that were acquired
as a result of market-making activities or other trading activities and
that it will be required to acknowledge that it will deliver a
prospectus in connection with any resale of such New Senior Debentures.
As a condition to its participation in the Exchange Offer each Holder
using the Exchange Offer to participate in a distribution of the New
Senior Debentures shall acknowledge and agree that, if the resales are
of New Senior Debentures obtained by such Holder in exchange for Senior
Debentures acquired directly from the Issuers or an Affiliate thereof,
it (1) could not, under Commission policy as in effect on the date of
this Agreement, rely on the position of the Commission enunciated in
MORGAN STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL
HOLDINGS CORPORATION (available May 13, 1988), as interpreted in the
Commission's letter to SHEARMAN & STERLING dated July 2, 1993, and
similar no-action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2) must comply with
the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a secondary
resale transaction must be covered by an effective registration
statement containing the selling security holder information required by
Item 507 or 508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers shall provide a supplemental letter to the
Commission (A) stating that the Issuers are registering the Exchange
Offer in reliance on the position of the Commission enunciated in EXXON
CAPITAL HOLDINGS CORPORATION (available May 13, 1988), MORGAN STANLEY
AND CO., INC. (available June 5, 1991) as interpreted in the
Commission's letter to SHEARMAN & STERLING dated July 2, 1993, and, if
applicable, any no-action letter obtained pursuant to clause (i) above,
(B) including a representation that the Issuers have not entered into
any arrangement or understanding with any Person to distribute the New
Senior Debentures to be received in the Exchange Offer and that, to the
best of the Issuers' information and belief, each Holder participating
in the Exchange Offer is acquiring the New Senior Debentures in its
ordinary course of business and has no arrangement or understanding with
any Person to participate in the distribution of the New Senior
Debentures received in the Exchange Offer and (C) any other undertaking
or representation required by the Commission as set forth in any
no-action letter obtained pursuant to clause (i) above, if applicable.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Issuers shall:
(i) comply with all the provisions of Section 6(c) below and
use their best efforts to effect such registration to permit the sale of
the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof (as indicated in the
information furnished to the Issuers pursuant to Section 4(b) hereof),
and pursuant thereto the Issuers will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the
intended
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method or methods of distribution thereof within the time periods and
otherwise in accordance with the provisions hereof, and
(ii) issue, upon the request of any Holder of Senior Debentures
covered by any Shelf Registration Statement contemplated by this Agreement, New
Senior Debentures having an aggregate principal amount equal to the aggregate
principal amount of Senior Debentures sold pursuant to the Shelf Registration
Statement and surrendered to the Issuers for cancellation; the Issuers shall
register New Senior Debentures on the Shelf Registration Statement for this
purpose and issue the New Senior Debentures to the purchaser(s) of securities
subject to the Shelf Registration Statement in the names as such purchaser(s)
shall designate.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities, the Issuers shall:
(i) use their reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Issuers shall file promptly an appropriate amendment to such
Registration Statement curing such defect, and, if Commission review is
required, use their respective reasonable best efforts to cause such
amendment to be declared effective as soon as practicable thereafter.
Notwithstanding anything to the contrary set forth in this Agreement,
the Issuers' obligations to use their best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended
shall be suspended in the event continued effectiveness of the Shelf
Registration Statement would, in the opinion of counsel to the Issuers,
require the Issuers to disclose a material financing, acquisition or
other corporate transaction, and the Management Committee of Investors,
shall have determined in good faith that such disclosure is not in the
best interests of the Issuers, but in no event will any such suspension,
individually or in the aggregate, exceed thirty (30) days within any
twelve month period during which the Shelf Registration Statement is
otherwise required to be effective.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as
may be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, or such shorter
period as will terminate upon the earlier of the following (A) when all
Transfer Restricted Securities covered by such Registration Statement
have been sold and (B) when, in the written opinion of counsel to the
Issuers, all outstanding Transfer Restricted Securities held by persons
that are not Affiliates of the Issuers may be resold without
registration under the Act pursuant to Rule 144(k) under the Act or any
successor provision thereto; as the case may be; cause the Prospectus to
be supplemented by any
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required Prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the Act, and to comply in all material
respects with Rules 424, 430A and 462, as applicable, under the Act in a
timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by such
Holder, confirm such advice in writing, (A) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and,
with respect to any applicable Registration Statement or any
post-effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to
make the statements therein not misleading, or that requires the making
of any additions to or changes in the Prospectus in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue
any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption
from qualification of the Transfer Restricted Securities under state
securities or Blue Sky laws, the Issuers shall use their best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time;
(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchaser of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(v) furnish to each selling Holder in connection with such
exchange or sale, if any, before filing with the Commission, copies of
any Registration Statement or any Prospectus included therein or any
amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and
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comment of such Holders in connection with such sale, if any, for a
period of at least three Business Days, and the Issuers will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including
all such documents incorporated by reference) to which such Holders
shall reasonably object within three Business Days after the receipt
thereof, except for any Registration Statement or amendment thereto or
prospectus or supplement thereto (a copy of which has been previously
furnished to the Initial Purchaser and their counsel (and, in the case
of a Shelf Registration Statement, the Holders and their counsel)) which
counsel to the Issuers has advised the Issuers in writing is required to
be filed in order to comply with applicable law. A Holder shall be
deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein
not misleading or fails to comply with the applicable requirements of
the Act;
(vi) promptly prior to the filing of any document that is to
be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to each Holder in connection
with such exchange or sale, if any, make the Issuers' representatives
available for discussion of such document and other customary due
diligence matters, and include such information in such document prior
to the filing thereof as such Holders may reasonably request;
(vii) in connection with a sale under a Shelf Registration
Statement, make available, at reasonable times, for inspection by each
selling Holder and any attorney or accountant retained by such Holders,
following written request therefor, all pertinent financial and
corporate documents and other records customarily inspected by
underwriters as reasonably necessary to conduct a reasonable
investigation within the meaning of Section 11 of the Act, subject to
execution of customary confidentiality agreements of the Issuers and
cause the Issuers' officers, directors and employees to supply such
information reasonably requested in writing by any such Holder, attorney
or accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness;
(viii) if requested by any selling Holders in connection with
such exchange or sale, promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such Holders may reasonably request to
have included therein, including, without limitation, information
relating to the "Plan of Distribution" of the Transfer Restricted
Securities and (in the case of a Shelf Registration Statement to the
extent necessary to comply with law or interpretation of the Commission,
names of Holders who propose to sell as selling securityholders), and
make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Issuers are
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
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(ix) furnish to each selling Holder in connection with such
exchange or sale, without charge, at least one conformed copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, excluding all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(x) deliver to each selling Holder without charge, as many
copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons reasonably may request;
and the Issuers hereby consent to the use (in accordance with law) of
the Prospectus and any amendment or supplement thereto by each selling
Holder in connection with the offering and the sale of the Transfer
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;
(xi) in connection with a sale under a Shelf Registration
Statement, upon the request of any Holder, enter into such customary
agreements (including underwriting agreements) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any applicable
Registration Statement contemplated by this Agreement as may be
reasonably requested by such Holders in connection with any sale or
resale pursuant to any applicable Registration Statement. In such
connection, the Issuers shall:
(A) upon request of any selling Holder,
furnish (or in the case of paragraphs (2) and (3), use
their best efforts to cause to be furnished) to such
Holder, upon Consummation of the Exchange Offer or upon
the effectiveness of the Shelf Registration Statement, as
the case may be:
(1) a certificate, dated
such date, signed on behalf of the
Issuers by (x) the President or any
Vice President and (y) a principal
financial or accounting officer of
the Issuers, confirming, as of the
date thereof, the matters set forth
in Sections 9(a) and 9(b) of the
Purchase Agreement and such other
similar matters as such Holders may
reasonably request;
(2) an opinion, dated the
date of effectiveness of the Shelf
Registration Statement of counsel for
the Issuers covering matters similar
to those set forth in paragraph (e)
of Section 9 of the Purchase
Agreement, and in any event including
a statement to the effect that such
counsel has participated in
conferences with officers and other
representatives of the Issuers and
representatives of the independent
public accountants for the Issuers
and have considered the matters
required to be stated therein and the
statements contained therein,
although such counsel has not
independently verified the accuracy,
completeness or fairness of such
statements; and a statement of such
counsel that, on the basis of the
foregoing (relying as to materiality
to the extent such counsel deems
appropriate upon the statements of
officers and other representatives of
the Issuers (and without independent
check or
12
<PAGE>
verification)), no facts came to such
counsel's attention that caused such
counsel to believe that the
applicable Registration Statement, at
the time such Registration Statement
or any post-effective amendment
thereto became effective, contained
an untrue statement of a material
fact or omitted to state a material
fact required to be stated therein or
necessary to make the statements
therein not misleading, or that the
Prospectus contained in such
Registration Statement as of its date
and, in the case of the opinion dated
the date of Consummation of the
Exchange Offer, as of the date of
Consummation, contained an untrue
statement of a material fact or
omitted to state a material fact
necessary in order to make the
statements therein, in the light of
the circumstances under which they
were made, not misleading. Without
limiting the foregoing, such counsel
may state further that such counsel
assumes no responsibility for, and
has not independently verified, the
accuracy, completeness or fairness of
the financial statements, notes and
schedules and other financial data
included in any Registration
Statement contemplated by this
Agreement or the related Prospectus;
and
(3) a customary comfort
letter, dated as of the date of
effectiveness of the Shelf
Registration Statement, as the case
may be, from the Issuers' independent
accountants, in the customary form
and covering matters of the type
customarily covered in comfort
letters to underwriters in connection
with underwritten offerings, and
(B) deliver such other documents and
certificates as may be reasonably requested by the
selling Holders to evidence compliance with the matters
covered in clause (A) above and with any customary
conditions contained in the any agreement entered into by
the Issuers pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may reasonably request and do any
and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Transfer Restricted Securities
covered by the applicable Registration Statement; PROVIDED, HOWEVER,
that the Issuers shall not be required to register or qualify as a
foreign corporation where they are not now so qualified or to take any
action that would subject them to the service of process in suits or to
taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where they are not now so
subject;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive
legends, if such securities are required to be represented by
certificates, and to register such Transfer Restricted Securities in
such
13
<PAGE>
denominations and such names as the selling Holders may request at
least two Business Days prior to such sale of Transfer Restricted
Securities;
(xiv) use their best efforts to cause the disposition of the
Transfer Restricted Securities 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
to consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xii) above;
(xv) provide a CUSIP number for the Transfer Restricted
Securities not later than the effective date of a Registration Statement
covering such Transfer Restricted Securities and provide the Trustee
under the Indenture with a printed certificate for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xvi) otherwise use their best efforts to comply in all
material respects with all applicable rules and regulations of the
Commission to the extent and so long as they are applicable to the
Exchange Offer or the Shelf Registration Statement , and make generally
available to its security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the effective
date of the Registration Statement (as such term is defined in paragraph
(c) of Rule 158 under the Act);
(xvii) use their reasonable best efforts to cause the Indenture
to be qualified under the TIA not later than the effective date of the
first Registration Statement required by this Agreement and, in
connection therewith, cooperate with the Trustee and the Holders to
effect such changes, if any, to the 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 the Trustee to
execute all documents that may be required to effect such changes and
all other forms and documents required to be filed with the Commission
to enable such Indenture to be so qualified in a timely manner; and
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of
a Transfer Restricted Security that, upon receipt of the notice referred to
in Section 6(c)(iii)(C) or any notice from the Issuers of the existence of
any fact of the kind described in Section 6(c)(iii)(D) hereof (in each case,
a "SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration
Statement until (i) such Holder has received copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such
Holder is advised in writing by the Issuers that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus (in each case,
the "RECOMMENCEMENT DATE"). Each Holder receiving a Suspension Notice hereby
agrees that it will either (i) destroy any Prospectuses, other than permanent
file copies, then in such Holder's possession which have been replaced by the
Issuers with more recently dated Prospectuses or (ii) deliver to the Issuers
(at the Issuers' expense) all copies, other
14
<PAGE>
than permanent file copies, then in such Holder's possession of the
Prospectus covering such Transfer Restricted Securities that was current at
the time of receipt of the Suspension Notice. The time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' performance of or
compliance with this Agreement will be borne by the Issuers, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing
certificates for the New Senior Debentures to be issued in the Exchange Offer
and printing of Prospectuses), messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel for the Issuers (v) all fees and
disbursements of independent certified public accountants of the Issuers
(including the expenses of any special audit and comfort letters required by
or incident to such performance).
The Issuers will, in any event, bear their internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and
the fees and expenses of any Person, including special experts, retained by
the Issuers.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers will reimburse
the Holders of Transfer Restricted Securities who are tendering Senior
Debentures into New Senior Debentures in the Exchange Offer and/or selling or
reselling Senior Debentures or New Senior Debentures pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall be chosen to replace Latham & Watkins by the
Holders of a majority in principal amount of the Transfer Restricted
Securities for whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) Each of the Issuers agrees, jointly and severally, to indemnify
and hold harmless each Holder, its directors, officers and each Person, if
any, who controls such Holder (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act), from and against any and all losses, claims,
damages, liabilities, judgments, (including without limitation, any
reasonable fees and expenses of counsel incurred in connection with
investigating or defending any matter, including any action that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained
in any Registration Statement, preliminary prospectus or Prospectus (as
amended or supplemented if the Issuers shall have furnished an amendment or
supplement) provided by the Issuers to any Holder or any
15
<PAGE>
prospective purchaser of New Senior Debentures or registered Senior
Debentures, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by an untrue statement or
omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the
Issuers by any of the Holders; PROVIDED, HOWEVER, that the foregoing
indemnification with respect to any untrue statement or alleged untrue
statement or omission or alleged omission in any preliminary prospectus or
Prospectus, shall not inure to the benefit of any Holder from whom the person
asserting such loss, claim, damage, liability or expense purchased any of the
New Senior Debentures or registered Senior Debentures if a copy of the
Prospectus (or any amendment or supplement thereto) was not sent or given on
behalf of such Holder to such person at or prior to the written confirmation
of the sale of such New Senior Debentures or registered Senior Debentures to
such person and if the Prospectus (or the Prospectus, as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense.
(b) Each Holder of Transfer Restricted agrees, severally and not
jointly, to indemnify and hold harmless the Issuers, and their respective
directors and officers, and each person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Issuers to the same extent as the foregoing indemnity from the Issuers set
forth in section (a) above, but only with reference to information relating
to such Holder furnished in writing to the Issuers by such Holder expressly
for use in any Registration Statement. In no event shall any Holder, its
directors, officers or any Person who controls such Holder be liable or
responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid
by such Holder for such Transfer Restricted Securities and (ii) the amount of
any damages that such Holder, its directors, officers or any Person who
controls such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PERSON")
in writing and the indemnifying party shall assume the defense of such
action, including the employment of counsel reasonably satisfactory to the
indemnified party and the payment of all reasonable fees and expenses of such
counsel, as incurred. Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of the
indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include
both the indemnified party and the indemnifying party, and the indemnified
party shall have been advised by its counsel that there may be one or more
legal defenses available to it which are different from or additional to
those available to the indemnifying party (in which case the indemnifying
party shall not have the right to assume the defense of such action on behalf
of the indemnified party). Notwithstanding anything to the contrary in this
Section 8, the indemnifying party shall not, in
16
<PAGE>
connection with any one action or separate but substantially similar or
related actions 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 (in addition to any local counsel) for
all indemnified parties and all such reasonable fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
Holders of a majority in aggregate principal amount of the Senior Debentures,
in the case of the parties indemnified pursuant to Section 8(a), and by the
Issuers, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold hamless the indemnified party
from and against any and all losses, claims, damages, liabilities and
judgments by reason of any settlement of any action (i) effected with the
indemnifying party's written consent or (ii) effected without its written
consent if the settlement is entered into more than thirty business days
after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the reasonable fees and expenses of
counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the
indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action, claim, litigation or proceeding and (ii) does not
include a statement as to or an admission of fault, culpability or a failure
to act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein (other than by
reason of exceptions provided under this Section 8, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, liabilities or judgments (i) in such proportion as
is appropriate to reflect the relative benefits received by the Issuers, on
the one hand, and the Holders, on the other hand, from their sale of Transfer
Restricted Securities or (ii) if the allocation provided by clause 8(d)(i) is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Issuers, on the one hand, and of the
Holder, on the other hand, in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or judgments, as
well as any other relevant equitable considerations. The relative fault of
the Issuers, on the one hand, and of the Holder, on the other hand, 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 Issuers, on the
one hand, or by the Holder, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as
a result of the losses, claims, damages, liabilities and judgments referred
to above shall be deemed to include, subject to the limitations set forth in
Section 8(a), any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
17
<PAGE>
The Issuers and each Holder agree that it would not be just and equitable
if contribution pursuant to this Section 8(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any matter,
including any action that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, no Holder, its directors, its officers or any Person, if any, who
controls such Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder
with respect to the sale of Transfer Restricted Securities pursuant to a
Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages which such
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each Holder
hereunder and not joint.
SECTION 9. RULE 144A AND RULE 144
The Issuers agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which
Investors (i) is not subject to Section 13 or 15(d) of the Exchange Act, to
make available, upon request of any Holder, to such Holder or beneficial
owner of Transfer Restricted Securities in connection with any sale thereof
and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section
13 or 15 (d) of the Exchange Act, to make all filings required thereby in a
timely manner in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144.
18
<PAGE>
SECTION 10. MISCELLANEOUS
(a) REMEDIES. The Issuers acknowledge and agree that any failure by
the Issuers to comply with their respective obligations under Sections 3 and
4 hereof may result in material irreparable injury to the Initial Purchaser
or the Holders for which there is no adequate remedy at law, that it will not
be possible to measure damages for such injuries precisely and that, in the
event of any such failure, the Initial Purchaser or any Holder may obtain
such relief as may be required to specifically enforce the Issuers'
obligations under Sections 3 and 4 hereof. The Issuers further agree to
waive the defense in any action for specific performance that a remedy at law
would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Issuers will not, on or after
the date of this Agreement, enter into any agreement with respect to their
securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. The
Issuers have not previously entered into any agreement granting any
registration rights with respect to its securities to any Person. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Issuers'
securities under any agreement in effect on the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless (i) in the case
of Section 5 hereof and this Section 10(c)(i), the Issuers have obtained the
written consent of Holders of all outstanding Transfer Restricted Securities
and (ii) in the case of all other provisions hereof, the Issuers have
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities (excluding Transfer
Restricted Securities held by the Issuers or its Affiliates).
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
Transfer Restricted Securities are being tendered pursuant to the Exchange
Offer, and that does not affect directly or indirectly the rights of other
Holders whose Transfer Restricted Securities are not being tendered pursuant
to such Exchange Offer, may be given by the Holders of a majority of the
outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuers, on the
one hand, and the Initial Purchaser, on the other hand, and shall have the
right to enforce such agreements directly to the extent they may deem such
enforcement necessary or advisable to protect its rights or the rights of
Holders hereunder.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail (registered or certified, return receipt requested), telex, telecopier,
or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records
of the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
19
<PAGE>
(ii) if to the Issuers:
Grove Investors LLC
201 Main Street
Fort Worth, TX 76102
Telecopier No.: (717) 593-5120
Attention: Keith Simmons, Esq.
With a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Telecopier No.: (212) 757-3990
Attention: Mark S. Bergman
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three
Business Days after being deposited in the mail, postage prepaid, if mailed;
when receipt acknowledged, if telecopied; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) No Holder may participate in an underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in customary underwriting
arrangements entered into in connection therewith and (b) completes and
executes all reasonable questionnaires, powers of attorney, and other
documents required under the terms of such underwriting arrangements.
(g) For any Underwritten Offering, the investment banker or
investment bankers and manager or managers for any underwritten Offering that
will administer such offering will be selected by the Holders of a majority
in aggregate principal amount of the Transfer Restricted Securities included
in such offering. Such investment bankers and managers are referred to
herein as the "underwriters."
(h) 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; PROVIDED, that nothing herein shall be deemed
to permit any assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities in any manner, whether by operation of law or
otherwise, such Transfer Restricted Securities shall be held subject to all
of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have agreed
to be bound by and to perform all of the terms and provisions
20
<PAGE>
of this Agreement, including the restrictions on resale set forth in this
Agreement and, if applicable, the Purchase Agreement, and such Person shall
be entitled to receive the benefits hereof.
(i) 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.
(j) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(k) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(l) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(m) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the registration rights granted
with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
GROVE INVESTORS LLC
By: /s/ John R. Monsky
-------------------------------
Name: John R. Monsky
Title:
GROVE INVESTORS CAPITAL, INC.
By: /s/ John R. Monsky
-------------------------------
Name: John R. Monsky
Title:
22
<PAGE>
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written by Donaldson, Lufkin & Jenrette
Securities Corporation on behalf of the
Initial Purchaser.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Edward Biggins
-------------------------------
Name:
Title:
23
<PAGE>
EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guarneri (Compliance Department)
Fax: (212) 892-7272
From: Grove Investors LLC/Grove Capital, Inc.
14 1/2% Senior Debentures due 2010
Date: ___,199_
For your information only (NO ACTION REQUIRED):
Today, ______, 199_, we filed [an Exchange Registration Statement/a
Shelf Registration Statement] with the Securities and Exchange Commission. We
currently expect this registration statement to be declared effective within __
business days of the date hereof.
24
<PAGE>
Exhibit 4.5
CONFORMED COPY
================================================================================
$325,000,000
CREDIT AGREEMENT
among
GROVE WORLDWIDE LLC
and
GROVE CAPITAL, INC.,
as Borrowers,
The Several Lenders
from Time to Time Parties Hereto,
CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION,
as Administrative Agent,
BANKBOSTON, N.A.,
as Syndication Agent
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
as Documentation Agent
Dated as of April 29, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS ............................................. 1
1.1 Defined Terms ............................................... 1
1.2 Other Definitional Provisions ............................... 25
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS .......................... 26
2.1 Term Loan Commitments ...................................... 26
2.2 Procedure for Term Loan Borrowing .......................... 26
2.3 Repayment of Term Loans .................................... 26
2.4 Revolving Credit Commitments ............................... 27
2.5 Procedure for Revolving Credit Borrowing ................... 27
2.6 Swing Line Commitment ...................................... 28
2.7 Procedure for Swing Line Borrowing;
Refunding of Swing Line Loans ............................ 28
2.8 Repayment of Loans; Evidence of Debt ....................... 30
2.9 Commitment Fees, etc ....................................... 31
2.10 Termination or Reduction of Revolving
Credit Commitments ....................................... 31
2.11 Optional Prepayments ....................................... 31
2.12 Mandatory Prepayments and Commitment
Reductions ............................................... 32
2.13 Conversion and Continuation Options ........................ 33
2.14 Minimum Amounts and Maximum Number of
Eurocurrency Tranches .................................... 34
2.15 Interest Rates and Payment Dates ........................... 34
2.16 Computation of Interest and Fees ........................... 35
2.17 Inability to Determine Interest Rate ....................... 35
2.18 Pro Rata Treatment and Payments ............................ 36
2.19 Requirements of Law ........................................ 38
2.20 Taxes ...................................................... 39
2.21 Indemnity .................................................. 41
2.22 Illegality ................................................. 41
2.23 Change of Lending Office ................................... 42
2.24 Replacement of Lenders under Certain Circumstances ......... 42
2.25 Controls on Prepayment if Aggregate
Outstanding Revolving Credit Exceeds
Aggregate Revolving Credit Commitments ................... 42
2.26 Provisions Regarding the "Euro" ............................ 43
SECTION 3. LETTERS OF CREDIT ........................................ 44
3.1 L/C Commitment .............................................. 44
3.2 Procedure for Issuance of Letter of Credit .................. 44
3.3 Commissions, Fees and Other Charges ......................... 44
3.4 L/C Participations .......................................... 45
3.5 Reimbursement Obligation of the Borrowers ................... 46
3.6 Obligations Absolute ........................................ 46
3.7 Letter of Credit Payments ................................... 47
3.8 Applications ................................................ 47
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SECTION 4. REPRESENTATIONS AND WARRANTIES ........................... 47
4.1 Financial Condition ........................................ 47
4.2 No Change .................................................. 48
4.3 Corporate Existence; Compliance with Law ................... 48
4.4 Corporate Power; Authorization;
Enforceable Obligations ................................. 48
4.5 No Legal Bar ............................................... 49
4.6 No Material Litigation ..................................... 49
4.7 No Default ................................................. 49
4.8 Ownership of Property; Liens ............................... 49
4.9 Intellectual Property ...................................... 49
4.10 Taxes ...................................................... 49
4.11 Federal Regulations ........................................ 50
4.12 Labor Matters .............................................. 50
4.13 ERISA ...................................................... 50
4.14 Investment Company Act; Other Regulations .................. 50
4.15 Subsidiaries ............................................... 51
4.16 Use of Proceeds ............................................ 51
4.17 Environmental Matters ...................................... 51
4.18 Accuracy of Information, etc ............................... 52
4.19 Security Documents ......................................... 52
4.20 Solvency ................................................... 53
4.21 Senior Debt ................................................ 53
4.22 Regulation H ............................................... 53
4.23 Year 2000 Matters .......................................... 53
SECTION 5. CONDITIONS PRECEDENT ..................................... 54
5.1 Conditions to Initial Extension of Credit ................... 54
5.2 Conditions to Each Extension of Credit ...................... 59
SECTION 6. AFFIRMATIVE COVENANTS .................................... 59
6.1 Financial Statements ........................................ 59
6.2 Certificates; Other Information ............................. 60
6.3 Payment of Obligations ...................................... 61
6.4 Conduct of Business and Maintenance
of Existence, etc ........................................ 61
6.5 Maintenance of Property; Insurance .......................... 61
6.6 Inspection of Property; Books and
Records; Discussions ..................................... 62
6.7 Notices ..................................................... 62
6.8 Environmental Laws .......................................... 63
6.9 Interest Rate Protection .................................... 63
6.10 Additional Collateral, etc ................................. 63
6.11 Intercompany Loans and Intercompany Notes .................. 65
SECTION 7. NEGATIVE COVENANTS ....................................... 66
7.1 Financial Condition Covenants ............................... 66
7.2 Limitation on Indebtedness .................................. 66
7.3 Limitation on Liens ......................................... 68
7.4 Limitation on Fundamental Changes ........................... 70
7.5 Limitation on Sale of Assets ................................ 71
7.6 Limitation on Dividends ..................................... 72
7.7 Limitation on Capital Expenditures .......................... 73
7.8 Limitation on Investments, Loans and Advances .............. 74
7.9 Limitation on Optional Payments and
Modifications of Debt Instruments, etc ................... 75
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7.10 Limitation on Transactions with Affiliates ................. 76
7.11 Limitation on Sales and Leasebacks ......................... 76
7.12 Limitation on Changes in Fiscal Periods .................... 76
7.13 Limitation on Negative Pledge Clauses ...................... 77
7.14 Limitation on Restrictions on Subsidiary Distributions ..... 77
7.15 Limitation on Lines of Business ............................ 78
7.16 Limitation on Amendments to Acquisition Documents .......... 78
7.17 Limitation on Hedging Agreements ........................... 78
SECTION 8. EVENTS OF DEFAULT ........................................ 78
SECTION 9. THE AGENTS ............................................... 82
9.1 Appointment ................................................ 82
9.2 Delegation of Duties ....................................... 82
9.3 Exculpatory Provisions ..................................... 82
9.4 Reliance by Agents ......................................... 82
9.5 Notice of Default .......................................... 83
9.6 Non-Reliance on Agents and Other Lenders ................... 83
9.7 Indemnification ............................................ 83
9.8 Agent in Its Individual Capacity ........................... 84
9.9 Successor Administrative Agent ............................. 84
9.10 Authorization to Release Liens ............................. 84
9.11 The Arranger ............................................... 85
SECTION 10. MISCELLANEOUS ........................................... 85
10.1 Amendments and Waivers .................................... 85
10.2 Notices ................................................... 86
10.3 No Waiver; Cumulative Remedies ............................ 87
10.4 Survival of Representations and Warranties ................ 87
10.5 Payment of Expenses ....................................... 87
10.6 Successors and Assigns; Participations and Assignments .... 88
10.7 Adjustments; Set-off ...................................... 90
10.8 Counterparts .............................................. 91
10.9 Severability .............................................. 91
10.10 Integration ............................................... 91
10.11 GOVERNING LAW ............................................. 91
10.12 Submission To Jurisdiction; Waivers ....................... 91
10.13 Acknowledgements .......................................... 92
10.14 WAIVERS OF JURY TRIAL ..................................... 92
10.15 Confidentiality ........................................... 92
10.16 Release of Collateral Security and Guarantee Obligations .. 93
10.17 Section Headings .......................................... 93
10.18 Judgment Currency ......................................... 93
10.19 Borrowers Obligations Joint and Several ................... 94
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ANNEXES:
A Pricing Grid
SCHEDULES:
A Designated Foreign Currencies
B Subsidiaries
C Provisions Regarding the "Euro"
1.1A Commitments and Information for Notices
1.1B Mortgaged Property
4.1(b) Guarantee Obligations and Dispositions of Certain Businesses
4.3 Certain Remaining Organizational Steps Required by Certain
Foreign Subsidiaries
4.4 Certain Limitations on Corporate Power of Certain Foreign
Subsidiaries and
Consents, Authorizations, Filings and Notices
4.6 Litigation
4.7 Contractual Obligations Disclosure
4.9 Intellectual Property Disclosure
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
7.2(e) Existing Indebtedness
7.3(f) Existing Liens
7.10 Affiliate Transactions Pursuant to Contracts or Agreements
7.11 Existing Sale/Leaseback Transactions
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
F-2 Form of Legal Opinion of Coudert & Brothers
F-3 Form of Legal Opinion of General Counsel to the Company and
its Subsidiaries
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
G-3 Form of Swing Line Note
H Form of Prepayment Option Notice
I Form of Exemption Certificate
J Form of Intercompany Note
K Dealer Receivables Financing Term Sheet
L Foreign Pledge Agreements
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CREDIT AGREEMENT, dated as of April 29, 1998, among GROVE WORLDWIDE
LLC, a Delaware limited liability company (the "Company"), GROVE CAPITAL, INC.,
a Delaware corporation and a Wholly Owned Subsidiary of the Company ("Grove
Capital"; the Company and Grove Capital, individually, a "Borrower" and
collectively, the "Borrowers"), the several banks and other financial
institutions or entities from time to time parties to this Agreement
(collectively, the "Lenders"; individually, a "Lender"), CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION, as Administrative Agent (as hereinafter defined) for the
Lenders hereunder, BANKBOSTON, N.A., as syndication agent (in such capacity, the
"Syndication Agent") for the Lenders hereunder, and DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION, as documentation agent (in such capacity, the
"Documentation Agent") for the Lenders hereunder.
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as hereinafter
defined), the parties thereto have agreed to the Acquisition (as hereinafter
defined);
WHEREAS, the Borrowers have requested that the Lenders and the
Agents enter into this Agreement for the purpose, among others, of providing a
source of funds to enable the Borrowers to consummate the Acquisition, and the
Lenders and the Agents have agreed to do so upon and subject to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Acquired Assets": the "Specified Grove Assets" as defined in the
Purchase Agreement.
"Acquired Businesses": the Acquired Assets and the Acquired Entities
or, as defined in the Purchase Agreement, the "Grove Companies".
"Acquired Entities": Crane, Grove France, Grove England, Grove
Germany, Delta Manlift, National Crane Corporation, Manlift Limited, Grove
Crane Limited, Grove Europe Pension Trustees Limited, Grove Crane SL and
Grove Australia.
"Acquisition": as defined in Section 5.1.
"Adjustment Date": as defined in the Pricing Grid.
<PAGE>
2
"Administrative Agent": Chase, together with its affiliates, as the
Arranger of the Commitments and as the administrative agent for the
Lenders under this Agreement and the other Loan Documents.
"Affected Eurocurrency Loans": as defined in Section 2.22.
"Affected Eurocurrency Rate": as defined in Section 2.17.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"Agents": the collective reference to the Administrative Agent, the
Documentation Agent and the Syndication Agent.
"Aggregate Exposure": with respect to any Lender, an amount equal to
(a) until the Closing Date, the aggregate amount of such Lender's
Commitments and (b) thereafter, the sum of (i) the aggregate unpaid
principal amount of such Lender's Term Loans and (ii) the amount of such
Lender's Revolving Credit Commitment or, if the Revolving Credit
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit.
"Aggregate Exposure Percentage": with respect to any Lender, the
ratio (expressed as a percentage) of such Lender's Aggregate Exposure to
the Aggregate Exposure of all Lenders.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Base Rate Eurocurrency
Loans Loans
--------- ------------
Revolving Credit Loans 1.250% 2.250%
Swing Line Loans 1.250% N/A
Term Loans 1.500% 2.500%;
provided, that on and after the first Adjustment Date occurring on or
after December 26, 1998, the Applicable Margin with respect to Revolving
Credit Loans, Swing Line Loans and Term Loans will be determined pursuant
to the Pricing Grid.
"Application": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"Arranger": as defined in the definition of the term "Administrative
Agent" in this Section 1.1.
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3
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property excluding any such Disposition permitted by
Section 7.5 (other than clause (g) thereof) by the Company or any of its
Subsidiaries.
"Assignee": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
"Available Revolving Credit Commitment": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment over (b) such Lender's Revolving
Extensions of Credit; provided, that in calculating any Lender's Revolving
Extensions of Credit for the purpose of determining such Lender's
Available Revolving Credit Commitment pursuant to Section 2.9(a), the
aggregate principal amount of Swing Line Loans then outstanding shall be
deemed to be zero.
"Base CD Rate": as defined in the definition of the term "Base Rate"
in this Section 1.1.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Reference
Lender as its prime or base rate in effect at its principal office (the
Prime Rate not being intended to be the lowest rate of interest charged by
the Reference Lender in connection with extensions of credit to debtors);
"Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which
is one and the denominator of which is one minus the C/D Reserve
Percentage and (b) the C/D Assessment Rate; and "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00
A.M., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Reference Lender
from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. Any change in the Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective as of the opening of business on
the effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
<PAGE>
4
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Board of Directors": (i) in the case of a Person that is a limited
partnership, the board of directors of its corporate general partner or
any committee authorized to act therefor (or, if the general partner is
itself a limited partnership, the board of directors of such general
partner's corporate general partner or any committee authorized to act
therefor), (ii) in the case of a Person that is a corporation, the board
of directors of such Person or any committee authorized to act therefor
and (iii) in the case of any other Person, the board of directors,
management committee or similar governing body or any authorized committee
thereof for the management of the business and affairs of such Person.
"Borrowers": as defined in the Preamble hereto.
"Borrowing Date": any Business Day specified by the Borrowers as a
date on which the Borrowers request the relevant Lenders to make Loans
hereunder.
"Business": as defined in Section 4.17.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in Houston, Texas or Harrisburg, Pennsylvania are
authorized or required by law to close, except that, when used in
connection with a Eurocurrency Loan in Dollars, "Business Day" shall mean
any Business Day on which dealings in Dollars between banks may be carried
on in London, England and Houston, Texas and in the case of any
Eurocurrency Loan in any Designated Foreign Currency, a day on which
dealings in such Designated Foreign Currency between banks may be carried
on in London, England and the principal financial center of such
Designated Foreign Currency.
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of such Person and
its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP, and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any
of the foregoing.
<PAGE>
5
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurocurrency time
deposits or overnight bank deposits having maturities of one year or less
from the date of acquisition issued by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof having combined capital and surplus of not less than $500,000,000;
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Services ("S&P") or P-2 by Moody's Investors Service, Inc.
("Moody's"), or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within six
months from the date of acquisition; (d) repurchase obligations of any
Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of one year or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; or (g)
shares of money market mutual or similar funds which invest in assets
satisfying the requirements of clauses (a) through (f) of this definition
and are sponsored by a registered broker dealer or mutual fund
distributor.
"C/D Assessment Rate": for any day as applied to any Base Rate Loan,
the annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. ss. 327.4 (or any
successor provision) to the FDIC (or any successor) for the FDIC's (or
such successor's) insuring time deposits at offices of such institution in
the United States.
"C/D Reserve Percentage": for any day as applied to any Base Rate
Loan, that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board, for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of
the Board as in effect from time to time) in respect of new non-personal
time deposits in Dollars having a maturity of 30 days or more.
"Chase": Chase Bank of Texas, National Association, and its
successors.
"Check-the-Box Subsidiary": a First-Tier Foreign Subsidiary which
has elected to be treated as a partnership or to be disregarded as an
entity separate from its owner for United States Federal income tax
purposes.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date shall not be later
than May 31, 1998.
<PAGE>
6
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the sum of the Term Loan Commitment
and the Revolving Credit Commitment of such Lender.
"Commitment Fee Rate": 0.375% per annum; provided, that on and after
the first Adjustment Date occurring on or after December 26, 1998, the
Commitment Fee Rate will be determined pursuant to the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Company and which is treated as a single employer under Section 414 of the
Code.
"Company": as defined in the Preamble hereto.
"Compliance Certificate": a certificate duly executed on behalf of a
Loan Party by a Responsible Officer substantially in the form of Exhibit
B.
"Confidential Information Memorandum": the Confidential Information
Memorandum dated April 1998 and furnished to the initial Lenders.
"Consolidated Balance Sheet Test Ratio": at any date, the ratio of
(i) the sum of (x) 85% of Total Accounts Receivable, (y) 65% of Total
Inventory and (z) 50% of Total Net Property, Plant and Equipment to (ii)
Total Senior Secured Indebtedness. In calculating the ratio as at any
date, an appropriate adjustment shall be made for any assets acquired or
disposed of, and any Senior Secured Indebtedness incurred or paid or
repaid since the last date as of which financial statements have been
furnished pursuant to Section 6.1.
"Consolidated EBITDA": for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period,
the sum of (a) income tax expense and distributions to the direct and
indirect members of Holdings in lieu of taxes, (b) Consolidated Interest
Expense, non-cash interest expense not included in Consolidated Interest
Expense, amortization or writeoff of debt discount and debt issuance costs
and commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization
expense and other non-cash charges and (d) amortization of intangibles
(including goodwill) and organization costs, plus (e) the aggregate amount
of up- front or one-time fees or expenses payable in respect of Interest
Rate Protection Agreements during such period (to the extent deducted in
determining Consolidated Net Income for such period) plus (f) the amount
of unrealized foreign exchange losses (net of any gains) (or minus the
amount of unrealized foreign exchange gains (net of any losses)) minus, to
the extent included in the statement of such Consolidated Net Income for
such period, other non-cash income.
<PAGE>
7
"Consolidated Fixed Charge Coverage Ratio": for any period, the
ratio of (a) Consolidated EBITDA for such period (not taking into account
(i) any charges of up to $30,000,000 relating to facilities closings or
(ii) any fees and expenses payable to the George Group in Permitted George
Group Transactions, (iii) one-time expenses associated with inventory,
research and development and other write-ups resulting from purchase
accounting adjustments at the time of the Acquisition or any Permitted
Acquisition or (iv) reasonable expenses associated with Permitted
Acquisitions) less the aggregate amount actually paid by the Company and
its Subsidiaries in cash during such period on account of Capital
Expenditures (excluding the principal amount of Indebtedness incurred in
connection with such expenditures and any such expenditures financed with
the proceeds of any Reinvestment Deferred Amount) to (b) Consolidated
Interest Expense for such period.
"Consolidated Interest Expense": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations and any
Dealer Receivables Financing) of the Company and its Subsidiaries for such
period net of interest income (including any Dealer Receivables Financing)
with respect to all outstanding Indebtedness of the Company and its
Subsidiaries (including all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and net costs under Interest Rate Protection Agreements to the
extent such net costs are allocable to such period in accordance with
GAAP).
"Consolidated Net Income": for any period, the consolidated net
income (or loss) of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Worth": at any date, all amounts which would, in
conformity with GAAP, be included on a consolidated balance sheet of the
Company and its Subsidiaries under total invested capital at such date.
"Consolidated Total Indebtedness": at any date, the aggregate
principal amount of all Indebtedness of the Company and its Subsidiaries
at such date, determined on a consolidated basis in accordance with GAAP,
excluding any Dealer Receivables Financing.
"Continuing Directors": the members of Holdings' Board of Directors
on the Closing Date, after giving effect to the Acquisition and the other
transactions contemplated hereby, and each other member, if, in each case,
such other member's nomination for election to the Board of Directors of
Holdings is recommended by at least a majority of the then Continuing
Directors or such other member receives the vote of the Permitted
Investors in his or her election by the holders of Holdings.
"Contractual Obligation": as to any Person, any provision of any
material security issued by such Person or of any material agreement,
instrument or other undertaking to which such Person is a party or by
which it or any of its material Property is bound.
"Crane": Crane Holding Inc., a Delaware corporation.
"Dealer Receivables Financing": any "off-balance sheet" financing of
dealer obligations owing to the Company or any of its Subsidiaries, with
limited recourse to the Company and its Subsidiaries (i) on terms and
conditions substantially in accordance with the
<PAGE>
8
terms and conditions contained in Exhibit K or (ii) any other such
financing on terms and conditions reasonably satisfactory to the
Administrative Agent and the Required Lenders.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Delta Manlift": Delta Manlift SAS, a societe anonyme simplifiee
organized under the laws of France.
"Designated Foreign Currencies": the currencies set forth on
Schedule A and any other available and freely convertible foreign currency
requested by the Company and approved by the Administrative Agent and all
of the Lenders in accordance with Section 10.1(b).
"Disposition": with respect to any Property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Documentation Agent": as defined in the Preamble hereto.
"Dollar Equivalent": with respect to the principal amount of any
Eurocurrency Loan made or outstanding in any Designated Foreign Currency
or any amount in respect of any Letter of Credit denominated in any
Designated Foreign Currency, at any date of determination thereof, an
amount in Dollars equivalent to such principal amount or such other amount
calculated on the basis of the Spot Rate of Exchange.
"Dollars" and "$": dollars in lawful currency of the United States
of America.
"Domestic Subsidiary": any Subsidiary of the Company organized under
the laws of any jurisdiction within the United States of America.
"ECF Percentage": in respect of any fiscal year of the Company (or,
in the case of its 1998 fiscal year, the portion thereof after the Closing
Date), 75%; provided, that the ECF Percentage shall be reduced to 50% if
the Consolidated Fixed Charge Coverage Ratio for the period of four
consecutive fiscal quarters ending on the last day of such fiscal year is
more than 2.5 to 1.0.
"Eligible Notes Receivable": at any date, all amounts which would,
in conformity with GAAP, be set forth opposite the caption "notes
receivable" (or any like caption), to the extent arising in the ordinary
course of business, on a consolidated balance sheet of the Company and its
Subsidiaries at such date (net of reserves (to the extent not already a
net amount) and not subject to third party liens).
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or
the environment, as now or may at any time hereafter be in effect.
<PAGE>
9
"Environmental Permits": any and all permits, licenses, approvals,
registrations, notifications, exemptions, and any other aurthorization
required under any Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Base Rate": with respect to each day during each
Interest Period pertaining to a Eurocurrency Loan, the rate per annum
determined by the Administrative Agent to be the arithmetic mean (rounded
to the nearest 1/100th of 1%) of the offered rates for deposits in Dollars
or in the applicable Designated Foreign Currency, as the case may be, with
a term comparable to such Interest Period that appears on the Dow Jones
Markets screen at approximately 11:00 A.M., London time, on the second
full Business Day preceding the first day of such Interest Period (or, in
the case of United Kingdom Pounds Sterling, on the first day of such
Interest Period); provided, however, that if there shall at any time no
longer exist a Dow Jones Markets screen, "Eurocurrency Base Rate" shall
mean, with respect to each day during each Interest Period pertaining to a
Eurocurrency Loan, the rate per annum equal to the rate at which Chase is
offered deposits in Dollars or in the applicable Designated Foreign
Currency at approximately 11:00 A.M., London time, two Business Days prior
to the first day of such Interest Period in the interbank eurocurrency
market where the eurocurrency and foreign currency and exchange operations
in respect of Dollars or such Designated Foreign Currency, as the case may
be, are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of its Eurocurrency Loan to be outstanding during
such Interest Period.
"Eurocurrency Loans": Loans the rate of interest applicable to which
is based upon the Eurocurrency Rate.
"Eurocurrency Rate": with respect to each day during each Interest
Period pertaining to a Eurocurrency Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurocurrency Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurocurrency Loan, the aggregate (without duplication) of the maximum
rates (expressed as a decimal fraction) of reserve requirements in effect
on such day (including basic, supplemental, marginal and emergency
reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
"Eurocurrency Tranche": the collective reference to Eurocurrency
Loans, the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
<PAGE>
10
"Excess Cash Flow": for any fiscal year of the Company, the excess,
if any, of (a) the sum, without duplication, of (i) Consolidated EBITDA
for such fiscal year and (ii) an amount equal to the amount of all
non-cash losses or charges deducted in arriving at Consolidated Net Income
for such fiscal year minus (b) the sum, without duplication, of (i)
Consolidated Interest Expense, (ii) Restricted Payments in respect of such
fiscal year under Section 7.6(b) through (f), (iii) income tax expense and
tax distributions to members during such fiscal year, (iv) the aggregate
amount of Capital Expenditures of the Company and its Subsidiaries made
during such fiscal year (excluding the principal amount of Indebtedness
incurred pursuant to Section 7.2(i) in connection with such expenditures),
(v) the aggregate amount of all prepayments of Revolving Credit Loans and
Swing Line Loans during such fiscal year to the extent accompanying
permanent optional reductions of the Revolving Credit Commitments and all
optional prepayments of the Term Loans during such fiscal year, (vi) the
aggregate amount of all regularly scheduled principal payments of Funded
Debt (including the Term Loans) of the Company and its Subsidiaries made
during such fiscal year (other than in respect of any revolving credit
facility to the extent there is not an equivalent permanent reduction in
commitments thereunder), (vii) the aggregate amount of all payments made
in connection with Permitted George Group Transactions, (viii) non-cash
gains during such fiscal year, (ix) the aggregate amount of reasonable
expenses in connection with Permitted Acquisitions, (x) the aggregate
amount of reasonable cash expenses for one-time extraordinary or
non-recurring charges deducted in determining Consolidated Net Income and
not included in Consolidated EBITDA, (xi) an amount equal to the aggregate
net gain on the Disposition of Property by the Company and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent included in arriving at such
Consolidated Net Income and (xii) cash payments made during such fiscal
year paid with respect to non-cash items included in clause (a) above for
such fiscal year or any prior fiscal year.
"Excess Cash Flow Application Date": as defined in Section 2.12(f).
"Existing Factoring Arrangements": factoring or discounting
arrangements (i) as in effect on the date hereof or entered into in the
ordinary course of business on substantially similar terms and consistent
with past practice or (ii) on terms and conditions reasonably satisfactory
to the Administrative Agent and the Required Lenders.
"Facility": each of (a) the Term Loan Commitments and the Term Loans
made thereunder (the "Term Loan Facility") and (b) the Revolving Credit
Commitments and the extensions of credit made thereunder (the "Revolving
Credit Facility").
"Federal Funds Effective Rate": for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
<PAGE>
11
"First-Tier Foreign Subsidiary": (i) Grove Holdings France, SAS and
(ii) each Foreign Subsidiary of the Company or Grove Capital all of the
Capital Stock of which is owned by the Company or a Domestic Subsidiary.
"Foreign Subsidiary": any Subsidiary of the Company that is not a
Domestic Subsidiary.
"Foreign Pledge Agreements": the pledge agreements to be executed by
the Company, or, if applicable, a Domestic Subsidiary, substantially in
the form of Exhibit L, providing for the pledge, to the Administrative
Agent on behalf of the Lender, of 65% of the capital stock of each
First-Tier Foreign Subsidiary (other than Grove Australia) as the same may
be amended, supplemented or otherwise modified from time to time.
"Funded Debt": as to any Person, all Indebtedness of such Person
that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
from such date, including all current maturities and current sinking fund
payments in respect of such Indebtedness whether or not required to be
paid within one year from the date of its creation and, in the case of the
Company, Indebtedness in respect of the Loans.
"Funding Office": the office of the Administrative Agent set forth
in Section 10.2.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time, except that for purposes
of Section 7.1, GAAP shall be determined on the basis of such principles
in effect on the date hereof and consistent with those used in the
preparation of the most recent audited financial statements delivered
pursuant to Section 4.1(b). In the event that any "Accounting Change" (as
defined below) shall occur and such change results in a change in the
method of calculation of financial covenants, standards or terms in this
Agreement, then the Borrowers and the Administrative Agent agree to enter
into negotiations in order to amend such provisions of this Agreement so
as to equitably reflect such Accounting Changes with the desired result
that the criteria for evaluating the Borrowers' financial condition shall
be the same after such Accounting Changes as if such Accounting Changes
had not been made. Until such time as such an amendment shall have been
executed and delivered by the Borrowers, the Administrative Agent and the
Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such
Accounting Changes had not occurred. "Accounting Changes" refers to
changes in accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the Securities and Exchange Commission (or successors thereto
or agencies with similar functions).
"George Group": The George Group, Inc., a Texas corporation, and its
successors.
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or
<PAGE>
12
administrative functions of or pertaining to government (including the
National Association of Insurance Commissioners).
"Grove Australia": Grove Manlift Pty. Ltd., an Australian limited
corporation.
"Grove Capital": as defined in the Preamble hereto.
"Grove England": Grove Europe Limited, a limited company organized
under the laws of England and Wales.
"Grove France": Grove France SA, a societe anonyme organized under
the laws of France.
"Grove Germany": Deutsche Grove GmbH, a German corporation.
"Grove Investors": Grove Investors LLC, a Delaware limited liability
company, the managing member of Holdings.
"Grove Investors Debentures": as defined in Section 7.6.
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by Holdings, the Company, Grove
Capital and each Subsidiary Guarantor, substantially in the form of
Exhibit A, as the same may be amended, supplemented or otherwise modified
from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including any bank under any letter of credit) to induce the
creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other
obligations (the "primary obligations") of any other third Person (the
"primary obligor") in any manner, whether directly or indirectly,
including any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any Property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase Property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee
<PAGE>
13
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrowers in
good faith.
"Guarantors": the collective reference to Holdings and the
Subsidiary Guarantors.
"Hanson": collectively, Hanson Funding (G) Limited, a limited
company organized under the laws of England and Wales, Deutsche Grove
Corporation, a Delaware corporation, Hanson America Holdings (4) Limited,
a limited company organized under the laws of England and Wales, Grove
France, Kidde and Hanson Finance PLC, a public limited company organized
under the laws of England and Wales, all of which Persons are party to the
Purchase Agreement.
"Hedging Agreement": any Interest Rate Protection Agreement and any
other currency or commodity swap, future, option, cap or collar agreement
with (i) any Lender or (ii) any financial institution reasonably
acceptable to the Administrative Agent, to or under which any of the
Company or its Subsidiaries is a party or a beneficiary on the date hereof
or becomes a party or a beneficiary after the date hereof.
"Holdings": Grove Holdings LLC, a Delaware limited liability
company, the managing member of the Company and the owner of all of the
Capital Stock of the Company.
"Holdings Debentures": as defined in Section 5.1(b)(ii).
"Holdings Debentures Indenture": the Indenture, dated as of April
29, 1998, entered into by Holdings in connection with the issuance of the
Holdings Debentures, a substantially final draft of which has been
furnished to the Administrative Agent and an executed copy of which has
been or, on the Closing Date, will be furnished to the Administrative
Agent, together with all instruments and other agreements entered into by
the Borrowers in connection therewith.
"Holdings Mezzanine Financing": as defined in Section 2.12(a).
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services (other
than trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to Property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such Property), (e) all
Capital Lease Obligations of such Person, (f) all obligations of such
Person, contingent or otherwise, as an account party under acceptance,
letter of credit or similar facilities, (g) all Guarantee Obligations of
such Person in respect of obligations of the kind referred to in clauses
(a) through (e) above and (h) all obligations of the kind referred to in
clauses (a) through (g) above secured by (or for which the holder of such
obligation has an existing right, contingent or otherwise, to be secured
by) any Lien on Property (including accounts and contract rights) owned by
such Person, whether or not such Person has assumed or become liable for
the payment of such obligation and (i) for the purposes of Section 8(e)
only, all obligations of such Person in respect of Interest Rate
<PAGE>
14
Protection Agreements; provided that, for purposes of Section 7.1 only,
Trade Obligations and Guarantee Obligations in connection with any Dealer
Receivables Financing guaranteeing up to 10% of the amount of any loss on
any receivable that is a part of such financing shall not be considered
Indebtedness.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and
all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and
damages therefrom.
"Intercompany Loan": a loan by, on the one hand, either Borrower or
any their Domestic Subsidiaries to, on the other hand, a Foreign
Subsidiary.
"Intercompany Loan Pledge Agreement": a pledge agreement executed by
a First- Tier Foreign Subsidiary to secure an Intercompany Loan,
substantially in the form of a Foreign Pledge Agreement.
"Intercompany Note": a note executed by a Foreign Subsidiary in
favor of, as the case may be, either Borrower or one of their Domestic
Subsidiaries, substantially in the form of Exhibit J.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurocurrency Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurocurrency Loan having
an Interest Period longer than three months, each day which is three
months, or a whole multiple thereof, after the first day of such Interest
Period and the last day of such Interest Period and (d) as to any Loan
(other than any Revolving Credit Loan that is a Base Rate Loan and any
Swing Line Loan), the date of any repayment or prepayment made in respect
thereof.
"Interest Period": as to any Eurocurrency Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurocurrency Loan and ending one, two, three or six
months thereafter (or, in the case of any Eurocurrency Loan in any
Designated Foreign Currency, any period of less than one month as may be
approved by the Administrative Agent), as selected by the Borrowers in
their notice of borrowing or notice of conversion, as the case may be,
given with respect thereto; and (b) thereafter, each period commencing on
the last day of the next preceding Interest Period applicable to such
Eurocurrency Loan and ending one, two, three or six months thereafter, as
selected by the Borrowers by irrevocable notice to the Administrative
Agent not less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
<PAGE>
15
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond
the Revolving Credit Termination Date or beyond the date final payment is
due on the Term Loans, as the case may be, shall end on the Revolving
Credit Termination Date or such due date, as applicable;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Company shall select Interest Periods so as not to
require a scheduled payment of any Eurocurrency Loan during an Interest
Period for such Loan.
"Interest Rate Protection Agreement": any interest rate protection
agreement, interest rate future, interest rate option, interest rate cap
or collar or other interest rate hedge arrangement with (i) any Lender or
(ii) any financial institution reasonably acceptable to the Administrative
Agent, to or under which any of the Company or its Subsidiaries is a party
or a beneficiary on the date hereof or becomes a party or a beneficiary
after the date hereof.
"Issuing Lender": Chase, in its capacity as issuer of any Letter of
Credit.
"Keystone": Keystone, Inc., a Texas corporation.
"Kidde": Kidde Industries, Inc., a Delaware corporation.
"L/C Commitment": $50,000,000.
"L/C Fee Payment Date": the last day of each March, June, September
and December and the last day of the Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters
of Credit which have not then been reimbursed pursuant to Section 3.5
(including, in the case of Letters of Credit then outstanding in any
Designated Foreign Currency, the Dollar Equivalent of the aggregate
principal amount thereof).
"L/C Participants": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
<PAGE>
16
"Lenders": as defined in the Preamble hereto.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including
any conditional sale or other title retention agreement and any capital
lease having substantially the same economic effect as any of the
foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents and the
Notes.
"Loan Parties": Holdings, the Company, Grove Capital and each
Subsidiary of the Company which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the
Term Loans or the Total Revolving Extensions of Credit, as the case may
be, outstanding under such Facility (or, in the case of the Revolving
Credit Facility, prior to any termination of the Revolving Credit
Commitments, the holders of more than 50% of the Total Revolving Credit
Commitments).
"Majority Revolving Credit Facility Lenders": the Majority Facility
Lenders in respect of the Revolving Credit Facility.
"Material Adverse Effect": a material adverse effect on (a) the
Acquisition, (b) the business, operations, property or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole or (c) the validity or enforceability of this Agreement or any of
the other Loan Documents or the rights or remedies of the Administrative
Agent or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Company
and/or its Subsidiaries, not including such amounts reserved for
environmental matters in accordance with GAAP as of December 27, 1997, in
excess of $7,000,000, for remedial costs, compliance costs, compensatory
damages, punitive damages, fines, penalties or any combination thereof.
"Material Subsidiary": each Domestic Subsidiary of the Company (i)
listed on part A of Schedule B or (ii) created after the date hereof, at
any date of determination, (a) whose total assets at the last day of the
most recent fiscal period for which Section 6.1 financials have been
delivered were equal to or greater than 5% of the consolidated total
assets of the Company at such date or (b) whose gross revenues for such
most recent fiscal period for which Section 6.1 financials have been
delivered were equal to or greater than 5% of the consolidated gross
revenues of the Company for such period, in each case determined in
accordance with GAAP.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
asbestos, polychlorinated biphenyls, urea-
<PAGE>
17
formaldehyde insulation, and any hazardous or toxic substances, materials
or wastes, defined or regulated as such in or under or that could result
in liability under any Environmental Law.
"Mortgaged Properties": the real properties listed on Schedule 1.1B
and any real property which may, after the Closing Date, become the
subject of a Mortgage in favor of the Administrative Agent pursuant to
Section 6.10(b), as to which the Administrative Agent for the benefit of
the Lenders shall be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made from time
to time by any Loan Party in favor of, or for the benefit of, the
Administrative Agent for the benefit of the Lenders, substantially in the
form of Exhibit D (with such changes thereto as shall be advisable under
the law of the jurisdiction in which such mortgage or deed of trust is to
be recorded), as the same may be amended, supplemented or otherwise
modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of (i) attorneys'
fees, accountants' fees, investment banking fees, (ii) amounts required to
be applied to the repayment of Indebtedness secured by a Lien expressly
permitted hereunder on any asset which is the subject of such Asset Sale
or Recovery Event (other than any Lien pursuant to a Security Document),
(iii) other customary fees and expenses actually incurred in connection
therewith and (iv) taxes paid or distributed pursuant to Section 7.6(b) or
reasonably estimated to be payable or distributable pursuant to Section
7.6(b) as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements) and (b) in
connection with any issuance or sale of equity securities or debt
securities or instruments or the incurrence of loans, the cash proceeds
received from such issuance or incurrence, net of attorneys' fees,
investment banking fees, accountants' fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith.
"Non-Excluded Taxes": as defined in Section 2.20(a).
"Non-U.S. Lender": as defined in Section 2.20(d).
"Notes": the collective reference to any promissory note evidencing
Loans.
"Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Loans and Reimbursement
Obligations and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-
filing or post-petition interest is allowed in such proceeding) the Loans
and all other obligations and liabilities of the Borrowers to the
Administrative Agent or to any Lender (or, in the case of Hedging
Agreements, any affiliate of any Lender), whether direct or indirect,
absolute or contingent, due or to become
<PAGE>
18
due, or now existing or hereafter incurred, which may arise under, out of,
or in connection with, this Agreement, any other Loan Document, the
Letters of Credit, any Hedging Agreement entered into with any Lender or
any affiliate of any Lender or any other document made, delivered or given
in connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrowers pursuant hereto) or otherwise.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement.
"Participant": as defined in Section 10.6(b).
"Payment Office": the office of the Administrative Agent set forth
in Section 10.2.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisition": any acquisition of a Person, division or
line of business in the same or related line of business by the Company or
any of its Subsidiaries for a purchase price (including any Indebtedness
assumed and continuing outstanding), together with the aggregate purchase
price paid in connection with other such acquisitions since the Closing
Date, of up to an amount of $50,000,000; provided that at any time of such
acquisition, based upon the assumption that such acquisition and any
additional Indebtedness incurred to finance such acquisition had been
consummated and incurred at the beginning of the most recently completed
four fiscal quarter period, and taking into account the earnings (or loss)
of the acquired Person, division or business line during such period and,
anticipated cost savings resulting from such acquisition, the Company
shall, based upon pro forma financial statements reviewed (including as to
the anticipated cost savings) by the Company's independent public
accountants, be in pro forma compliance with the provisions of Section 7.1
and no Default or Event of Default shall have occurred and be continuing.
"Permitted George Group Transactions": consulting arrangements with
the George Group and its affiliates and any payments for fees and expenses
thereunder; provided that no Default or Event of Default shall have
occurred and be continuing and provided further that (i) such payments
shall not exceed $10,000,000 in any fiscal year of the Company and shall
not exceed $25,000,000 cumulatively at any time during five years from the
Closing Date (with each such amount being subject to reasonable adjustment
by the Company with the consent of the Administrative Agent (not to be
unreasonably withheld) in connection with any Permitted Acquisition) and
(ii) after the fifth anniversary of the Closing Date, any payments to the
George Group must be approved by the Administrative Agent.
"Permitted Investors": (i) Keystone, FW Grove Coinvestors, L.P.,
Strategic, George Group Employee Partners--Grove, L.P., Michael George and
their respective Affiliates on the date of this Agreement and (ii) any of
the Permitted Transferees of the Persons referred to in clause (i).
1
<PAGE>
19
"Permitted Transferee": with respect to any Person, in the case of
any Person who is a natural person, (a) such individual's spouse or
children, any trust for such individual's benefit or the benefit of such
individual's spouse or children, or any corporation, partnership, limited
liability company or similar entity in which the direct and beneficial
owner or owners of 80% or more of the equity interest is such Person or
such individual's spouse or children or any trust for the benefit of such
Persons; and (b) the heirs, executors, administrators, or personal
representatives upon death of such Person or upon the incompetence or
disability of such Person for purposes of the protection and management of
such individual's assets.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Prime Rate": as defined in the definition of the term "Base Rate"
in this Section 1.1.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Properties": as defined in Section 4.17.
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including Capital Stock.
"Purchase Agreement": the Stock and Asset Purchase Agreement, dated
as of March 10, 1998, among the Company and Hanson.
"Recovery Event": any settlement of or payment equal to or greater
than $1,000,000 in respect of any property or casualty insurance claim or
any condemnation proceeding arising after the Closing Date relating to any
asset of the Company or any of its Subsidiaries.
"Reference Lender": the Administrative Agent.
"Refunded Swing Line Loans": as defined in Section 2.7.
"Refunding Date": as defined in Section 2.7.
"Register": as defined in Section 10.6(d).
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20
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of the Borrowers to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by the Company or any of
its Subsidiaries in connection therewith which are not applied to prepay
the Term Loans or reduce the Revolving Credit Commitments pursuant to
Section 2.12(c) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Company has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing
and that the Company (directly or indirectly through a Subsidiary) intends
and expects to use all or a specified portion of the Net Cash Proceeds of
an Asset Sale or Recovery Event to acquire assets useful in its business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Company's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring one year after such
Reinvestment Event and (b) the date on which the Company shall have
determined not to, or shall have otherwise ceased to, acquire assets
useful in the Company's business with all or any portion of the relevant
Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty day notice period
is waived under regulations promulgated under Title IV of ERISA.
"Required Lenders": the holders of more than 50% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of (i) the
aggregate unpaid principal amount of the Term Loans and (ii) the Total
Revolving Credit Commitments or, if the Revolving Credit Commitments have
been terminated, the Total Revolving Extensions of Credit.
"Required Prepayment Lenders": the Majority Facility Lenders in
respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each
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21
case applicable to or binding upon such Person or any of its material
Property or to which such Person or any of its Property is subject.
"Responsible Officer": the chief executive officer, president or
chief financial officer of the Company or any officer at the level of vice
president or higher, but in any event, with respect to financial matters,
the chief financial officer, treasurer or comptroller of the Company.
"Restricted Payments": as defined in Section 7.6.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans and participate in
Swing Line Loans and Letters of Credit, in an aggregate principal and/or
face amount not to exceed the amount set forth under the heading
"Revolving Credit Commitment" opposite such Lender's name on Schedule
1.1A, as the same may be changed from time to time pursuant to the terms
hereof. The original amount of the Total Revolving Credit Commitments is
$125,000,000.
"Revolving Credit Commitment Period": the period from and including
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Lender": each Lender which has a Revolving Credit
Commitment or which has made Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Percentage": as to any Revolving Credit Lender at
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the Total Revolving Credit Commitments (or, at any
time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Revolving Credit Loans then outstanding (including, in the case
of Revolving Credit Loans in any Designated Foreign Currency, the Dollar
Equivalent thereof) constitutes of the aggregate principal amount of the
Revolving Credit Loans then outstanding (including, in the case of
Revolving Credit Loans then outstanding in any Designated Foreign
Currency, the Dollar Equivalent of the aggregate principal amount
thereof)).
"Revolving Credit Termination Date": April 29, 2005.
"Revolving Extensions of Credit": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding
(including, in the case of Revolving Credit Loans then outstanding in any
Designated Foreign Currency, the Dollar Equivalent of the aggregate
principal amount thereof), (b) such Lender's Revolving Credit Percentage
of the L/C Obligations then outstanding and (c) such Lender's Revolving
Credit Percentage of the aggregate principal amount of Swing Line Loans
then outstanding.
"Sale/Leaseback Transactions": as defined in Section 7.11.
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22
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Foreign Pledge Agreements, the Mortgages and all
other security documents hereafter delivered to the Administrative Agent
granting a Lien on any Property of any Person to secure the obligations
and liabilities of any Loan Party under any Loan Document.
"Senior Leverage Ratio": as of the last day of any period of four
consecutive fiscal quarters, the ratio of (a) Total Senior Secured
Indebtedness on such day to (b) the sum of (i) Consolidated Total
Indebtedness as of such day and (ii) Consolidated Net Worth as of such
day.
"Senior Subordinated Note Indenture": the Indenture, dated as of
April 29, 1998, entered into by the Borrowers in connection with the
issuance of the Senior Subordinated Notes, a substantially final draft of
which has been furnished to the Administrative Agent and an executed copy
of which has been or, on the Closing Date, will be furnished to the
Administrative Agent, together with all instruments and other agreements
entered into by the Borrowers in connection therewith, as the same may be
amended, supplemented or otherwise modified from time to time in
accordance with Section 7.9.
"Senior Subordinated Notes": the senior subordinated notes of the
Borrowers in the aggregate amount of $225,000,000 due 2008 issued on the
Closing Date pursuant to the Senior Subordinated Note Indenture and any
substantially identical exchange notes issued pursuant to the Senior
Subordinated Note Indenture.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all stated liabilities and identified contingent liabilities,
(b) the present fair saleable value of the assets of such Person will, as
of such date, be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably
small amount of capital with which to conduct its business, and (d) such
Person should be able to pay its debts as they mature. For purposes of
this definition, (i) "debt" means liability on a "claim", and (ii) "claim"
means any (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (y) right
to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Specified Change of Control": a "Change of Control" as defined in
the Senior Subordinated Note Indenture.
"Specified Rate": the maximum marginal rate of federal, state and
local income tax applicable to income of the relevant type for a resident
of New York City or California, whichever is greater; provided that in no
event shall the Specified Rate be higher than that provided for pursuant
to the definition of Tax Amount in the Senior Subordinated Notes
Indenture. As of the date hereof, the Specified Rate applicable to
ordinary income is 47.6%.
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23
In the event of any material change to the Specified Rate, the Company
will notify the Administrative Agent of such change and provide in
reasonable detail the basis and computation of the new Specified Rate.
"Spot Rate of Exchange": with respect to any Designated Foreign
Currency, at any date of determination thereof, the spot rate of exchange
in London that appears on the display page applicable to such Designated
Foreign Currency on the Dow Jones Markets System Incorporated Service (or
such other page as may replace such page on such service for the purpose
of displaying the spot rate of exchange in London); provided that if there
shall at any time no longer exist such a page on such service, the spot
rate of exchange shall be determined by reference to another similar rate
publishing service selected by the Administrative Agent and if no such
similar rate publishing service is available by reference to the published
rate of the Administrative Agent in effect at such date for similar
commercial transactions.
"Strategic": F.W. Strategic Partners, L.P., a Delaware limited
partnership.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the Board of Directors
or other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company.
"Subsidiary Guarantor": each Material Subsidiary of the Company
other than Grove Capital.
"Swing Line Commitment": the obligation of the Swing Line Lender to
make Swing Line Loans pursuant to Section 2.6 in an aggregate principal
amount at any one time outstanding not to exceed $10,000,000.
"Swing Line Lender": Chase, in its capacity as the lender of Swing
Line Loans.
"Swing Line Loans": as defined in Section 2.6.
"Swing Line Participation Amount": as defined in Section 2.7.
"Syndication Agent": as defined in the Preamble hereto.
"Term Loan": as defined in Section 2.1.
"Term Loan Commitment": as to any Lender, the obligation of such
Lender, if any, to make a Term Loan to the Borrowers hereunder in a
principal amount not to exceed the amount set forth under the heading
"Term Loan Commitment" opposite such Lender's name on Schedule 1.1A. The
original aggregate amount of the Term Loan Commitments is $200,000,000.
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24
"Term Loan Lender": each Lender which has a Term Loan Commitment or
which has made a Term Loan.
"Term Loan Percentage": as to a Term Loan Lender at any time, the
percentage which such Lender's Term Loan Commitment then constitutes of
the aggregate Term Loan Commitments (or, at any time after the Closing
Date, the percentage which the aggregate principal amount of such Lender's
Term Loans then outstanding constitutes of the aggregate principal amount
of the Term Loans then outstanding).
"Three-Month Secondary CD Rate": as defined in the definition of the
term "Base Rate" in this Section 1.1.
"Total Accounts Receivable": at any date, the sum of (i) all amounts
which would, in conformity with GAAP, be set forth opposite the caption
"trade receivables" (or any like caption) on a consolidated balance sheet
of the Company and its Subsidiaries at such date (net of reserves (to the
extent not already net of reserves) and not subject to third party liens)
and (ii) Eligible Notes Receivable.
"Total Inventory": at any date, all amounts which would, in
conformity with GAAP, be set forth opposite the caption "inventories" (or
any like caption) on a consolidated balance sheet of the Company and its
Subsidiaries at such date (net of reserves (to the extent not already net
of reserves) and not subject to third party liens).
"Total Net Property, Plant and Equipment": at any date, all amounts
which would, in conformity with GAAP, be set forth opposite the caption
"property, plant and equipment" (or any like caption) on a consolidated
balance sheet of the Company and its Subsidiaries at such date (net of
reserves and not subject to third party liens).
"Total Revolving Credit Commitments": at any time, the aggregate
amount of the Revolving Credit Commitments at such time.
"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders at such time.
"Total Senior Secured Indebtedness": the aggregate principal amount
of the Indebtedness of the Company and its Subsidiaries under this
Agreement or which is secured by a Lien, except for (a) the Senior
Subordinated Notes, (b) any Dealer Receivables Financing, (c) the Existing
Factoring Arrangement and (d) any other Indebtedness which is subordinated
in right of payment to the Loans and other Indebtedness hereunder.
"Trade Obligations": as defined in Section 7.2(l).
"Transferee": as defined in Section 10.15.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurocurrency Loan.
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25
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than (x) directors' qualifying shares
required by law and (y) Capital Stock required to be held by a second
shareholder pursuant to the laws of France in an amount not to exceed
one-tenth of 1% of the outstanding Capital Stock) is owned by such Person
directly and/or through other Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that
is a Wholly Owned Subsidiary of the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Holdings, the Company and its Subsidiaries not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The words
include, includes and including shall be deemed to be followed by the phrase
"without limitation".
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions
hereof, each Term Loan Lender severally agrees to make a term loan (a "Term
Loan") to the Borrowers in Dollars on the Closing Date in a principal amount
equal to the Term Loan Commitment of such Lender. The Term Loans may from time
to time be Eurocurrency Loans or Base Rate Loans, as determined by the Borrowers
and notified to the Administrative Agent in accordance with Sections 2.2 and
2.13.
2.2 Procedure for Term Loan Borrowing. The Borrowers shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 11:00 A.M., Houston, Texas time, one Business Day
prior to the anticipated Closing Date) requesting that the Term Loan Lenders
make the Term Loans on the Closing Date and specifying the amount to be
borrowed. The Term Loans made on the Closing Date shall initially be Base Rate
Loans, and no Term Loan, without the consent of the Administrative Agent, may be
converted into or continued as a Eurocurrency Loan having an Interest Period in
excess of one month prior to the date which is 60
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26
days after the Closing Date. Upon receipt of such notice the Administrative
Agent shall promptly notify each Term Loan Lender thereof. Not later than 1:00
P.M., Houston, Texas time, on the Closing Date each Term Loan Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the Term Loan to be made by such Lender.
The Administrative Agent shall credit the account of the Borrowers on the books
of the Funding Office with the aggregate of the amounts made available to the
Administrative Agent by the Term Loan Lenders and in like funds as received by
the Administrative Agent.
2.3 Repayment of Term Loans. The Term Loan of each Term Loan Lender
shall mature in 16 consecutive semiannual installments, commencing on October
29, 1998, with the amount payable on each date set forth below for all the Term
Loans equal to the amount set forth below opposite such date:
Date Amount
October 29, 1998 $ 1,000,000
April 29, 1999 1,000,000
October 29, 1999 1,000,000
April 29, 2000 1,000,000
October 29, 2000 1,000,000
April 29, 2001 1,000,000
October 29, 2001 1,000,000
April 29, 2002 1,000,000
October 29, 2002 1,000,000
April 29, 2003 1,000,000
October 29, 2003 1,000,000
April 29, 2004 1,000,000
October 29, 2004 44,000,000
April 29, 2005 44,000,000
October 29, 2005 50,000,000
April 29, 2006 50,000,000
2.4 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrowers from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the sum of (i) the L/C Obligations then outstanding and
(ii) the aggregate principal amount of the Swing Line Loans then outstanding,
does not exceed the amount of such Lender's Revolving Credit Commitment,
provided that no Lender shall make any Revolving Credit Loan in any Designated
Foreign Currency if, after giving effect to the making of such Revolving Credit
Loan, the Dollar Equivalent of the then outstanding Revolving Credit Loans and
L/C Obligations in any Designated Foreign Currencies would exceed $35,000,000
(it being understood and agreed that the Administrative Agent shall calculate
the Dollar Equivalent of the then outstanding Revolving Credit Loans in any
Designated Foreign Currency on the date on which the Borrowers have given the
Administrative Agent a notice of borrowing with respect to any Revolving Credit
Loan for purposes of determining compliance with this section). During the
Revolving Credit Commitment Period the
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27
Borrowers may use the Revolving Credit Commitments by borrowing, prepaying the
Revolving Credit Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof.
(b) The Revolving Credit Loans may be made in Dollars or any
Designated Foreign Currency and may from time to time be (i) Eurocurrency Loans,
(ii) in the case of Revolving Credit Loans in Dollars, Base Rate Loans or (iii)
a combination thereof, as determined by the Borrowers and notified to the
Administrative Agent in accordance with Sections 2.5 and 2.13, provided that no
Revolving Credit Loan shall be made as a Eurocurrency Loan after the day that is
one month prior to the Revolving Credit Termination Date.
(c) The Borrowers shall repay all outstanding Revolving Credit Loans
on the Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. The Borrowers may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrowers shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 12:00 Noon, Houston, Texas time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Revolving Credit Loans are to be initially Eurocurrency Loans made in
Dollars, or (b) four Business Days prior to the requested Borrowing Date, if all
or any part of the requested Revolving Credit Loans are to be initially
Eurocurrency Loans made in any Designated Foreign Currency or (c) one Business
Day prior to the requested Borrowing Date, in the case of Base Rate Loans,
specifying (i) the amount and Type of Revolving Credit Loans to be borrowed,
(ii) the requested Borrowing Date and (iii) in the case of Eurocurrency Loans,
the respective amounts of each such Type of Loan, the respective lengths of the
initial Interest Period therefor and, if the Eurocurrency Loans in respect of
such borrowing are to be made entirely or partly in any Designated Foreign
Currency, the Designated Foreign Currency thereof. Any Revolving Credit Loans
made on the Closing Date shall initially be Base Rate Loans, and no Revolving
Credit Loan may be made as, converted into or continued as a Eurocurrency Loan
having an Interest Period in excess of one month prior to the date which is 60
days after the Closing Date. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (x) in the case of Base Rate Loans,
$1,000,000 or a whole multiple thereof (or, if the then aggregate Available
Revolving Credit Commitments are less than $1,000,000, such lesser amount) and
(y) in the case of Eurocurrency Loans (or, in the case of Eurocurrency Loans to
be made in any Designated Foreign Currency, the approximate Dollar Equivalent of
the principal amount thereof shall be in an amount equal to), $5,000,000 or a
whole multiple of $1,000,000 in excess thereof; provided, that the Swing Line
Lender may request, on behalf of the Borrowers, borrowings under the Revolving
Credit Commitments which are Base Rate Loans in other amounts pursuant to
Section 2.7. Upon receipt of any such notice from the Borrowers, the
Administrative Agent shall promptly notify each Revolving Credit Lender thereof.
Each Revolving Credit Lender will make the amount of its pro rata share of each
borrowing available to the Administrative Agent for the account of the Borrowers
at the Funding Office prior to 12:00 Noon, Houston, Texas time (except with
respect to the Closing Date in which case such amounts will be made available by
10:00 A.M. Houston, Texas, Time) on the Borrowing Date requested by the
Borrowers in Dollars or the applicable Designated Foreign Currency and in funds
immediately available to the Administrative Agent. Such borrowing will then be
made available to the Borrowers by the Administrative Agent crediting the
account of the Borrowers on the books of the Funding Office with the aggregate
of the amounts made available to the Administrative Agent by the Revolving
Credit Lenders and in like funds as received by the Administrative Agent.
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2.6 Swing Line Commitment. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make a portion of the credit otherwise
available to the Borrowers under the Revolving Credit Commitments from time to
time during the Revolving Credit Commitment Period by making swing line loans
("Swing Line Loans") to the Borrowers in Dollars; provided that (i) the
aggregate principal amount of Swing Line Loans outstanding at any time shall not
exceed the Swing Line Commitment then in effect (notwithstanding that the Swing
Line Loans outstanding at any time, when aggregated with the Swing Line Lender's
other outstanding Revolving Credit Loans hereunder, may exceed the Swing Line
Commitment then in effect) and (ii) the Borrowers shall not request, and the
Swing Line Lender shall not make, any Swing Line Loan if, after giving effect to
the making of such Swing Line Loan, the aggregate amount of the Available
Revolving Credit Commitments would be less than zero. During the Revolving
Credit Commitment Period, the Borrowers may use the Swing Line Commitment by
borrowing, repaying and reborrowing, all in accordance with the terms and
conditions hereof. Swing Line Loans shall be Base Rate Loans only and shall not
be entitled to be converted into Eurocurrency Loans.
(b) The Borrowers shall repay all outstanding Swing Line Loans on
the Revolving Credit Termination Date.
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line
Loans. (a) Whenever the Borrowers desire that the Swing Line Lender make Swing
Line Loans they shall give the Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swing Line Lender not later than 1:00 P.M., Houston, Texas time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date (which shall be a Business Day during the Revolving Credit
Commitment Period), Each borrowing under the Swing Line Commitment shall be in
an amount equal to $100,000 or a whole multiple thereof. Not later than 3:00
P.M., Houston, Texas time, on the Borrowing Date specified in a notice in
respect of Swing Line Loans, the Swing Line Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the amount of the Swing Line Loan to be made by the Swing Line
Lender. On such Borrowing Date, the Administrative Agent shall credit the
account of the Borrowers on the books of the Funding Office with the aggregate
of the amounts made available to the Administrative Agent by the Swing Line
Lender and in like funds as received by the Administrative Agent.
(b) The Swing Line Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrowers (which hereby
irrevocably direct the Swing Line Lender to act on their behalf), on one
Business Day's notice given by the Swing Line Lender no later than 12:00 Noon,
Houston, Texas time, request each Revolving Credit Lender to make, and each
Revolving Credit Lender hereby agrees to make, a Revolving Credit Loan, in an
amount equal to such Revolving Credit Lender's Revolving Credit Percentage of
the aggregate amount of the Swing Line Loans (the "Refunded Swing Line Loans")
outstanding on the date of such notice, to repay the Swing Line Lender. Each
Revolving Credit Lender shall make the amount of such Revolving Credit Loan
available to the Administrative Agent at the Funding Office in immediately
available funds, not later than 10:00 A.M., Houston, Texas time, one Business
Day after the date of such notice. The proceeds of such Revolving Credit Loans
shall be immediately applied by the Swing Line Lender to repay the Refunded
Swing Line Loans. The Borrowers irrevocably authorize the Swing Line Lender to
charge the Borrowers' account with the Administrative Agent (up to the amount
available in each such account) in order to immediately
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29
pay the amount of such Refunded Swing Line Loans to the extent amounts received
from the Revolving Credit Lenders are not sufficient to repay in full such
Refunded Swing Line Loans.
(c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(b), one of the events described in
Section 8(f) shall have occurred and be continuing with respect to the Borrowers
or if for any other reason, as determined by the Swing Line Lender in its sole
discretion, Revolving Credit Loans may not be made as contemplated by Section
2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit
Loan was to have been made pursuant to the notice referred to in Section 2.7(b)
(the "Refunding Date"), purchase for cash an undivided participating interest in
an amount equal to (i) its Revolving Credit Percentage times (ii) the aggregate
principal amount of Swing Line Loans then outstanding which were to have been
repaid with such Revolving Credit Loans (the "Swing Line Participation Amount").
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's Swing Line Participation Amount,
the Swing Line Lender receives any payment on account of the Swing Line Loans,
the Swing Line Lender will distribute to such Lender its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's participating interest
was outstanding and funded and, in the case of principal and interest payments,
to reflect such Lender's pro rata portion of such payment if such payment is not
sufficient to pay the principal of and interest on all Swing Line Loans then
due); provided, however, that in the event that such payment received by the
Swing Line Lender is required to be returned, such Revolving Credit Lender will
return to the Swing Line Lender any portion thereof previously distributed to it
by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.7(b) and to purchase participating interests pursuant
to Section 2.7(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including (i) any setoff, counterclaim, recoupment, defense
or other right which such Revolving Credit Lender or the Borrowers may have
against the Swing Line Lender, the Borrowers or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default or an Event of
Default or the failure to satisfy any of the other conditions specified in
Section 5; (iii) any adverse change in the condition (financial or otherwise) of
the Borrowers; (iv) any breach of this Agreement or any other Loan Document by
the Borrowers, any other Loan Party or any other Revolving Credit Lender; or (v)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing.
2.8 Repayment of Loans; Evidence of Debt. (a) The Borrowers jointly
and severally hereby unconditionally promise to pay to the Administrative Agent
for the account of the appropriate Revolving Credit Lender or Term Loan Lender,
as the case may be, (i) the then unpaid principal amount of each Revolving
Credit Loan of such Revolving Credit Lender on the Revolving Credit Termination
Date (or such earlier date on which the Loans become due and payable pursuant to
Section 8), (ii) the then unpaid principal amount of each Swing Line Loan of
such Swing Line Lender on the Revolving Credit Termination Date (or such earlier
date on which the Loans become due and payable pursuant to Section 8) and (iii)
the principal amount of each Term Loan of such Term Loan Lender in installments
according to the amortization schedule set forth in Section 2.3 (or on such
earlier date on which the Loans become due and payable pursuant to Section 8).
The Borrowers hereby further agree to pay interest on the unpaid principal
amount of the Loans from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth in
Section 2.15.
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30
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrowers to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent, on behalf of the Borrowers, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrowers to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrowers and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrowers to repay (with applicable interest) the Loans made
to the Borrowers by such Lender in accordance with the terms of this Agreement.
(e) The Borrowers agree that, upon the request to the Administrative
Agent by any Lender, the Borrowers will execute and deliver to such Lender a
promissory note of the Borrowers evidencing any Term Loans, Revolving Credit
Loans or Swing Line Loans, as the case may be, of such Lender, substantially in
the forms of Exhibit G-1, G-2 or G-3, respectively, with appropriate insertions
as to date and principal amount.
2.9 Commitment Fees, etc. (a) The Borrowers jointly and severally
agree to pay to the Administrative Agent for the account of each Revolving
Credit Lender a commitment fee for the period from and including the Closing
Date to the last day of the Revolving Credit Commitment Period, computed at the
Commitment Fee Rate on the average daily amount of the Available Revolving
Credit Commitment of such Lender during the period, payable quarterly in arrears
on the last day of each March, June, September and December and on the Revolving
Credit Termination Date, commencing on the first of such dates to occur after
the date hereof.
(b) The Borrowers jointly and severally agree to pay to the
Administrative Agent, for its own account, the fees in the amounts and on the
dates previously agreed to in the letter dated March 6, 1998 among Keystone, the
Company, The Chase Manhattan Bank and Chase Securities, Inc.
2.10 Termination or Reduction of Revolving Credit Commitments. The
Borrowers shall have the right, upon not less than three Business Days' notice
to the Administrative Agent, to terminate the Revolving Credit Commitments or,
from time to time, to reduce the amount of the Revolving Credit Commitments;
provided that no such termination or reduction of Revolving Credit Commitments
shall be permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans and Swing Line Loans made on the effective date thereof,
the Total Revolving Extensions of Credit would exceed the Total Revolving Credit
Commitments. Any such reduction shall be in an
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31
amount equal to $1,000,000, or a whole multiple thereof, and shall reduce
permanently the Revolving Credit Commitments then in effect.
2.11 Optional Prepayments. The Borrowers may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon at least three Business Days' prior irrevocable notice by the Borrowers to
the Administrative Agent (in the case of Eurocurrency Loans outstanding in
Dollars), at least four Business Days' irrevocable notice by the Borrowers to
the Administrative Agent (in the case of Eurocurrency Loans outstanding in any
Designated Foreign Currency), at least one Business Day prior irrevocable notice
by the Borrowers to the Administrative Agent (in the case of Base Rate Loans
other than Swing Line Loans) or same- day irrevocable notice by the Borrowers to
the Administrative Agent (in the case of Swing Line Loans), which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurocurrency Loans or Base Rate Loans; provided, that if a Eurocurrency Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrowers shall also pay any amounts owing pursuant to Section
2.21. Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with (except in the case of Revolving Credit Loans which are Base Rate
Loans and Swing Line Loans) accrued interest to such date on the amount prepaid.
Partial prepayments of Term Loans and Revolving Credit Loans shall be in an
aggregate principal amount (or, in the case of Eurocurrency Loans outstanding in
any Designated Foreign Currency, the Dollar Equivalent of an approximate
aggregate principal amount thereof) of $1,000,000 or a whole multiple thereof.
Partial prepayments of Swing Line Loans shall be in an aggregate principal
amount of $100,000 or a whole multiple thereof. Partial prepayments of the
Revolving Credit Loans shall (unless the Borrowers otherwise direct during a
time when no Default or Event of Default has occurred and is continuing) be
applied, first, to payment of the Swing Line Loans then outstanding and second,
to payment of the Revolving Credit Loans then outstanding.
2.12 Mandatory Prepayments and Commitment Reductions. (a) Unless the
Required Prepayment Lenders shall otherwise agree, if any Capital Stock shall,
subsequent to the Closing Date, be issued by Holdings, the Company or any of its
Subsidiaries (excluding any issuance of Capital Stock (x) to management of
Holdings, the Company or a subsidiary (including in connection with the exercise
of stock options) or (y) pursuant to Section 7.5(e) or (z) where the Net Cash
Proceeds thereof do not exceed $1,000,000 in any fiscal year), an amount equal
to 50% of the Net Cash Proceeds thereof shall be applied on the date of such
issuance or incurrence (or within two days after such date if the provisions of
the succeeding paragraph (d) are complied with) toward the prepayment of the
Term Loans and the reduction of the Revolving Credit Commitments as set forth in
Section 2.12(f); provided that, solely for the purpose of replacing an
equivalent portion of Capital Stock of Holdings on the Closing Date, Holdings
shall be entitled to issue, without any application of any Net Cash Proceeds
thereof under this Section 2.12, on terms and conditions and with holders
reasonably satisfactory to the Administrative Agent, on or prior to the date six
months after the Closing Date, up to $50,000,000 in Net Cash Proceeds of
mezzanine financing (the "Holdings Mezzanine Financing").
(b) Unless the Required Prepayment Lenders shall otherwise agree,
if, subsequent to the Closing Date, any Indebtedness is incurred by Holdings,
the Company or any of its Subsidiaries (excluding any Indebtedness incurred in
accordance with Section 7.2 as in effect on the date of this Agreement), an
amount equal to 100% of the Net Cash Proceeds thereof shall be applied on the
date of such issuance or incurrence (or within two days after such date if the
provisions of the succeeding
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32
paragraph (d) are complied with) toward the prepayment of the Term Loans and the
reduction of the Revolving Credit Commitments as set forth in Section 2.12(f).
(c) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date the Company or any of its Subsidiaries shall receive Net Cash
Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof, an amount equal to 100% of such
Net Cash Proceeds shall be applied on such date (or within two days after such
date if the provisions of the succeeding paragraph (d) are complied with) toward
the prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.12(f); provided, that, notwithstanding the
foregoing, (i) the aggregate Net Cash Proceeds of Asset Sales and Recovery
Events that may be excluded from the foregoing requirement pursuant to a
Reinvestment Notice shall not exceed $50,000,000 in any fiscal year of the
Company, (ii) on each Reinvestment Prepayment Date, an amount equal to the
Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayment of the Term Loans and the reduction of
the Revolving Credit Commitments as set forth in Section 2.12(f) and (iii) the
aggregate of all Reinvestment Deferred Amounts not applied toward one such
prepayment or reduction shall not at any one time exceed $50,000,000.
(d) Provided that the Borrowers deposit the proceeds received by
them pursuant to the circumstances giving rise to the requirement to make a
prepayment pursuant to any of the preceding paragraphs (a), (b) or (c) with the
Administrative Agent, for the benefit of the Lenders, in a cash collateral
account, the Borrowers may have until the second succeeding day following the
receipt of such proceeds to make the prepayment required by any such paragraph.
The Borrowers hereby grant to the Administrative Agent, for the benefit of the
Lenders, a security interest in all amounts from time to time on deposit in such
cash collateral account and expressly waive all rights (which rights the
Borrowers hereby acknowledge and agree are vested exclusively in the
Administrative Agent) to exercise dominion or control over any such amounts.
(e) Unless the Required Prepayment Lenders shall otherwise agree,
if, for any fiscal year of the Company, commencing with the fiscal year ending
September 30, 1999, there shall be Excess Cash Flow, the Borrowers shall, on the
relevant Excess Cash Flow Application Date, apply the ECF Percentage of such
Excess Cash Flow toward the prepayment of the Term Loans as set forth in Section
2.12(f). Each such prepayment and commitment reduction shall be made on a date
(an "Excess Cash Flow Application Date") no later than five days after the
earlier of (i) the date on which the financial statements of the Company
referred to in Section 6.1(a), for the fiscal year with respect to which such
prepayment is made, are required to be delivered to the Lenders and (ii) the
date such financial statements are actually delivered.
(f) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to Section 2.12 shall be applied, first (in
all cases), to the pro rata prepayment of the Term Loans and, second (in the
cases of paragraphs (a), (b) and (c)), to reduce permanently the Revolving
Credit Commitments. Any such reduction of the Revolving Credit Commitments shall
be accompanied by prepayment of the Revolving Credit Loans and/or Swing Line
Loans to the extent, if any, that the Total Revolving Extensions of Credit
exceed the amount of the Total Revolving Credit Commitments as so reduced,
provided that if the aggregate principal amount of Revolving Credit Loans and
Swing Line Loans then outstanding is less than the amount of such excess
(because L/C Obligations constitute a portion thereof), the Borrowers shall, to
the extent of the balance of such excess, replace outstanding Letters of Credit
and/or deposit an amount in cash in a cash collateral account established
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33
with the Administrative Agent for the benefit of the Lenders on terms and
conditions satisfactory to the Administrative Agent. The application of any
prepayment pursuant to Section 2.12 shall be made first to Base Rate Loans and
second to Eurocurrency Loans. Each prepayment of the Loans under Section 2.12
(except in the case of Revolving Credit Loans that are Base Rate Loans and Swing
Line Loans) shall be accompanied by accrued interest to the date of such
prepayment on the amount prepaid.
(g) If, as a result of the making of any payment required to be made
pursuant to Section 2.12, the Borrowers would be required to indemnify any
Lender pursuant to Section 2.21, the Borrowers may deposit the amount of such
payment with the Administrative Agent, for the benefit of the Lenders, in a cash
collateral account, until the end of the applicable Interest Period at which
time such payment shall be made. The Borrowers hereby grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in all
amounts from time to time on deposit in such cash collateral account and
expressly waive all rights (which rights the Borrowers hereby acknowledge and
agree are vested exclusively in the Administrative Agent) to exercise dominion
or control over any such amounts.
2.13 Conversion and Continuation Options. (a) The Borrowers may
elect from time to time to convert Eurocurrency Loans made or outstanding in
Dollars to Base Rate Loans by giving the Administrative Agent at least one
Business Day prior irrevocable notice of such election. The Borrowers may elect
from time to time to convert Base Rate Loans to Eurocurrency Loans made or
outstanding in Dollars by giving the Administrative Agent at least three
Business Days' prior irrevocable notice of such election (which notice shall
specify the length of the initial Interest Period therefor), provided that no
Base Rate Loan under a particular Facility may be converted into a Eurocurrency
Loan (i) when any Event of Default has occurred and is continuing and the
Administrative Agent or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
(b) Any Eurocurrency Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrowers giving irrevocable notice to the Administrative Agent, in accordance
with the applicable provisions of the term "Interest Period" set forth in
Section 1.1, of the length of the next Interest Period to be applicable to such
Loans, provided that no Eurocurrency Loan in Dollars under a particular Facility
may be continued as such (i) when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Majority Facility Lenders in
respect of such Facility have determined in its or their sole discretion not to
permit such continuations or (ii) after the date that is one month prior to the
final scheduled termination or maturity date of such Facility, and provided,
further, that (x) in the case of Eurocurrency Loans made or outstanding in
Dollars, if the Borrowers shall fail to give any required notice as described
above in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Eurocurrency Loans in Dollars shall be automatically
converted to Base Rate Loans on the last day of such then expiring Interest
Period and (y) in case of Eurocurrency Loans made or outstanding in any
Designated Foreign Currency, if the Borrowers shall fail to give any required
notice as described above in this paragraph or if such continuation is not
permitted pursuant to clause (i) of the preceding proviso, such Eurocurrency
Loans will be continued for the shortest available Interest Periods as
determined by the Administrative Agent.
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34
2.14 Minimum Amounts and Maximum Number of Eurocurrency Tranches.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurocurrency Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Eurocurrency Loans outstanding in
Dollars comprising each Eurocurrency Tranche shall be equal to $5,000,000 or a
whole multiple of $1,000,000 in excess thereof, (b) the Dollar Equivalent of the
aggregate principal amount of the Eurocurrency Loans outstanding in any
Designated Foreign Currency comprising each Eurocurrency Tranche shall be equal
to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (c) no
more than ten Eurocurrency Tranches shall be outstanding at any one time.
2.15 Interest Rates and Payment Dates. (a) Each Eurocurrency Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurocurrency Rate determined for such
day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
which is equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section 2.15
plus 2% or (y) in the case of Reimbursement Obligations (A) denominated in
Dollars, the rate applicable to Base Rate Loans under the Revolving Credit
Facility plus 2% or (B) denominated in a Designated Foreign Currency, the rate
applicable to Eurocurrency Loans denominated in such currency for the applicable
Interest Period as determined by or with the approval of the Administrative
Agent plus 2%, and (ii) if all or a portion of any interest payable on any Loan
or Reimbursement Obligation or any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to, in the case of any such amount denominated in Dollars, the
rate applicable to Base Rate Loans under the relevant Facility plus 2% or, in
the case of any such amounts denominated in a Designated Foreign Currency, the
rate applicable to Eurocurrency Loans denominated in such currency for the
applicable Interest Period as determined by or with the approval of the
Administrative Agent plus 2%, in each case, with respect to clauses (i) and (ii)
above, from the date of such non-payment until such amount is paid in full (as
well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
2.15 shall be payable from time to time on demand.
2.16 Computation of Interest and Fees. (a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to (i) Base
Rate Loans the rate of interest on which is calculated on the basis of the Prime
Rate and (ii) Designated Foreign Currency Loans in Pounds Sterling, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrowers and the relevant Lenders of each
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35
determination of a Eurocurrency Rate. Any change in the interest rate on a Loan
resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrowers and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrowers and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrowers, deliver to the
Borrowers a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Sections 2.15(a) and 2.15(b).
2.17 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurocurrency Rate with
respect to any Eurocurrency Loan for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurocurrency Rate with respect to any Eurocurrency Loan determined or to
be determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such
Interest Period (either the determination by the Administrative Agent
described in the preceding clause (a) or the notice from the Majority
Facility Lenders described in this clause (b), which affects a
Eurocurrency Rate, such rate, the "Affected Eurocurrency Rate"),
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrowers and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurocurrency Loans under the relevant Facility the rate
of interest applicable to which is based upon the Affected Eurocurrency Rate
requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans (provided that prior to 1:00 p.m. on the Business Day preceding
the first day of such Interest Period the Borrowers may revoke their notice of
borrowing, in which case no such Loans shall be made), (y) any Loans under the
relevant Facility that were to have been converted on the first day of such
Interest Period to or continued as Eurocurrency Loans the rate of interest
applicable to which is based upon the Affected Eurocurrency Rate shall be
converted to or continued as Base Rate Loans and (z) any outstanding
Eurocurrency Loans under the relevant Facility that were to have been converted
on the first day of such Interest Period to or continued as Eurocurrency Loans
the rate of interest applicable to which is based upon the Affected Eurocurrency
Rate shall be converted, on the first day of such Interest Period, to Base Rate
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurocurrency Loans under the relevant Facility the rate of interest
applicable to which is based upon the Affected Eurocurrency Rate shall be made
or continued as such, nor shall the Borrowers have the right to convert Loans
under the relevant Facility to Eurocurrency Loans the rate of interest
applicable to which is based upon the Affected Eurocurrency Rate. The
Administrative Agent agrees to withdraw any
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36
such notice as soon as reasonably practicable after the Administrative Agent is
notified of a change in circumstances which makes such notice inapplicable.
2.18 Pro Rata Treatment and Payments. (a) Except as otherwise
provided in Sections 2.6 and 2.7 and subject to Section 2.18(g), each borrowing
by the Borrowers from the Lenders hereunder, each payment by the Borrowers on
account of any commitment fee and any reduction of the Commitments of the
Lenders shall be made pro rata according to the respective Term Loan Percentages
or Revolving Credit Percentages, as the case may be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrowers on
account of principal of and interest on the Term Loans shall be applied to
reduce the remaining installments of the Term Loans pro rata according to the
respective outstanding principal amounts of the Term Loans then held by the Term
Loan Lenders. Amounts prepaid on account of the Term Loans may not be
reborrowed.
(c) Each payment (including each prepayment) by the Borrowers on
account of principal of and interest on the Revolving Credit Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.
(d) All payments (including prepayments) to be made by the Borrowers
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
Houston, Texas time, on the due date thereof to the Administrative Agent, for
the account of the Lenders, at the Payment Office, in Dollars or, in the case of
Eurocurrency Loans outstanding in any Designated Foreign Currency, such
Designated Foreign Currency and whether in Dollars or any Designated Foreign
Currency in immediately available funds. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurocurrency
Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day. If any payment on a
Eurocurrency Loan becomes due and payable on a day other than a Business Day,
the maturity thereof shall be extended to the next succeeding Business Day
unless the result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the immediately
preceding Business Day. In the case of any extension of any payment of principal
pursuant to the preceding two sentences, interest thereon shall be payable at
the then applicable rate during such extension.
(e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal (x) in the case of Loans to be made in Dollars, the daily average
Federal Funds Effective Rate or (y) in the case of any Revolving Credit Loans to
be made in any Designated Foreign Currency, the rate customary in such
Designated Foreign Currency for settlement of similar inter-bank obligations, as
quoted by the Administrative Agent, in each case for the period until such
Lender makes
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37
such amount immediately available to the Administrative Agent. A certificate of
the Administrative Agent submitted to any Lender with respect to any amounts
owing under this Section 2.18(e) shall be conclusive in the absence of manifest
error. If such Lender's share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to, in the case of Loans
to be made in Dollars, Base Rate Loans hereunder or, in the case of Loans to be
made in any Designated Foreign Currency, the rate per annum referred to in
clause (y) of the second preceding sentence in respect of such Designated
Foreign Currency plus the Applicable Margin hereunder, on demand, from the
Borrowers.
(f) Unless the Administrative Agent shall have been notified in
writing by the Borrowers prior to the date of any payment being made hereunder
that the Borrowers will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrowers are making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrowers within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to (x) in the case
of Loans to be made in Dollars, the daily average Federal Funds Effective Rate
or (y) in the case of any Revolving Credit Loans to be made in any Designated
Foreign Currency, the rate customary in such Designated Foreign Currency for
settlement of similar inter-bank obligations, as quoted by the Administrative
Agent. Nothing herein shall be deemed to limit the rights of the Administrative
Agent or any Lender against the Borrowers.
(g) Notwithstanding any other provision contained herein, in the
event that any Lender gives notice to the Administrative Agent that it is unable
to fund Revolving Credit Loans in any Designated Foreign Currency at a
reasonable cost to it, the Administrative Agent shall, until such notice is
withdrawn and to the extent necessary in order to excuse such Lender from making
any Revolving Credit Loans in such Designated Foreign Currency and to continue
to make available to the Borrowers the full aggregate amount of the Revolving
Credit Commitments, reallocate from time to time among the Lenders the
outstanding Revolving Credit Loans denominated in Dollars and the Revolving
Credit Loans in such Designated Foreign Currency; provided that, in the event
that the Majority Facility Lenders of the Revolving Credit Facility give such
notice to the Administrative Agent, the Lenders shall not be required to make
any Revolving Credit Loans in such Designated Foreign Currency until any such
notices have been withdrawn so that the Majority Facility Lenders of the
Revolving Credit Facility have either not given any such notice or have
withdrawn any such notice.
2.19 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurocurrency Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for Non-
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38
Excluded Taxes covered by Section 2.20 and changes in the rate of tax on
the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurocurrency Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurocurrency Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrowers shall within 30 days of receipt
of notice from such Lender pay such Lender any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this
Section 2.19, it shall promptly notify the Borrowers (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrowers (with a copy to the Administrative
Agent) of a written request therefor, the Borrowers shall pay to such Lender
such additional amount or amounts as will compensate such Lender for such
reduction; provided that the Borrowers shall not be required to compensate a
Lender pursuant to this paragraph for any amounts incurred more than six months
prior to the date that such Lender notifies the Borrowers of such Lender's
intention to claim compensation therefor; and provided further that, if the
circumstances giving rise to such claim have a retroactive effect, then such
six-month period shall be extended to include the period of such retroactive
effect.
(c) A certificate as to any additional amounts payable pursuant to
this Section 2.19 submitted by any Lender to the Borrowers (with a copy to the
Administrative Agent) shall specify the event giving rise to such claim for
additional amounts, set out in reasonable detail an estimate of the basis and
computation of such claim and shall be conclusive in the absence of manifest
error. The obligations of the Borrowers pursuant to this Section 2.19 shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.20 Taxes. (a) All payments made by the Borrowers under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future
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39
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on any Agent or any Lender
as a result of a present or former connection between such Agent or such Lender
and the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings ("Non-
Excluded Taxes") or Other Taxes are required to be withheld from any amounts
payable to any Agent or any Lender hereunder, the amounts so payable to such
Agent or such Lender shall be increased to the extent necessary to yield to such
Agent or such Lender (after payment of all Non-Excluded Taxes and Other Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement, provided, however, that the Borrowers shall
not be required to increase any such amounts payable to any Lender with respect
to any Non-Excluded Taxes or other Taxes (i) that are attributable to such
Lender's failure to comply with the requirements of paragraph (d) or (e) of this
Section or (ii) that are United States withholding taxes imposed on amounts
payable to such Lender at the time the Lender becomes a party to this Agreement,
except to the extent that such Lender's assignor (if any) was entitled, at the
time of assignment, to receive additional amounts from the Borrowers with
respect to such Non-Excluded Taxes pursuant to Section 2.20(a).
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrowers, as promptly as possible thereafter, the Borrowers shall send to
the Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrowers showing payment thereof. If the Borrowers fail to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Agents the required receipts or other required documentary
evidence, the Borrowers shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by any
Agent or any Lender as a result of any such failure. The agreements in this
Section 2.20 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a citizen or resident of
the United States of America, a corporation, partnership or other entity created
or organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a "Non-U.S. Lender") shall
deliver to the Borrowers and the Administrative Agent (or, in the case of a
Participant, to the Lender from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form
4224 or any subsequent versions thereof or successors thereto, or, in the case
of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest" a statement substantially in the form of Exhibit I and a Form W-8, or
any subsequent versions thereof or successors thereto properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by the Borrowers
under this Agreement and the other Loan
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40
Documents. Such forms shall be delivered by each Non-U.S. Lender on or before
the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrowers
at any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrowers (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 2.20(b), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.20(d) that
such Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the
Borrowers are located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrowers (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrowers, such properly completed and
executed documentation prescribed by applicable law as will permit such payments
to be made without withholding or at a reduced rate, provided that such Lender
is legally entitled to complete, execute and deliver such documentation and in
such Lender's reasonable judgment such completion, execution or submission would
not materially prejudice the legal position of such Lender.
(f) If the Administrative Agent or any Lender receives a refund or
net tax benefit in respect of Non-Excluded Taxes or Other Taxes paid by the
Borrowers, which in the good faith judgment of the Administrative Agent or any
such Lender is allocable to such payment, it shall as soon as practicable
reimburse the Borrowers the amount of such refund or net tax benefit, together
with any other amounts paid by the Borrowers in connection with such refunded
Non-Excluded Taxes or Other Taxes and any other tax benefit obtained by the
Administrative Agent or any Lender incurred in obtaining such refund; provided
that the Borrowers agree to, as soon as practicable, return such refund to the
Administrative Agent or any such Lender, as the case may be, if they receive
notice from the Administrative Agent or any such Lender that the Administrative
Agent or Lender, as the case may be, is required to repay such refund.
2.21 Indemnity. The Borrowers agree to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrowers in making a borrowing
of, conversion into or continuation of Eurocurrency Loans after the Borrowers
have given a notice requesting the same in accordance with the provisions of
this Agreement, (b) default by the Borrowers in making any prepayment of
Eurocurrency Loans after the Borrowers have given a notice thereof in accordance
with the provisions of this Agreement or (c) the making of a prepayment or
conversion of Eurocurrency Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to the excess, if any, of (i) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of such Interest Period (or, in the case of
a failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Loans provided for herein (excluding, however, the Applicable
Margin included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank eurocurrency market.
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41
A certificate as to any amounts payable pursuant to this Section 2.21 submitted
to the Borrowers by any Lender shall specify the event giving rise to the claim
for such indemnification and set out in reasonable detail the basis of
computation of such claim and shall be conclusive in the absence of manifest
error. This covenant shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
2.22 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
any Eurocurrency Loans as contemplated by this Agreement ("Affected Eurocurrency
Loans"), (a) such Lender shall promptly give written notice of such
circumstances to the Borrowers and the Administrative Agent (which notice shall
be withdrawn whenever such circumstances no longer exist), (b) the commitment of
such Lender hereunder to make Affected Eurocurrency Loans, continue Affected
Eurocurrency Loans as such and, in the case of Affected Eurocurrency Loans in
Dollars, to convert a Base Rate Loan to Affected Eurocurrency Loans shall
forthwith be cancelled and, until such time as it shall no longer be unlawful
for such Lender to make or maintain such Affected Eurocurrency Loans, in the
case of Revolving Credit Loans in Dollars, such Lender shall then have a
commitment only to make a Base Rate Loan when an Affected Eurocurrency Loan is
requested and, in the case of any Revolving Credit Loans in a Designated Foreign
Currency which would be Affected Eurocurrency Loans, such Lender shall not be
required to make Revolving Credit Loans in such Designated Foreign Currency and
(c) such Lender's Loans then outstanding as Affected Eurocurrency Loans, if any,
shall, in the case of Affected Eurocurrency Loans in Dollars, be converted
automatically to Base Rate Loans and, in the case of Affected Eurocurrency Loans
in the Designated Foreign Currency, be repaid, in each case, on the respective
last days of the then current Interest Periods with respect to such Loans or
within such earlier period as required by law. If any such conversion of an
Affected Eurocurrency Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the Borrowers shall pay to such
Lender such amounts, if any, as may be required pursuant to Section 2.21.
2.23 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.19, 2.20(a) or
2.22 with respect to such Lender, it will, if requested by the Borrowers, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section 2.23 shall
affect or postpone any of the obligations of the Borrowers or the rights of any
Lender pursuant to Section 2.19 or 2.20(a).
2.24 Replacement of Lenders under Certain Circumstances. The
Borrowers shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to Section 2.19, 2.20 or 2.22 or (b)
defaults in its obligation to make Loans hereunder, with a replacement financial
institution; provided that (i) such replacement does not conflict with any
Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) prior to any such replacement,
such Lender shall have taken no action under Section 2.23 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 2.19 or 2.20,
(iv) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Borrowers shall be liable to such replaced Lender under
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Section 2.21 (as though Section 2.21 were applicable) if any Eurocurrency Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Company and the Administrative Agent, (vii) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
10.6 (provided that the Borrowers shall be obligated to pay the registration and
processing fee referred to therein), (viii) until such time as such replacement
shall be consummated, the Borrowers shall pay all additional amounts (if any)
required pursuant to Section 2.19 or 2.20, as the case may be, and (ix) any such
replacement shall not be deemed to be a waiver of any rights which the
Borrowers, the Administrative Agent or any other Lender shall have against the
replaced Lender.
2.25 Controls on Prepayment if Aggregate Outstanding Revolving
Credit Exceeds Aggregate Revolving Credit Commitments. (a) The Borrowers will
implement and maintain internal controls to monitor the borrowings and
repayments of Loans by the Borrowers and the issuance of and drawings under
Letters of Credit, with the object of preventing any request for an extension of
credit that would result in the Total Revolving Extensions of Credit with
respect to all of the Lenders (including the Swing Line Lender) being in excess
of the Total Revolving Credit Commitments then in effect, the Total Revolving
Extensions of Credit made in any Designated Foreign Currencies with respect to
all of the Lenders being in excess of $35,000,000 and of promptly identifying
and remedying any circumstance where, by reason of changes in exchange rates,
the Total Revolving Extensions of Credit (made in Dollars or any Designated
Foreign Currency) with respect to all of the Lenders (including the Swing Line
Lender) exceeds the Total Revolving Credit Commitments then in effect or the
Total Revolving Extensions of Credit made in any Designated Foreign Currencies
with respect to all of the Lenders exceeds $35,000,000. In the event that at any
time the Borrowers determine that the Total Revolving Extensions of Credit (made
in Dollars or any Designated Foreign Currency) with respect to all of the
Lenders (including the Swing Line Lender) exceeds the Total Revolving Credit
Commitments then in effect or the Total Revolving Extensions of Credit made in
any Designated Foreign Currencies with respect to all of the Lenders exceeds
$35,000,000, in each case, by more than 5%, the Borrowers will promptly notify
the Administrative Agent.
(b) The Administrative Agent will calculate the Total Revolving
Extensions of Credit (including any portion made in any Designated Foreign
Currency) with respect to all of the Lenders (including the Swing Line Lender)
from time to time, and in any event not less frequently than once during each
calendar week. In making such calculations, the Administrative Agent will rely
on the information most recently received by it from the Swing Line Lender in
respect of outstanding Swing Line Loans and from the Issuing Lender in respect
of outstanding L/C Obligations.
(c) In the event that on any date the Administrative Agent
calculates that the Total Revolving Extensions of Credit (made in Dollars or any
Designated Foreign Currency) with respect to all of the Lenders (including the
Swing Line Lender) exceeds the Total Revolving Credit Commitments then in effect
or the Total Revolving Extensions of Credit made in any Designated Foreign
Currency with respect to all of the Lenders exceeds $35,000,000, in each case,
by more than 5%, the Administrative Agent will give notice to such effect to the
Borrowers and the Lenders. Within five Business Days of receipt of any such
notice, the Borrowers will, as soon as practicable but in any event within five
Business Days of receipt of such notice, first, make such repayments or
prepayments of Loans (together with interest accrued to the date of such
repayment or prepayment), second, pay any Reimbursement Obligations then
outstanding and, third, cash collateralize any outstanding L/C
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43
Obligations on terms reasonably satisfactory to the Administrative Agent as
shall be necessary to cause the Total Revolving Extensions of Credit (made in
Dollars or any Designated Foreign Currency) with respect to all of the Lenders
(including the Swing Line Lender) to no longer exceed the aggregate Total
Revolving Credit Commitments then in effect and/or the Total Revolving
Extensions of Credit made in any Designated Foreign Currency with respect to all
of the Lenders to no longer exceed $35,000,000. If any such repayment or
prepayment of a Eurocurrency Loan pursuant to this section occurs on a day which
is not the last day of the then current Interest Period with respect thereto,
the Borrowers shall pay to the Revolving Credit Lenders such amounts, if any, as
may be required pursuant to Section 2.21.
2.26 Provisions Regarding the "Euro". The provisions included in
Schedule C are hereby incorporated in this Section 2.26 as if fully set forth
herein.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
the Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue letters of credit for the
account of the Borrowers on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to time by the
Issuing Lender; provided that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the
Available Revolving Credit Commitments would be less than zero. Each Letter of
Credit shall (i) be denominated in Dollars or in a Designated Foreign Currency,
(ii) be either (A) a standby letter of credit issued to support obligations of
the Company or a Subsidiary, contingent or otherwise or (B) a commercial letter
of credit issued in respect of the purchase of inventory or other goods or
services by the Company or its Subsidiaries in the ordinary course of business
(the letters of credit described in the preceding clauses (A) and (B), "Letters
of Credit") and (iii) expire no later than the earlier of (x) the first
anniversary of its date of issuance and (y) the date which is five Business Days
prior to the Revolving Credit Termination Date, provided that any Letter of
Credit with a one-year term may provide for the renewal thereof for additional
one-year periods (which shall in no event extend beyond the date referred to in
clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrowers may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the reasonable satisfaction of the Issuing
Lender, and such other certificates, documents and other papers and information
as the Issuing Lender may reasonably request. Upon receipt of any Application,
the Issuing Lender will process such Application and the certificates, documents
and other papers and information delivered to it in connection therewith in
accordance with its customary procedures and shall promptly issue the Letter of
Credit requested thereby (but in no event shall the Issuing Lender be required
to issue any
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44
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrowers. The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrowers promptly following the issuance thereof.
The Issuing Lender shall promptly furnish to the Administrative Agent, which
shall in turn promptly furnish to the Lenders, notice of the issuance of each
Letter of Credit (including the amount thereof).
3.3 Commissions, Fees and Other Charges. (a) The Borrowers will pay
a commission on the aggregate drawable amount of all outstanding Letters of
Credit at a per annum rate equal to the Applicable Margin then in effect with
respect to Eurocurrency Loans under the Revolving Credit Facility, shared
ratably among the Revolving Credit Lenders and payable quarterly in arrears on
each L/C Fee Payment Date after the issuance date. In addition, the Borrowers
shall pay to the Issuing Lender for its own account a fronting fee on the
aggregate drawable amount of all outstanding Letters of Credit of 1/4 of 1% per
annum, payable quarterly in arrears on each L/C Fee Payment Date after the
Issuance Date.
(b) In addition to the foregoing fees and commissions, the Borrowers
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in the Issuing Lender's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Borrowers in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Revolving Credit Percentage of the amount of such draft,
or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) (x) in the case of Letters
of Credit denominated in Dollars, the daily average Federal Funds Effective Rate
or (y) in the case of Letters of Credit denominated in a Designated Currency,
the daily average of the rate customary in such Designated Foreign Currency for
settlement of similar inter-bank obligations, as quoted by the Administrative
Agent, during the period from and including the date such payment is required to
the date on which such payment is immediately available to the Issuing Lender,
times (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any L/C Participant pursuant to Section 3.4(a) is not
made available to the Issuing Lender by such
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45
L/C Participant within three Business Days after the date such payment is due,
the Issuing Lender shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Base Rate Loans under the Revolving Credit
Facility. A certificate of the Issuing Lender submitted to any L/C Participant
with respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrowers or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrowers. The Borrowers agree
to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrowers of the date and amount of a draft presented under any
Letter of Credit and paid by the Issuing Lender for the amount of (a) such draft
so paid and (b) any taxes, fees, charges or other costs or expenses incurred by
the Issuing Lender in connection with such payment. Except as otherwise agreed
by the Borrowers and the Issuing Bank, each such payment shall be made to the
Issuing Lender at its address for notices specified herein in the currency in
which the relevant Letter of Credit was issued in immediately available funds.
Interest shall be payable on any and all amounts remaining unpaid by the
Borrowers under this Section from the date such amounts become payable (whether
at stated maturity, by acceleration or otherwise) until payment in full at the
rate set forth in Section 2.15(c); provided that if the Issuing Lender does not
notify the Borrowers as provided for by 11:00 A.M. (Houston, Texas time) on the
date such draft is paid, then for such day (and until the next Business Day) all
amounts remaining unpaid in respect of such notice shall bear interest at the
rate set forth in Section 2.15(a) or 2.15(b), as applicable. Each drawing under
any Letter of Credit shall (unless an event of the type described in clause (i)
or (ii) of Section 8(f) shall have occurred and be continuing with respect to
the Borrowers, in which case the procedures specified in Section 3.4 for funding
by L/C Participants shall apply) constitute a request by the Borrowers to the
Administrative Agent for a borrowing pursuant to Section 2.5 (or, at the option
of the Administrative Agent and the Swing Line Lender in their sole discretion,
a borrowing pursuant to Section 2.7 of Swing Line Loans) in the amount of such
drawing. The Borrowing Date with respect to such borrowing shall be the date of
such drawing.
3.6 Obligations Absolute. The Borrowers' obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrowers may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrowers also agree with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrowers'
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrowers and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrowers against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
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46
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrowers agree that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards or care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrowers and
shall not result in any liability of the Issuing Lender to the Borrowers.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrowers of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrowers in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement
and to make the Loans and issue or participate in the Letters of Credit, the
Borrowers hereby jointly and severally represent and warrant to each Agent and
each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma consolidated
balance sheet of the Company and its consolidated Subsidiaries as at December
27, 1997 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies
of which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to (i) the consummation of
the Acquisition, (ii) the Loans to be made and the Senior Subordinated Notes to
be issued on the Closing Date and the use of proceeds thereof, (iii) the
contribution by Holdings to the Company of $168,000,000 and (iv) the payment of
fees and expenses in connection with the foregoing. The Pro Forma Balance Sheet
has been prepared based on the best information available to the Borrowers as of
the date of delivery thereof, and presents fairly in all material respects on a
pro forma basis the estimated financial position of the Company and its
consolidated Subsidiaries as at December 27, 1997, assuming that the events
specified in the preceding sentence had actually occurred at such date.
(b) The audited consolidated balance sheets of the Acquired
Businesses as at September 27, 1997 and September 28, 1996 and the consolidated
statements of income and of cash flows for the fiscal years ended September 27,
1997, September 28, 1996 and September 30, 1995, reported on by and accompanied
by an unqualified report from Ernst & Young LLP with respect to fiscal years
1997 and 1996 and Price Waterhouse LLP with respect to 1995, present fairly in
all material respects the consolidated financial condition of the Acquired
Businesses as at such date, and the consolidated results of its operations and
its consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of the Acquired Businesses as at December
27, 1997 and December 28, 1996, and the related unaudited consolidated
statements of income and cash flows for the three-month periods ended on such
dates, present fairly in all material respects the consolidated financial
condition of the Acquired Businesses as at such dates, and the consolidated
results
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47
of its operations and its consolidated cash flows for the three-month periods
then ended (subject to normal year-end audit adjustments and the absence of
certain footnotes). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). As of the date
hereof, other than as set forth on part A of Schedule 4.1(b), the Acquired
Businesses do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any long-term leases or unusual
forward or long-term commitments, including any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, which are not reflected in the most recent audited financial
statements referred to in this paragraph (b) (or in the notes thereto). Except
as set forth on part B of Schedule 4.1(b), during the period from December 27,
1997 to and including the date hereof there has been no Disposition by the
Acquired Businesses of any material part of its business or Property (other than
(x) in the ordinary course of business or (y) as part of the Acquisition).
4.2 No Change. From and after December 27, 1997, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
4.3 Corporate Existence; Compliance with Law. Except as set forth on
Schedule 4.3, each of the Company and its Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization (except no representation is made as to the good standing of any
Subsidiary organized under the laws of any jurisdiction in which there is no
concept of good standing), (b) has the corporate or limited liability company
power and authority, as the case may be, and the legal right, to own and operate
its Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation or limited liability company and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of Property or the
conduct of its business requires such qualification, except to the extent that
the failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect, and (d) is in compliance with all Requirements of Law
except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Except
as set forth on Schedule 4.4, each Loan Party has the corporate or limited
liability company power and authority, as the case may be, and the legal right,
to make, deliver and perform the Loan Documents to which it is a party and, in
the case of the Borrowers, to borrow hereunder. Except as set forth on Schedule
4.4, each Loan Party has taken all necessary corporate or limited liability
company action to authorize the execution, delivery and performance of the Loan
Documents to which it is a party and, in the case of the Borrowers, to authorize
the borrowings on the terms and conditions of this Agreement. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
Acquisition and the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Loan
Documents, except (i) consents, authorizations, filings and notices described in
Schedule 4.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect,
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48
(ii) the filings referred to in Section 4.19 and (iii) those which, in the
aggregate, could not be reasonably expected to have a Material Adverse Effect if
not obtained or made. Each Loan Document has been duly executed and delivered on
behalf of each Loan Party party thereto. This Agreement constitutes, and each
other Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
4.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
material Requirement of Law or any material Contractual Obligation of the
Company or any of its Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of their respective material
properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security Documents).
No Requirement of Law or Contractual Obligation applicable to the Company or any
of its Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
4.6 No Material Litigation. Except as set forth in Schedule 4.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Company,
threatened by or against Holdings, the Company or any of its Subsidiaries or
against any of their respective properties or revenues (a) with respect to any
of the Loan Documents or any of the transactions contemplated hereby or thereby,
or (b) which (after taking into account the Company's relevant insurance
policies and coverages) could reasonably be expected to have a Material Adverse
Effect.
4.7 No Default. Except as set forth in Schedule 4.7, neither the
Company nor any of its Subsidiaries is in default under or with respect to any
of its Contractual Obligations in any respect which could reasonably be expected
to have a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
4.8 Ownership of Property; Liens. Each of the Company and its
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other Property (other than Intellectual Property), and none of such Property is
subject to any Lien except as permitted by Section 7.3.
4.9 Intellectual Property. The Company and each of its Subsidiaries
owns, or is licensed to use, all material Intellectual Property necessary for
the conduct of its business as currently conducted. No material claim has been
asserted and is pending by any Person challenging or questioning the use of any
Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does the Company or any of its Subsidiaries know of any valid
basis for any such claim. Except as set forth on Schedule 4.9, the use of such
Intellectual Property by the Company and its Subsidiaries does not infringe on
the rights of any Person, except to the extent of any infringement which could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
4.10 Taxes. The Company and each of its Subsidiaries has filed or
caused to be filed all Federal, state and other material tax returns which are
required to be filed and has paid all material
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49
taxes shown to be due and payable on said returns or on any assessments made
against it or any of its Property and all other material taxes, fees or other
charges imposed on it or any of its Property by any Governmental Authority
(other than any the amount or validity of which are currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Company or its
Subsidiaries, as the case may be); no material tax Lien has been filed, and, to
the knowledge of the Company, no claim is being asserted, with respect to any
such tax, fee or other charge.
4.11 Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose which violates the provisions of the
Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrowers will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 referred to in Regulation U.
4.12 Labor Matters. There are no strikes or other labor disputes
against the Company or any of its Subsidiaries pending or, to the knowledge of
the Company, threatened that (individually or in the aggregate) could reasonably
be expected to have a Material Adverse Effect. Hours worked by and payment made
to employees of the Company and its Subsidiaries have not been in violation of
the Fair Labor Standards Act or any other applicable Requirement of Law dealing
with such matters that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. All payments due from the Company or
any of its Subsidiaries on account of employee health and welfare insurance that
(individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect if not paid have been paid or accrued as a liability on
the books of the Company or the relevant Subsidiary.
4.13 ERISA. Except where the liability that has been incurred or
could reasonably be expected to be incurred (individually or in the aggregate)
could not have a Material Adverse Effect: (i) neither a Reportable Event nor an
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 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
Plan, and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code; (ii) no termination of a Single Employer Plan
has occurred, and no Lien in favor of the PBGC or a Plan has arisen, during such
five-year period; (iii) the present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) 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 by a material amount; (iv) neither
Borrower nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan which has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither Borrower nor
any Commonly Controlled Entity would become subject to any material liability
under ERISA if such Borrower 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 this representation is made or deemed made;
and (v) no such Multiemployer Plan is in Reorganization or Insolvent.
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50
4.14 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
4.15 Subsidiaries. The Subsidiaries listed on part B of Schedule B
constitute all the Subsidiaries of the Company at the Closing Date and after
giving effect to the Acquisition, and the information set forth thereon as to
their respective principal places of business, chief executive offices,
jurisdictions of organization and, with respect to Domestic Subsidiaries,
locations of material tangible assets (other than goods in transit or leased by
the Company or a Subsidiary to a customer) are correct as of such date.
4.16 Use of Proceeds. The proceeds of the Term Loans shall be used
to finance a portion of the Acquisition and to pay related fees and expenses.
The proceeds of the Revolving Credit Loans and/or the Swing Line Loans shall be
used (a) to finance a portion of the Acquisition and to pay related fees and
expenses, (b) to finance Permitted Acquisitions and (c) for general corporate
purposes of the Borrowers and their Subsidiaries.
4.17 Environmental Matters. Other than exceptions to any of the
following that, individually or in the aggregate, could not reasonably be
expected to result in the payment of a Material Environmental Amount:
(a) The facilities and properties owned, leased or operated by the
Company or any of its Subsidiaries (the "Properties") do not contain, and have
not previously contained, any Materials of Environmental Concern in amounts or
concentrations or under circumstances which (i) constitute or constituted a
violation of, or (ii) could give rise to liability under, any Environmental Law.
(b) The Properties and all operations at the Properties are in
material compliance, and have in the last five years been in compliance, with
all applicable Environmental Laws, and there is no contamination at, under or
about the Properties or violation of any Environmental Law with respect to the
Properties or the business operated by the Company or any of its Subsidiaries
(the "Business") which could interfere with the continued operation of the
Properties or impair the fair saleable value thereof. Neither the Borrowers nor
any of their Subsidiaries has assumed any liability of any other Person under
Environmental Laws.
(c) Neither the Borrowers nor any of their Subsidiaries have
received or are aware of any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Properties or
the Business, nor does either Borrower have knowledge or reason to believe that
any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of by the Company or any of its Subsidiaries in violation of, or in a
manner or to a location which could give rise to liability to the Company or any
of its Subsidiaries under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed of at, on or
under any
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51
of the Properties in violation of, or in a manner that could give rise to
liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of either Borrower, threatened, under any
Environmental Law to which the Company or any of its Subsidiaries is or will be
named as a party with respect to the Properties or the Business, nor are there
any consent decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements outstanding under
any Environmental Law with respect to the Properties or the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Company or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could give rise to liability under Environmental
Laws.
4.18 Accuracy of Information, etc. No statement or information
regarding Holdings, the Company and its Subsidiaries (other than statements and
information constituting projections and pro forma financial information)
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement (as any
such statement or information may be supplemented or modified by any subsequent
statement, information or document furnished to the Administrative Agent or
Lenders prior to the Closing Date) furnished to the Administrative Agent or the
Lenders or any of them, by or on behalf of any Loan Party for use in connection
with the transactions contemplated by this Agreement or the other Loan
Documents, contained as of the date such statement, information, document or
certificate was so furnished (or, in the case of the Confidential Information
Memorandum, as of the date of this Agreement), any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not materially misleading. The projections and pro forma
financial information contained in the materials referenced above are based upon
good faith estimates and assumptions believed by management of the Borrowers to
be reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as fact
and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. As of the date hereof, the representations and warranties
regarding Holdings, the Company and its Subsidiaries contained in the Purchase
Agreement are true and correct in all material respects. There is no fact known
to any Loan Party as of the date hereof that could reasonably be expected to
have a Material Adverse Effect that has not been expressly disclosed herein, in
the other Loan Documents, in the Confidential Information Memorandum or in any
other documents, certificates and statements furnished to the Administrative
Agent and the Lenders for use in connection with the transactions contemplated
hereby and by the other Loan Documents.
4.19 Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock (as
defined in the Guarantee and Collateral Agreement), when any stock certificates
representing such Pledged Stock and stock powers related thereto duly executed
in blank by the relevant pledgor are delivered to the Administrative Agent or
other actions required by applicable law are completed, and in the case of the
other Collateral described in the Guarantee and Collateral Agreement,
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52
when financing statements or other designated recording forms in appropriate
form are filed in the offices specified on Schedule 4.19(a) (which financing
statements and other designated recording forms have been delivered to the
Administrative Agent in duly completed form and duly executed), the Guarantee
and Collateral Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as defined
in the Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person (except, in the case of Collateral other than Pledged
Stock, Liens permitted by Section 7.3).
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.19(b), each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person.
(c) Each Foreign Pledge Agreement is effective to create in favor of
the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Pledged Stock (as defined in each Foreign
Pledge Agreement) described therein and proceeds thereof. When any stock
certificates representing such Pledged Stock and stock powers related thereto
duly executed in blank by the relevant pledgor are delivered to the
Administrative Agent or other actions required by applicable law are completed,
each of the Foreign Pledge Agreements shall constitute a fully perfected Lien
on, and security interest in, all right, title and interest of the relevant Loan
Party in such Pledged Stock and the proceeds thereof, as security for the
Obligations (as defined in the Guarantee and Collateral Agreement), in each case
prior and superior in right to any other Person.
4.20 Solvency. Each Loan Party is, and after giving effect to the
Acquisition and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be Solvent.
4.21 Senior Debt. The Obligations in respect of the Loan Documents
constitute "Senior Debt" of the Borrowers under and as defined in the Senior
Subordinated Note Indenture. The obligations of each Subsidiary Guarantor under
the Guarantee and Collateral Agreement constitute "Senior Debt" of such
Subsidiary Guarantor under and as defined in the Senior Subordinated Note
Indenture.
4.22 Regulation H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of Housing
and Urban Development as an area having special flood hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968.
4.23 Year 2000 Matters. Any reprogramming required to permit the
proper functioning (but only to the extent that such proper functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Company or any of its
Subsidiaries or used or relied upon in the conduct of their business (including
any such systems and
<PAGE>
53
other equipment supplied by others), and the testing of all such systems and
other equipment as so reprogrammed, will be completed by January 1, 1999, except
to the extent that the failure to do so could not reasonably be expected to have
a Material Adverse Effect. The costs to the Company and its Subsidiaries, taking
into account the information systems upgrade that the Company and its
Subsidiaries are engaged in as of the date hereof, that have not been incurred
as of the date hereof for such reprogramming and testing and for the other
reasonably foreseeable consequences to them of any improper functioning of other
computer systems and equipment containing embedded microchips due to the
occurrence of the year 2000 could not reasonably be expected to result in a
Material Adverse Effect. Except for any reprogramming referred to above and
taking into account the information systems upgrade that the Company and its
Subsidiaries are engaged in as of the date hereof, the computer systems of the
Company and its Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue for the term of this Agreement to be, sufficient for
the conduct of their business as currently conducted.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Company and Grove Capital, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of Holdings, the
Company, Grove Capital and each Subsidiary Guarantor, (iii) each Foreign
Pledge Agreement, executed and delivered by a duly authorized officer of
the Company, or, if applicable a Domestic Subsidiary, (iv) a Mortgage
covering each of the Mortgaged Properties, executed and delivered by a
duly authorized officer of each party thereto and (v) if requested by a
Lender for the account of each relevant Lender, Notes conforming to the
requirements hereof and executed and delivered by a duly authorized
officer of the Company and Grove Capital.
(b) Acquisition, etc. The following transactions shall have been
consummated, in each case, in accordance with all Requirements of Law and
on terms and conditions reasonably satisfactory to the Lenders:
(i) pursuant to the Purchase Agreement, the Company has
acquired, directly or indirectly through certain Subsidiaries, (the
"Acquisition") from Hanson, by purchase or merger, (A) all of the issued
and outstanding Capital Stock of the Acquired Entities and (B) the
Acquired Assets, for a total purchase price of $583,000,000 in cash plus
the assumption of Indebtedness as described on Schedule 7.2(e);
(ii) the Administrative Agent shall have received
satisfactory evidence that Holdings shall have received at least (A)
$120,000,000 in gross cash proceeds from the issuance of its Capital Stock
to Grove Investors and (B) $50,000,000
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54
in gross cash proceeds from the issuance by Holdings of senior discount
debentures pursuant to documentation substantially final drafts of which
have been furnished to the Lenders and executed copies of which have been
furnished to the Administrative Agent (the "Holdings Debentures"), and the
net proceeds described in the preceding clauses (A) and (B) shall have
been contributed to the Company;
(iii) the Administrative Agent shall have received
satisfactory evidence that the Company shall have received at least
$168,000,000 in gross cash proceeds from the issuance of 100% of its
Capital Stock to Holdings; and
(iv) the Administrative Agent shall have received
satisfactory evidence that the Borrowers shall have received at least
$225,000,000 in gross cash proceeds from the issuance of the Senior
Subordinated Notes.
(c) Purchase Agreement and Related Agreements. The Administrative
Agent shall have received a true and correct copy of the Purchase
Agreement and of all of the closing documents delivered pursuant to the
Purchase Agreement (including copies of any documents which purport to
amend, modify, supplement or waive any of the terms of the preceding
documents) in connection with the closing of the Acquisition (including
the limited liability company agreements of Holdings and the Company,
agreements relating to transition arrangements, labor agreements and
assignments of leased or licensed assets and all documents delivered
therewith), all of which shall be (i) consistent with the Purchase
Agreement and (ii) on terms and conditions reasonably satisfactory to the
Administrative Agent. The Administrative Agent shall have received a
certificate of a Responsible Officer of each of the Company and Grove
Capital certifying that (x) no provision of the documents described in the
preceding sentence shall have been waived, amended, supplemented or
modified in a manner, in any material respect, adverse to the
Administrative Agent and the Lenders, (y) all conditions to the closing of
the Acquisition provided for in the Purchase Agreement have been satisfied
without any waiver or modification of any of the terms thereof, in any
material respect, adverse to the Administrative Agent and the Lenders and
(z) the Borrowers, their Affiliates and Subsidiaries (A) are not in breach
or violation of any of their obligations under the Purchase Agreement or
the financing thereof and (ii) are not subject to contractual or other
restrictions that would be violated by the Acquisition.
(d) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
have received (i) the Pro Forma Balance Sheet, (ii) (A) audited
consolidated balance sheets of the Acquired Businesses as at September 27,
1997 and September 28, 1996 and the consolidated statements of income and
of cash flows for the fiscal years ended September 27, 1997, September 28,
1996 and September 30, 1995 and (B) unaudited financial statements of the
Acquired Businesses for each fiscal quarterly period ended subsequent to
the date of the latest applicable financial statements delivered pursuant
to clause (A), which shall be consistent in all material respects with the
unaudited financial statements for such years and periods provided to
Chase prior to the date hereof and (iii) satisfactory unaudited interim
consolidated financial statements of the Borrowers for each fiscal month
and quarterly period ended after October 1997 as to which such financial
statements are available, and all of such financial statements shall not
reflect any material adverse change in the consolidated financial
condition of the Acquired Businesses and the Borrowers, as reflected in
the financial statements or projections contained in the Confidential
Information Memorandum.
<PAGE>
55
(e) Approvals. All governmental and material third party approvals
(including landlords' and other consents) necessary or, in the reasonable
discretion of the Administrative Agent, advisable in connection with the
Acquisition, the continuing operations of the Company and its Subsidiaries
and the transactions contemplated hereby shall have been obtained on
satisfactory terms and shall be in full force and effect, and all
applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority which would restrain,
prevent or otherwise impose adverse conditions on the Acquisition or the
financing contemplated hereby.
(f) Termination of Existing Indebtedness. The Administrative Agent
shall have received satisfactory evidence that substantially all of the
existing Indebtedness of the Company and its Subsidiaries (other than
Indebtedness allowed pursuant to Section 7.2(e)) shall have been paid in
full and arrangements satisfactory to the Administrative Agent shall have
been made for the termination of Liens and security interests granted in
connection therewith.
(g) Fees. The Lenders, Administrative Agent, Syndication Agent and
the Documentation Agent shall have received all fees required to be paid,
and all expenses for which invoices have been presented, on or before the
Closing Date.
(h) Projections. The Lenders shall have received projections for
fiscal years 1998-2004 and a satisfactory written analysis of the
business and prospects of the Company and its Subsidiaries for the period
from the Closing Date through December 31, 2004.
(i) Solvency Analysis. The Lenders shall have received a
satisfactory solvency opinion from Houlihan, Lokey, Howard & Zukin
Financial Advisors, Inc. which shall document the solvency of the Company
and its Subsidiaries considered as a whole after giving effect to the
Acquisition and the transactions contemplated hereby.
(j) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located, and such search shall reveal no liens on
any of the assets of the Company or its Subsidiaries except for liens
permitted by Section 7.3.
(k) Environmental Report. The Lenders shall have received a
supplemental report in form and scope reasonably satisfactory to the
Administrative Agent, prepared by Dames & Moore with respect to such
properties of the Company or its Subsidiaries as the Administrative Agent
may reasonably designate and based upon a visit to such properties by
Dames & Moore, substantially confirming the findings and conclusions of
the report of Dames & Moore previously provided to the Administrative
Agent with respect to such properties.
(l) Expenses. The Administrative Agent shall have received
satisfactory evidence that the fees and expenses to be incurred in
connection with the Acquisition and the financing thereof shall not exceed
$24,000,000.
(m) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party and each Foreign Subsidiary, dated
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56
the Closing Date, substantially in the form of Exhibit C, with appropriate
insertions and attachments.
(n) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinions of Paul, Weiss, Rifkind, Wharton &
Garrison and Coudert Brothers, counsel to the Borrowers and their
Subsidiaries, substantially in the form of Exhibits F-1 and F-2,
respectively;
(ii) the legal opinion of Keith Simmons, general counsel of
the Company and its Subsidiaries, substantially in the form of
Exhibit F-3;
(iii) to the extent consented to by the relevant counsel, each
legal opinion, if any, delivered in connection with the Purchase
Agreement, accompanied by a reliance letter in favor of the Lenders;
and
(iv) the legal opinions of (A) Pepper Hamilton LLP, (B) Kutak
Rock, (C) Kelly, Hart and Hallman (a professional corporation) and
(D) Oppenhoff & Radler, local counsel to the Borrowers (and/or
certain of the Company's Subsidiaries) in each of Pennsylvania,
Nebraska, Texas and Germany, respectively, and of such other special
and local counsel as may be required by the Administrative Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require.
(o) Pledged Stock; Stock Power; Pledged Notes. The Administrative
Agent shall have received (i) any certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof and (ii) each
promissory note pledged to the Administrative Agent pursuant to the
Guarantee and Collateral Agreement endorsed (without recourse) in blank
(or accompanied by an executed transfer form in blank satisfactory to the
Administrative Agent) by the pledgor thereof.
(p) Filings, Registrations and Recordings. Each document (including
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the Administrative Agent
to be filed, registered or recorded in order to create in favor of the
Administrative Agent, for the benefit of the Lenders, a perfected Lien on
the Collateral described therein, prior and superior in right to any other
Person (other than with respect to Liens expressly permitted by Section
7.3), shall be in proper form for filing, registration or recordation.
(q) Title Insurance; Flood Insurance. (i) If requested by the
Administrative Agent, the Administrative Agent shall have received, and
the title insurance company issuing the policy referred to in clause (ii)
below (the "Title Insurance Company") shall have received, maps or plats
of an as-built survey of the sites of the Mortgaged Properties certified
to the Administrative Agent and the Title Insurance Company in a manner
satisfactory to them, dated a date
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57
reasonably satisfactory to the Administrative Agent and the Title
Insurance Company by an independent professional licensed land surveyor
reasonably satisfactory to the Administrative Agent and the Title
Insurance Company, which maps or plats and the surveys on which they are
based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1992, and, without limiting the generality of the foregoing,
there shall be surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the buildings,
structures and other improvements and the established building setback
lines; (B) the lines of streets abutting the sites and width thereof; (C)
all access and other easements appurtenant to the sites; (D) all roadways,
paths, driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the site, whether recorded, apparent from a
physical inspection of the sites or otherwise known to the surveyor; (E)
any encroachments on any adjoining property by the building structures and
improvements on the sites; (F) if the site is described as being on a
filed map, a legend relating the survey to said map; and (G) the flood
zone designations, if any, in which the Mortgaged Properties are located.
(ii) The Administrative Agent shall have received in respect of each
Mortgaged Property a mortgagee's title insurance policy (or policies) or
marked up unconditional binder for such insurance. Each such policy shall
(A) be in an amount reasonably satisfactory to the Administrative Agent;
(B) be issued at ordinary rates; (C) insure that the Mortgage insured
thereby creates a valid first Lien on such Mortgaged Property free and
clear of all defects and encumbrances, except as disclosed therein; (D)
name the Administrative Agent for the benefit of the Lenders as the
insured thereunder; (E) be in the form of ALTA Loan Policy - 1970 (Amended
10/17/70 and 10/17/84) (or equivalent policies); (F) contain such
endorsements and affirmative coverage as the Administrative Agent may
reasonably request and (G) be issued by First American Title Insurance
Company or such other title company satisfactory to the Administrative
Agent (including any such title companies acting as co-insurers or
reinsurers, at the option of the Administrative Agent). The Administrative
Agent shall have received evidence satisfactory to it that all premiums in
respect of each such policy, all charges for mortgage recording tax, and
all related expenses, if any, have been paid.
(iii) If requested by the Administrative Agent, the Administrative
Agent shall have received (A) a policy of flood insurance which (1) covers
any parcel of improved real property which is encumbered by any Mortgage
(2) is written in an amount not less than the outstanding principal amount
of the indebtedness secured by such Mortgage which is reasonably allocable
to such real property or the maximum limit of coverage made available with
respect to the particular type of property under the National Flood
Insurance Act of 1968, whichever is less, and (3) has a term ending not
later than the maturity of the Indebtedness secured by such Mortgage and
(B) confirmation that the Company has received the notice required
pursuant to Section 208(e)(3) of Regulation H of the Board.
(iv) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in clause (ii) above and a copy of
all other material documents affecting the Mortgaged Properties.
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58
(r) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.3 of the
Guarantee and Collateral Agreement.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including its initial extension of credit but excluding any borrowing pursuant
to the penultimate sentence of Section 3.5) is subject to the satisfaction of
the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date, except to the extent that such
representations and warranties relate to a particular date, in which case
such representations and warranties shall be true and correct in all
material respects on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrowers
hereunder shall constitute a representation and warranty by the Borrowers as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Company and Grove Capital hereby jointly and severally agree
that, so long as the Commitments remain in effect, any Letter of Credit remains
outstanding (unless cash collateralized) or any Loan or other amount is owing to
any Lender or any Agent hereunder, each of the Company and Grove Capital shall
and shall, to the extent applicable, cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent and
each Lender (through the Administrative Agent):
(a) as soon as available, but in any event within 95 days after the
end of each fiscal year of the Company, a copy of the audited consolidated
balance sheet of the Company and its consolidated Subsidiaries as at the
end of such year and the related audited consolidated statements of
income, invested capital and of cash flows for such year, setting forth in
each case in comparative form the figures for the previous year, reported
on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by KPMG Peat Marwick,
LLP or other independent certified public accountants of nationally
recognized standing;
(b) as soon as available, but in any event not later than 50 days
after the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited consolidated balance sheet of the
Company and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the
figures for the previous year, certified by a Responsible Officer as being
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59
fairly stated in all material respects (subject to the absence of
footnotes and normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 50 days
after the end of each month occurring during each fiscal year of the
Company (other than the third, sixth, ninth and twelfth such month), the
unaudited consolidated balance sheets of the Company and its Subsidiaries
as at the end of such month and the related unaudited consolidated
statements of income for such month and the portion of the fiscal year
through the end of such month, setting forth in each case in comparative
form the figures for the previous year, certified by a Responsible Officer
as being fairly stated in all material respects (subject to the absence of
footnotes and normal year-end audit adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative
Agent and each Lender (through the Administrative Agent), or, in the case of
clause (g), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate on behalf of the Company signed
by a Responsible Officer stating that, to the best of each such
Responsible Officer's knowledge, each Loan Party during such period has,
in all material respects, observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate and (ii) in the case of quarterly or annual
financial statements, (x) a Compliance Certificate containing all
financial information necessary for determining compliance by the Company
and its Subsidiaries with the provisions of this Agreement referred to
therein as of the last day of the fiscal quarter or fiscal year of the
Company, as the case may be, and (y) to the extent not previously
disclosed to the Administrative Agent, a listing of any county or state
within the United States where any Loan Party keeps material inventory or
equipment (other than goods in transit or leased by the Company or a
Subsidiary to a customer ) and of any Intellectual Property acquired by
any Loan Party since the date of the most recent list delivered pursuant
to this clause (y) (or, in the case of the first such list so delivered,
since the Closing Date);
(c) as soon as available, and in any event no later than 75 days
after the end of each fiscal year of the Company, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of the Company and its Subsidiaries as of the end of the
following fiscal year, and the related consolidated statements of
projected cash flow, projected changes in financial position and projected
income), and, as soon as available,
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60
significant revisions, if any, of such budget and projections with respect
to such fiscal year (collectively, the "Projections"), which Projections
shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has no
reason to believe that such Projections are unreasonable or misleading in
any material respect;
(d) within 50 days after the end of each fiscal quarter of the
Company, a narrative discussion and analysis of the financial condition
and results of operations of the Company and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the portion
of the Projections covering such periods and to the comparable periods of
the previous year;
(e) no later than 5 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior
Subordinated Note Indenture or the Purchase Agreement;
(f) within five Business Days after the same are sent, copies of all
financial statements and reports which the Company or Grove Capital sends
to the holders of any class of its debt securities or public equity
securities and within five Business Days after the same are filed, copies
of all financial statements and reports which the Company or Grove Capital
may make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority; and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be,
all its material obligations of whatever nature, except where the amount
or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves with respect thereto to the extent,
if any, required by GAAP, have been provided on the books of the Company
or its Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence, etc. (a) (i)
Preserve, renew and keep in full force and effect its corporate existence
and (ii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business,
except, in each case, as otherwise permitted by Sections 7.4 and 7.5 and
except, in the case of clause (ii) above, to the extent that failure to do
so could not reasonably be expected to have a Material Adverse Effect; and
(b) comply with all Contractual Obligations and Requirements of Law except
to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all Property and
systems useful and necessary in its business in good working order and
condition (ordinary wear and tear excepted) except where the failure to do
so could not, in the aggregate, be reasonably expected to have a Material
Adverse Effect and (b) maintain with financially sound and reputable
insurance companies insurance on all its Property in at least such amounts
and against at least such risks (but including in any event
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61
public liability, product liability and business interruption) as are
usually insured against in the same general area by companies engaged in
the same or a similar business.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP (or, in the case of any Foreign Subsidiary which does not
keep its books of records and account in accordance with GAAP, in conformity
with the generally accepted accounting principles of such Foreign Subsidiary's
jurisdiction of organization) and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of any Lender to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any
reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Company and its Subsidiaries with officers and employees of the Company and its
Subsidiaries and with its independent certified public accountants (provided
that the Company shall have the right to have a representative present during
any such discussions with its independent certified public accountants).
6.7 Notices. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Company or any of its
Subsidiaries in which the amount involved is $5,000,000 or more and not
covered by insurance or in which injunctive or similar relief is sought;
(d) the following events, as soon as practicable and in any event
within 30 days after either Borrower knows or has reason to know thereof:
(i) the occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any
Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or either Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan in each case where
such event has had or could reasonably be expected to result, individually
or in the aggregate, in liability in excess of $5,000,000; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Company or the relevant Subsidiary proposes
to take with respect thereto.
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62
6.8 Environmental Laws. (a) (i) Comply with all Environmental Laws
applicable to it, and obtain, comply with and maintain any and all Environmental
Permits necessary for its operations as conducted and as planned; and (ii) take
all reasonable efforts to ensure that all of its tenants, subtenants,
contractors, subcontractors, and invitees comply with all Environmental Laws,
and obtain, comply with and maintain any and all Environmental Permits,
applicable to any of them insofar as any failure to so comply, obtain or
maintain reasonably could be expected to adversely affect the Borrower or any of
its Subsidiaries. For purposes of this Section 6.8(a), noncompliance by the
Borrower with this clause (i) or the succeeding clause (ii) shall be deemed not
to constitute a breach of this covenant provided that, upon learning of any
actual or suspected noncompliance, the Company and its Subsidiaries shall
promptly undertake all reasonable efforts to achieve compliance, and provided
further that, in any case, such non-compliance, individually or in the
aggregate, could not reasonably be expected to give rise to a Material Adverse
Effect.
(b) Promptly comply with all orders and directives of all
Governmental Authorities regarding Environmental Laws, other than such orders
and directives as to which an appeal has been timely and properly taken in good
faith, and provided that the pendency of any and all such appeals could not
reasonably be expected to give rise to a Material Adverse Effect.
(c) Maintain, periodically review, update, and implement in all
material respects, a program to identify and promote compliance with and to
minimize prudently any liabilities or potential liabilities under any
Environmental Law that may affect Borrower or any of its Subsidiaries, including
without limitation compliance and liabilities relating to: discharges to air and
water; acquisition, transportation, storage, and use of hazardous materials;
waste disposal; species protection; the acquisition of interests in real
property or of entities with interests in real property; the repair, maintenance
and improvement of real properties; employee health and safety; and
recordkeeping.
6.9 Interest Rate Protection. In the case of the Borrowers, within
90 days after the Closing Date, enter into Interest Rate Protection Agreements
to the extent necessary to provide that at least one-third of the aggregate
principal amount of the Term Loans is subject to either a fixed interest rate or
interest rate protection for a period of not less than three years, which
Interest Rate Protection Agreements shall have terms and conditions reasonably
satisfactory to the Administrative Agent.
6.10 Additional Collateral, etc. (a) With respect to any Property
acquired after the Closing Date by Holdings, the Company, Grove Capital or any
of the Subsidiary Guarantors (other than (x) any Property described in
paragraphs (b) or (c) below, (y) any Property subject to a Lien expressly
permitted by Section 7.3(g) and (z) any Excluded Assets (as defined in the
Guarantee and Collateral Agreement)) as to which the Administrative Agent, for
the benefit of the Lenders, does not have a perfected Lien, promptly (i) execute
and deliver to the Administrative Agent such amendments to the Guarantee and
Collateral Agreement or such other documents as the Administrative Agent
reasonably deems necessary or advisable in order to grant to the Administrative
Agent, for the benefit of the Lenders, a security interest in such Property and
(ii) take all actions reasonably necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in such Property, subject to Liens permitted by Section 7.3,
including the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent.
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63
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $5,000,000 acquired after
the Closing Date by Holdings, the Company, Grove Capital or any of the
Subsidiary Guarantors (other than any such real property subject to a Lien
expressly permitted by Section 7.3(g)), promptly (i) execute and deliver a first
priority Mortgage in favor of the Administrative Agent, for the benefit of the
Lenders, covering such real property, (ii) if requested by the Administrative
Agent, provide the Lenders with (x) title and extended coverage insurance
covering such real property in an amount at least equal to the purchase price of
such real estate (or such other amount as shall be reasonably specified by the
Administrative Agent) as well as a current ALTA survey thereof, together with a
surveyor's certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Administrative Agent in connection with such
mortgage or deed of trust, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) With respect to (i) any new Material Subsidiary, (ii) any new
First-Tier Foreign Subsidiary, created or acquired after the Closing Date by
Holdings, the Company, Grove Capital or any of their Subsidiaries (which, for
the purposes of this paragraph (c), shall include any existing Subsidiary that
ceases to be Foreign Subsidiary) and (iii) any First-Tier Foreign Subsidiary
existing as of the date hereof or created or acquired after the Closing Date by
Holdings, the Company, Grove Capital or any of their subsidiaries which has
become a Check-the-Box Subsidiary, shall promptly (A) execute and deliver to the
Administrative Agent such amendments to the Guarantee and Collateral Agreement
as the Administrative Agent deems necessary or advisable in order to grant to
the Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in (1) 100% of the Capital Stock of any such new
Material Subsidiary, (2) 65% of the Capital Stock of any such new First-Tier
Foreign Subsidiary or (3) 100% of the Capital Stock of any Check-the- Box
Subsidiary referred to in the preceding clause (iii) (provided that such
increased pledge shall not be required or shall be released if (x) such
Check-the-Box Subsidiary elects not to be treated as a partnership or to be
disregarded as an entity separate from its owner for United States federal
income tax purposes or (y) such pledge results in material adverse tax
consequences to such Check-the-Box Subsidiary as notified by the Company to the
Administrative Agent), which is owned by Holdings, the Company or any of its
Subsidiaries, (B) deliver to the Administrative Agent the certificates, if any,
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of Holdings, the Company or
such Subsidiary, as the case may be, (C) cause such new Material Subsidiary (1)
to become a party to the Guarantee and Collateral Agreement and (2) to take such
actions necessary or advisable to grant to the Administrative Agent for the
benefit of the Lenders a perfected first priority security interest in the
Collateral and/or the pledged stock, as the case may be, described in the
Guarantee and Collateral Agreement with respect to such new Material Subsidiary,
First-Tier Foreign Subsidiary or Check-the-Box Subsidiary, including the filing
of Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
requested by the Administrative Agent, and (D) if reasonably requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) Within 90 days after the Closing Date, enter into and deliver to
the Administrative Agent a pledge agreement (on terms and conditions reasonably
satisfactory to the Administrative Agent)
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64
providing for the pledge, to the Administrative Agent, for the ratable benefit
of the Lenders, of 65% (as such percentage may be required to be later increased
pursuant to the provisions of the preceding paragraph (c)) of the Capital Stock
of Grove Australia.
(e) Within 30 days after the Closing Date, shall deliver to the
Administrative Agent (i) a mortgage's title insurance policy and survey meeting
the requirements of Section 5.1(q) with respect to the Mortgaged Property
located in Blue Ridge Summit, Pennsylvania and shall take all such further
action as may be reasonably requested by the Administrative Agent in connection
with the Mortgage related thereto and (ii) a survey meeting the requirements of
Section 5.1(q) with respect to the Mortgaged Property located in Shady Grove,
Pennsylvania.
(f) Within 15 days after the Closing Date, shall (i) deliver to the
Administrative Agent (A) evidence as may be reasonably satisfactory to the
Administrative Agent that each of Grove Holdings France SAS and Grove Worldwide
Holdings Germany GmbH has completed all corporate formalities as may be required
pursuant to the law of each such company's jurisdiction of organization, (B)
each of Grove Holdings France SAS and Grove Worldwide Holdings Germany GmbH (and
each such entity's corporate parent) has completed each other act as may be
required to make the Foreign Pledge Agreement providing for the pledge of 65%
(as such percentage may be required to be later increased pursuant to the
provisions of the preceding paragraph (c)) of such Subsidiary's Capital Stock to
the Administrative Agent, for the ratable benefit of the Lenders, the legal,
valid and binding obligation of each party thereto, enforceable against each
such party in accordance with its terms and (C) a certificate of a Responsible
Officer of the Company representing and warranting that, in light of the steps
taken in the preceding clauses (A) and (B), the matters contained in Sections
4.3 and 4.4, as they relate to such companies, are true and correct as of such
date (ii) shall cause Coudert Brothers and/or Oppenhoff & Radler to deliver to
the Administrative Agent and the Lenders an executed legal opinion in connection
with the matters described in the preceding clause (i) in form and substance
reasonably satisfactory to the Administrative Agent.
6.11 Intercompany Loans and Intercompany Notes. In the case of the
Borrowers and their Domestic Subsidiaries, after the Closing Date, other than as
may be required from time to time by applicable law or to the extent it would
adversely affect the deductibility of interest on any Intercompany Note or
otherwise have a material adverse tax effect on the Foreign Subsidiary in
question, (i) make any investment or advance to any Foreign Subsidiary by way of
an Intercompany Loan evidenced by an Intercompany Note, provided that the
Company and its Subsidiaries may make equity contributions or investments in
Foreign Subsidiaries as permitted by Section 7.8(h) and (ii) cause each of its
Check-the-Box Subsidiaries, pursuant to an Intercompany Loan Pledge Agreement,
to pledge (x) 100% of the Capital Stock of its direct Subsidiaries that are
Check-the-Box Subsidiaries, and (y) 65% of the Capital Stock owned and held by
it in its remaining Subsidiaries to secure any Intercompany Notes executed by
it, provided that such pledge shall not be required or shall be released if (a)
such Check-the-Box Subsidiary elects not to be treated as a partnership or to be
disregarded as an entity separate from its owner for United States federal
income tax purposes or (b) such pledge results in material adverse tax
consequences to such Check-the-Box Subsidiary, the Company, or the direct or
indirect owners of the Capital Stock of the Company as notified by the Company
to the Administrative Agent.
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65
SECTION 7. NEGATIVE COVENANTS
The Borrowers hereby jointly and severally agree that, so long as
the Commitments remain in effect, any Letter of Credit remains outstanding or
any Loan or other amount is owing to any Lender or any Agent hereunder, each of
the Company and Grove Capital shall not, and shall not permit any of its
respective Subsidiaries to, directly or indirectly:
7.1 Financial Condition Covenants.
(a) Senior Leverage Ratio. Permit the Senior Leverage Ratio as at
the last day of any fiscal quarter of the Company ending in any period set forth
below to exceed the ratio set forth below opposite such period:
Senior
Period Leverage Ratio
------ --------------
Closing Date to 12/31/1999 0.50 to 1.0
3/31/2000 to 12/31/2001 0.45 to 1.0
3/31/2002 to 12/31/2003 0.40 to 1.0
3/31/2004 and thereafter 0.35 to 1.0
(b) Consolidated Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Company (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending with any fiscal quarter in any period set
forth below to be less than the ratio set forth below opposite such period:
Consolidated Fixed
Period Charge Coverage Ratio
------ ---------------------
Closing Date to 12/31/1999 1.05 to 1.0
3/31/2000 to 12/31/2001 1.10 to 1.0
3/31/2002 to 12/31/2002 1.15 to 1.0
3/31/2003 to 12/31/2003 1.25 to 1.0
3/31/2004 to 12/31/2004 1.50 to 1.0
3/31/2005 to 12/31/2005 1.75 to 1.0
thereafter 2.00 to 1.0
(c) Consolidated Balance Sheet Test Ratio. Permit the Consolidated
Balance Sheet Test Ratio as of any day to be less than 1.0 to 1.0.
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
<PAGE>
66
(b) Indebtedness of the Company to any Subsidiary and of any Wholly
Owned Subsidiary to the Company or any other Wholly Owned Subsidiary
(provided that, after giving effect thereto, Section 7.8 shall not have
been contravened);
(c) Indebtedness secured by Liens permitted by Section 7.3(g) in an
aggregate principal amount not to exceed $10,000,000 at any one time
outstanding;
(d) Capital Lease Obligations, mortgage financings, purchase money
obligations or similar financings incurred for the purpose of financing
all or any part of the purchase price of, or cost of construction or
improvement of, property, plant or equipment used in the business of the
Company or such Subsidiary, in an aggregate principal amount, not to
exceed $10,000,000 at any one time outstanding;
(e) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(e) and any refinancing, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof);
(f) guarantees made in the ordinary course of business by the
Company or any of its Subsidiaries of obligations of any Wholly Owned
Subsidiary;
(g) (i) Indebtedness of the Borrowers in respect of the Senior
Subordinated Notes in an aggregate principal amount not to exceed
$225,000,000 and (ii) Guarantee Obligations of any Subsidiary Guarantor in
respect of such Indebtedness; provided that such Guarantee Obligations are
subordinated to the obligations of such Subsidiary Guarantor under the
Guarantee and Collateral Agreement to the same extent as the obligations
of the Borrowers in respect of the Senior Subordinated Notes are
subordinated to the Loans;
(h) (i) Indebtedness (including any Guarantee Obligation of such
Indebtedness) of the Company and its Subsidiaries in respect of the Dealer
Receivables Financing in an aggregate principal amount not to exceed
$110,000,000 and (ii) Indebtedness of the Company and its Subsidiaries in
respect of the Existing Factoring Arrangements in an aggregate principal
amount not to exceed $15,000,000;
(i) additional Indebtedness of the Company or any of its
Subsidiaries in an aggregate principal amount (for the Company and all
Subsidiaries) not to exceed $20,000,000 at any one time outstanding
(provided that, after giving effect thereto, Section 7.8 shall not have
been contravened);
(j) Indebtedness in respect of Hedging Agreements entered into for
non-speculative purposes;
(k) Indebtedness (including letters of credit) incurred in respect
of workers compensation claims, self-insurance obligations, performance,
surety, bid or similar bonds and completion guarantees provided by the
Company or a Subsidiary in the ordinary course of business;
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67
(l) repurchase or remarketing obligations, first loss guarantees,
contingent loss guarantees and residual value guarantees and similar
obligations (the "Trade Obligations") of the Company and its Subsidiaries
incurred in the ordinary course of business;
(m) Indebtedness not in excess of $10,000,000 outstanding at any
time assumed in connection with a Permitted Acquisition (provided such
indebtedness was not created in contemplation of such acquisition);
(n) Indebtedness not to exceed $7,500,000 in the aggregate in
connection with Sale/Leaseback Transaction permitted by Section 7.11;
(o) Guarantee Obligations of the Company or any of the Subsidiary
Guarantors of Indebtedness of the Company or a Subsidiary of the Company,
which Indebtedness was permitted to be incurred by another clause of this
Section 7.2, provided that the amount of Indebtedness of the Company and
its Subsidiaries is not thereby increased (provided that, after giving
effect thereto, Section 7.8 shall not have been contravened);
(p) the incurrence of Indebtedness arising from agreements of the
Company or any Subsidiary providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred or assumed
in connection with the disposition or acquisition of any business, assets
or Capital Stock of a Subsidiary; provided that (i) the maximum aggregate
liability of such Indebtedness shall at no time exceed the gross proceeds
actually received by the Company and its Subsidiaries in connection with
any such disposition or the gross proceeds actually paid by the Company
and its Subsidiaries in connection with any such acquisition and (ii)
Indebtedness permitted by this paragraph shall in no way increase the
total amount of consideration permitted to be expended in connection with
a Permitted Acquisition (provided that, after giving effect thereto,
Section 7.8 shall not have been contravened).
7.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its Property or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes, assessments or governmental charges not yet due
or which are being contested in good faith by appropriate proceedings,
provided that, if required by GAAP, adequate reserves with respect thereto
are maintained on the books of the Company or its Subsidiaries, as the
case may be;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, artisan's or other like Liens arising in the ordinary course
of business which are not overdue for a period of more than 30 days or
which are being contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, government contracts, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred and statutory or contractual
bankers' Liens on monies held in bank accounts in the ordinary course of
business;
<PAGE>
68
(e) easements, rights-of-way, restrictions and other similar
encumbrances and encumbrances consisting of zoning restrictions,
easements, licenses, restrictions on the use of Property or minor
imperfections in title thereto incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and which do not in
any case materially detract from the value of the Property subject thereto
or materially interfere with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
(i) securing Indebtedness permitted by Section 7.2(e) and (ii) relating to
real property but not securing Indebtedness, provided that no such Lien is
spread to cover any additional Property (other than a substitution of like
property) after the Closing Date and that the amount of Indebtedness
secured thereby is not increased;
(g) Liens securing Indebtedness of the Company or any of its
Subsidiaries incurred pursuant to Sections 7.2(c) and 7.2(d) to finance
the acquisition (by purchase, contribution or otherwise) of fixed or
capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets or such Liens existed on such Property before the time of its
acquisition and was not created in anticipation thereof, (ii) such Liens
do not at any time encumber any Property other than the Property financed
by such Indebtedness and (iii) the amount of Indebtedness secured thereby
is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into
by the Company, Grove Capital or any of their Subsidiaries in the ordinary
course of its business and covering only the assets so leased;
(j) Liens not otherwise permitted by this Section 7.3 so long as
neither (i) the aggregate outstanding principal amount of the obligations
secured thereby nor (ii) the aggregate fair market value (determined as of
the date such Lien is incurred) of the assets subject thereto exceeds (as
to the Company and all of its Subsidiaries) $20,000,000 at any one time;
(k) Liens in favor of the United States for amounts paid by the
Company or any of its Subsidiaries as progress payments under government
contracts entered into by them in the ordinary course of business;
(l) attachment, judgment or other similar Liens arising in
connection with court or arbitration proceedings, provided that the same
are discharged within 30 days;
(m) possessory Liens in favor of brokers and dealers arising in
connection with the acquisition or disposition of investments of the type
permitted in subsection 7.8(b); provided that such Liens (i) attach only
to such investments and (ii) secure only obligations incurred in the
ordinary course and arising in connection with the acquisition or
disposition of such investments and not any obligation in connection with
margin financing;
<PAGE>
69
(n) Liens on property or assets (x) acquired pursuant to a Permitted
Acquisition or (y) of a corporation or other entity which becomes a
Subsidiary or is merged into the Company pursuant to a Permitted
Acquisition; provided that (i) such Liens existed at the time such assets
were acquired or such corporation or other entity became a Subsidiary or
was merged into the Company and were not created in anticipation thereof
and (ii) any such Lien is not spread to cover any other property or assets
of the corporation after the time such corporation becomes a Subsidiary;
(o) Liens securing reimbursement obligations with respect to letters
of credit and products and proceeds thereof in the ordinary course;
(p) Liens securing obligations under Hedging Agreements which
Hedging Agreements relate to Indebtedness that is otherwise permitted
under this Agreement;
(q) Liens arising out of consignment or similar arrangements for the
sale of goods entered into by the Company or any Subsidiary in the
ordinary course of business;
(r) any extension, renewal or replacement of the foregoing,
provided, that the Liens permitted by this paragraph shall not extend to
or cover any additional Indebtedness or Property (other than a
substitution of like Property);
(s) Liens in favor of the Company or a Subsidiary;
(t) Liens with respect to Trade Obligations and related inventory
and equipment; and
(u) Liens incurred in connection with any Dealer Receivables
Financing and the Existing Factoring Arrangements.
7.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business except:
(a) any Subsidiary of the Company may be merged or consolidated with
or into (i) the Company (provided that the Company shall be the continuing
or surviving corporation) or (ii) with or into any Wholly Owned Subsidiary
Guarantor (provided that the Wholly Owned Subsidiary Guarantor shall be
the continuing or surviving corporation) or (iii) if such Subsidiary is a
Foreign Subsidiary, with or into any First-Tier Foreign Subsidiary, the
Company or any Wholly Owned Subsidiary Guarantor (provided that the
First-Tier Foreign Subsidiary, the Company or the Wholly Owned Subsidiary
Guarantor, as the case may be, shall be the continuing or surviving
corporation);
(b) any Subsidiary of the Company may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Company, any
Wholly Owned Subsidiary Guarantor or, if such Subsidiary is a Foreign
Subsidiary, to any First-Tier Foreign Subsidiary, the Company or any
Wholly Owned Subsidiary Guarantor;
(c) the Company and its Subsidiaries may alter the form of their
corporate or other entity organization (including a liquidation in
connection therewith), provided that the Loan
<PAGE>
70
Parties enter into such amendments to this Agreement and, if applicable,
the Guarantee and Collateral Agreement, as shall be reasonably
satisfactory to the Administrative Agent and the Required Lenders;
(d) Grove France may change its corporate organization to an SAS;
(e) Grove Capital may be liquidated in the event the Company becomes
a corporation in accordance with clause (c) above; and
(f) any inactive Subsidiary with no material assets may be
liquidated or merged into any other Subsidiary.
7.5 Limitation on Sale of Assets. Dispose of any of its Property or
business (including receivables and leasehold interests), whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares
of such Subsidiary's Capital Stock (other than any directors' qualifying shares)
to any Person (other than the Company or any of its Wholly-Owned Subsidiary
Guarantors), except:
(a) sales of receivables, notes receivables, chattel paper and
related assets pursuant to (i) the Dealer Receivables Financing or (ii)
any Existing Factoring Arrangement;
(b) the Disposition of obsolete or worn out property in the ordinary
course of business;
(c) the Disposition of inventory in the ordinary course of business;
(d) Dispositions permitted by Sections 7.3 and 7.4;
(e) the sale or issuance of any Subsidiary's Capital Stock to the
Company, Grove Capital or any Wholly Owned Subsidiary Guarantor, provided
that, to the extent applicable, any such sale or issuance is also in
accordance with the limitations included in the proviso contained in
paragraph (h) of Section 7.8;
(f) the Disposition of other assets for aggregate net proceeds not
to exceed $10,000,000 in the aggregate for any fiscal year of the Company;
(g) any Asset Sale or Recovery Event, provided, that the
requirements of Section 2.12(c) are complied with in connection therewith;
and
provided that, in the event that a Disposition pursuant to any one of the
preceding exceptions would give rise to an obligation on the part of the
Borrowers to make (i) a mandatory redemption of the Senior Subordinated Notes or
(ii) an offer to redeem the Senior Subordinated Notes (pursuant to the terms of
the Senior Subordinated Notes Indenture), such a Disposition, notwithstanding
anything to the contrary in this Agreement, shall not be permissible.
7.6 Limitation on Dividends. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Company
<PAGE>
71
or any Subsidiary or any warrants or options to purchase any such Capital Stock,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Company or any Subsidiary (collectively, "Restricted
Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the Company,
Grove Capital or any Wholly Owned Subsidiary;
(b) the Company may pay dividends to Holdings (and Holdings may pay
any such dividends to the owners of its Capital Stock or to Grove
Investors) in order to enable the direct and indirect owners of the
Capital Stock of Holdings and Grove Investors to pay income taxes,
determined at the Specified Rate, attributable to the taxable income of
Holdings and its Subsidiaries;
(c) after the fifth anniversary of the Closing Date and so long as
no Default or Event of Default shall have occurred and be continuing, the
Company may pay dividends to Holdings in order to enable Holdings to pay
interest when due on the Holdings Debentures;
(d) after the fifth anniversary of the Closing Date and so long as
(i) no Default or Event of Default shall have occurred and be continuing
and (ii) the Consolidated Fixed Charge Coverage Ratio for the period of
four consecutive fiscal quarters ending on the last day of the most
recently ended fiscal quarter is at least 2.5 to 1.0 (including on a
pro-forma basis as Consolidated Interest Expense any dividends paid or to
be paid in respect of such period permitted pursuant to this paragraph
(d)), the Company may pay dividends to Holdings in order to enable
Holdings to pay interest or scheduled dividends when due on the Holdings
Mezzanine Financing;
(e) so long as no Default or Event of Default shall have occurred
and be continuing, the repurchase, redemption or other acquisition or
retirement for value of any Capital Stock of Grove Investors or Holdings
held by any member or former member of Grove Investors', Holdings' or the
Company's (or any of its Subsidiaries') Board of Directors or any
officers, employees, or directors or former officers, employees or
directors of Grove Investors', Holdings or the Company or any Subsidiary
pursuant to Grove Investors' limited liability company operating agreement
or pursuant to any equity subscription agreement, stock option plan,
employment agreement or other similar agreement, and any dividends to
Holdings to fund any such repurchase, redemption or acquisition, provided
that, subsequent to the Closing Date, the aggregate amount of the
preceding payments shall not exceed (x) $2,000,000 in calendar year 1998
and thereafter $5,000,000 in any calendar year (with unused amounts, other
than the $2,000,000 related to 1998 which may not be carried over, in any
calendar year being carried over to succeeding calendar years subject to a
maximum of $15,000,000 per calendar year) plus (y) the aggregate cash
proceeds received by the Company during such calendar year from any
reissuance of Capital Stock by Grove Investors, Holdings or the Company to
Persons who are or become a member of Grove Investors', Holdings' or the
Company's (or any of its Subsidiaries') Board of Directors or an officer
or employee of Grove Investors, Holdings or the Company and provided
further, however, that, (i) subsequent to the Closing Date, all such
payments shall not exceed $15,000,000 plus the aggregate cash proceeds
received by the Company subsequent to the Closing Date from any reissuance
of Capital Stock by Grove
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72
Investors, Holdings or the Company and (ii) notwithstanding the
parenthetical included in the preceding clause (x), the aggregate amount
of any such payments in any calendar year shall not exceed $10,000,000
plus the aggregate cash proceeds received by the Company during such
calendar year from any reissuance of Capital Stock by Grove Investors,
Holdings or the Company unless the Consolidated Fixed Charge Coverage
Ratio for the period of four consecutive fiscal quarters ending on the on
the last day of the most recently ended fiscal quarter is at least 2.5 to
1.0;
(f) the Company may pay dividends to Holdings to permit Holdings to
make administrative and other payments (including taxes) in the ordinary
course of business; and
(g) the payment of dividends or making of loans or advances for
costs and expenses incurred by Grove Investors or Holdings in either
company's capacity as a holding company or as issuer of the Holdings
Debentures or the Senior Debentures Due 2010 of Grove Investors (the
"Grove Investors Debentures"), respectively, or for services rendered by
Grove Investors or Holdings on behalf of the Company in an amount not to
exceed $2,000,000 in any fiscal year.
7.7 Limitation on Capital Expenditures. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise, excluding
Permitted Acquisitions) any Capital Expenditure, except (a) Capital Expenditures
of the Company and its Subsidiaries in the ordinary course of business not
exceeding the aggregate amount in each period or fiscal year set forth below of
the amount set forth below:
Period Amount
------ ------
Closing Date to end
of fiscal 1998 $ 25,000,000
1999 15,000,000
2000 15,000,000
2001 15,000,000
2002 15,000,000
2003 20,000,000
2004 20,000,000
2005 20,000,000
; provided, that (i) up to 25% of any such amount referred to above, if not so
expended in the fiscal year for which it is permitted, may be carried over for
expenditure in the next succeeding fiscal year, (ii) Capital Expenditures made
pursuant to this clause (a) during any fiscal year shall be deemed made, first,
in respect of amounts carried over from the prior fiscal year pursuant to
subclause (i) above and, second, in respect of amounts permitted for such fiscal
year as provided above (any amount carried over from a preceding fiscal year and
not made on the succeeding year may not be carried over to a second succeeding
year) and (iii) any amount referred to above shall be increased for such year by
the amount of any cash payment received by the Company in such year in respect
of any indemnity payment from Hanson (pursuant to the indemnity provisions of
the Purchase Agreement and which relate to the Company's management and
information systems) which the Company expends in connection with correcting any
management and information systems deficiency during such year and (b) Capital
Expenditures made with the proceeds of any Reinvestment Deferred Amount.
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73
7.8 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting all or a material part of a division or
line of business of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees, directors and officers of the
Company or its Subsidiaries in the ordinary course of business (including
for travel, entertainment and relocation expenses) in an aggregate amount
for the Company and its Subsidiaries not to exceed $2,000,000 at any one
time outstanding;
(e) the Acquisition and related transactions, including loans and
capital contributions to pay the cost of the Acquisition and to capitalize
Subsidiaries;
(f) investments made by the Company or any of its Subsidiaries with
the proceeds of any Reinvestment Deferred Amount;
(g) loans, advances and investments by the Company or any of its
Subsidiaries in the Company or any Person that is a Wholly Owned
Subsidiary Guarantor;
(h) Intercompany Loans, other investments or capital contributions
by the Company and its Wholly-Owned Subsidiaries to Foreign Subsidiaries
in an aggregate amount for the Company and such Wholly-Owned Subsidiaries
not to exceed $35,000,000 at any one time outstanding, provided that
(other than as may be required from time to time by applicable law or to
the extent it would adversely affect the deductibility of interest on any
Intercompany Note or otherwise have a material adverse tax effect on the
Foreign Subsidiary in question) no more than $10,000,000 of the foregoing
amount may be in the form of investments or capital contributions;
(i) Intercompany Loans by the Company and its Wholly-Owned
Subsidiaries in the ordinary course of business to Subsidiaries which are
not Subsidiary Guarantors or Foreign Subsidiaries in an aggregate amount
for the Company not to exceed $5,000,000 at any one time outstanding;
(j) Permitted Acquisitions;
(k) in addition to investments otherwise expressly permitted by this
Section 7.8 (excluding, however, the preceding paragraph (h)), investments
by the Company or any of its Subsidiaries in an aggregate amount (valued
at cost) not to exceed $20,000,000 during the term of this Agreement;
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74
(l) loans to officers and managers of Grove Investors, Holdings and
the Company or the receipt of promissory notes from such officers and
managers to enable such officers and managers to purchase Capital Stock of
Grove Investors;
(m) the Company and its Subsidiaries may acquire and own investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers or in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising
out of the ordinary course of business; provided that the Company and its
Subsidiaries have paid no new consideration (other than forgiveness of
Indebtedness or other obligations) therefor;
(n) investments by the Company and its Subsidiaries in connection
with Hedging Agreements; and
(o) in addition to the Intercompany Loans, other investments or
capital contributions permitted by the preceding paragraph (h),
Intercompany Loans, other investments or capital contributions by the
Company and its Wholly-Owned Subsidiaries in connection with charges
relating to facilities closings in an aggregate amount for the Company and
such Wholly-Owned Subsidiaries not to exceed $30,000,000.
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) Make or offer to make any payment, prepayment, repurchase
or redemption of or otherwise defease or segregate funds for any such payment,
prepayment, repurchase or redemption (other than scheduled interest or principal
payments not permitted to be made in kind) with respect to (i) the Senior
Subordinated Notes (other than the exchange offer contemplated by the Senior
Subordinated Note Indenture) or (ii) any other instrument governing Indebtedness
of the Company or any of its Subsidiaries (other than any Dealer Receivables
Financing, the Existing Factoring Arrangements or the Trade Obligations) for an
aggregate principal amount of $5,000,000 or more (each such instrument, an
"Other Indebtedness Instrument"), (b) amend, modify, waive or otherwise change,
or consent or agree to any amendment, modification, waiver or other change to,
any of the terms of (i) any Other Indebtedness Instrument or (ii) the Senior
Subordinated Notes (other than any such amendment, modification, waiver or other
change which (A) would extend the maturity or reduce the amount of any payment
of principal thereof or which would reduce the rate or extend the date for
payment of interest thereon, (B) does not involve the payment of a consent fee
and (C) any amendment, modification or waiver which would not be adverse to the
interests of the Administrative Agent or the Lenders), (c) designate any
Indebtedness as "Designated Senior Indebtedness" for the purposes of the Senior
Subordinated Note Indenture or (d) amend its certificate of incorporation in any
manner reasonably determined by the Administrative Agent to be adverse to the
Lenders without the prior written consent of the Required Lenders.
7.10 Limitation on Transactions with Affiliates. Enter into any
transaction, including any purchase, sale, lease or exchange of Property, the
rendering of any service or the payment of any management, advisory or similar
fees, with any Affiliate (other than the Company or any Wholly Owned Subsidiary)
unless such transaction is (a) otherwise permitted under this Agreement, (b) in
the ordinary course of business of the Company or such Subsidiary, as the case
may be, and (c) upon fair and reasonable terms no less favorable to the Company
or such Subsidiary, as the case may be, than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate.
Notwithstanding the foregoing, the Company and its Subsidiaries may (i) enter
into Permitted George Group Transactions
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75
approved by Holdings in its capacity as the managing member of the Company, (ii)
any employment agreement, compensation or employee benefit arrangements and
incentive arrangements with any officer, director, member or employee entered
into by the Company or any of its Subsidiaries in the ordinary course of
business, (iii) pay reasonable directors or managers fees to Persons who are not
otherwise Affiliates of the Company, (iv) make loans and advances to officers,
directors and employees of the Company or any Subsidiary for travel,
entertainment, moving and other relocation expenses, in each case made in the
ordinary course of business, (v) make change of control and other severance
payments (exclusive of any payments permitted by Section 7.6(e)) not to exceed
$5,000,000, (vi) enter into or engage in transactions pursuant to any contract
or agreement in effect on the date hereof and listed on Schedule 7.10 as the
same may be amended, modified or replaced from time to time so long as such
amendment, modification or replacement is no less favorable to the Company and
its Subsidiaries than the contract or agreement as in effect on the date hereof,
and (viii) transactions permitted by Section 7.6(b), (e) and (g) and Section
7.8(l).
7.11 Limitation on Sales and Leasebacks. Other than as in effect on
the date hereof and as set forth on Schedule 7.11, enter into any arrangement
with any Person providing for the leasing by the Company or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Company or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Company or such Subsidiary (a "Sale/Leaseback
Transaction"), except for Sale/Leaseback Transactions subsequent to the Closing
Date the aggregate sales price of which does not exceed $7,500,000.
7.12 Limitation on Changes in Fiscal Periods. Permit the fiscal year
of the Company to end on a day other than the Saturday closest to the last day
of September or change the Company's method of determining fiscal quarters
provided that the Company may make one election after the Closing Date to change
its fiscal year end, if the Company enters into such amendments to this
Agreement as the Administrative Agent shall reasonably request to reflect such
change, including modifications to Section 7, such that the covenants affected
by such change shall have the same effect (or, in any case, be substantively no
less favorable to the Lenders, in the determination of the Administrative Agent)
after giving effect thereto as if such change were not made. The Lenders hereby
authorize the Administrative Agent to enter into such amendments to effect such
modifications, if any, in accordance with the provisions of this Section.
7.13 Limitation on Negative Pledge Clauses. Enter into or suffer to
exist or become effective any agreement which prohibits or limits the ability of
Holdings, the Company, Grove Capital or any of their Subsidiaries to create,
incur, assume or suffer to exist any Lien upon any of its Property or revenues,
whether now owned or hereafter acquired, to secure the Obligations or, in the
case of any guarantor, its obligations under the Guarantee and Collateral
Agreement, other than (a) this Agreement and the other Loan Documents, (b) the
Senior Subordinated Note Indenture, the Holdings Debentures Indenture and the
indenture relating to the Grove Investors Debentures, (c) agreements relating to
the Dealer Receivables Financing and Existing Factoring Arrangements, (d) any
agreements governing any purchase money Liens or Capital Lease Obligations
otherwise permitted hereby (in which case, any prohibition or limitation shall
only be effective against the assets financed thereby), (e) any agreement
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Subsidiaries as in effect at the time of such acquisition (except to
the extent such Indebtedness was incurred in connection with or in contemplation
of such acquisition), which prohibition or limitation is not
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applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms of
this Agreement and (f) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business; provided that the Company and its Subsidiaries may enter into any such
agreement to the extent that such agreement is in connection with a Lien
permitted by Section 7.3 or a sale of assets permitted by Section 7.5 and any
such prohibitions apply only to the Property encumbered by such Lien or subject
to such sale.
7.14 Limitation on Restrictions on Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Company to (a) pay dividends
or make any other distributions in respect of any Capital Stock of such
Subsidiary held by, or pay any Indebtedness owed to, the Company or any other
Subsidiary of the Borrower, (b) make loans or advances to the Company or any
other Subsidiary of the Company or (c) transfer any of its assets to the Company
or any other Subsidiary of the Company, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under
the Loan Documents, the Senior Subordinated Note Indenture or the Holdings
Debentures Indenture, (ii) with respect to clause (c) only, any restrictions
existing under the agreements relating to the Dealer Receivables Financing and
Existing Factoring Arrangements, (iii) any restrictions with respect to a
Subsidiary imposed pursuant to an agreement which has been entered into in
connection with the Disposition of all or substantially all of the Capital Stock
or assets of such Subsidiary, (iv) any restrictions with respect to the Company
or any of its Subsidiaries imposed pursuant to an agreement which has been
entered into in connection with a Lien permitted by Section 7.3 or a sale of
assets permitted by Section 7.5 and any such prohibitions or limitations apply
only to the Property encumbered by such Lien or subject to such sale, (v) any
agreement governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Subsidiaries as in effect at the time of such acquisition
(except to the extent that (A) such Indebtedness was incurred in connection with
or in contemplation of such acquisition or (B) the encumbrance or restriction
contained in the agreement relating to such Capital Stock was included therein
in connection with or in contemplation of such acquisition), 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 or assets of the Person, so
acquired, provided that such Indebtedness or Capital Stock was permitted by the
terms of this Agreement to be incurred or acquired, as the case may be, (vi)
customary non-assignment provisions in leases and other agreements entered into
in the ordinary course of business and consistent with past practices and (vii)
restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business.
7.15 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Company and its Subsidiaries are engaged on the date of this Agreement or
which are related thereto.
7.16 Limitation on Amendments to Acquisition Documents. (a) Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and
conditions of the indemnities and licenses furnished to the Company or any of
its Subsidiaries pursuant to the Purchase Agreement or any other document
delivered by Hanson or any of its affiliates in connection therewith such that
after giving effect thereto such indemnities or licenses shall be materially
less favorable to the interests of the Loan Parties or the Lenders with respect
thereto or (b) otherwise amend, supplement or otherwise modify the terms and
conditions of the Purchase Agreement or any such other documents except to the
extent that
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any such amendment, supplement or modification could not reasonably be expected
to have a Material Adverse Effect.
7.17 Limitation on Hedging Agreements. Enter into any Hedging
Agreement other than for the purpose of hedging its revenues, assets or
liabilities for non-speculative purposes.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrowers shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrowers shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) any Loan Party shall default in the observance or performance of
any agreement contained in Section 6.7(a), Section 7 or Section 5.1 of the
Guarantee and Collateral Agreement; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section),
and such default shall continue unremedied for a period of 30 days; or
(e) Holdings, the Company, Grove Capital or any of the Company's
Subsidiaries shall (i) default in making any payment of any principal of
any Indebtedness (including any Guarantee Obligation, but excluding the
Loans and Reimbursement Obligations) on the scheduled or original due date
with respect thereto or default in making any payment of any interest on
any such Indebtedness, in each case, beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created after giving effect to any consents or waivers relating thereto;
or (ii) default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause
(i) or (ii) of this paragraph (e) shall not at any time constitute an
Event of Default unless, at such
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time, one or more defaults, events or conditions of the type described in
clauses (i) and (ii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount
of which exceeds in the aggregate $5,000,000; or
(f) (i) Holdings, the Company, Grove Capital or any of the Company's
Subsidiaries shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets,
or Holdings, the Company, Grove Capital or any of the Company's
Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against Holdings, the Company,
Grove Capital or any of the Company's Subsidiaries any case, proceeding or
other action of a nature referred to in clause (i) above which (A) results
in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against Holdings, the
Company, Grove Capital or any of the Company's Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) Holdings,
the Company, Grove Capital or any of the Company's Subsidiaries shall take
any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) Holdings, the Company, Grove Capital or any of the
Company's Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become due;
or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Company, Grove Capital or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which Reportable
Event or commencement of proceedings or appointment of a trustee is, in
the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes of Title IV of ERISA,
(v) the Company, Grove Capital or any Commonly Controlled Entity shall, or
in the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could, in the sole judgment of
the Required Lenders, reasonably be expected to have a Material Adverse
Effect; or
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(h) one or more judgments or decrees shall be entered against
Holdings, the Company, Grove Capital or any of the Company's Subsidiaries
involving for the Company and its Subsidiaries taken as a whole in the
aggregate a liability (not paid or covered by insurance (taking into
account any deductibles) as to which the relevant insurance company has
acknowledged coverage) of $5,000,000 or more, and all such judgments or
decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 30 days from the entry thereof; or
(i) any of the Security Documents shall cease, for any reason (other
than by reason of any act on the part of the Administrative Agent or a
Lender), to be in full force and effect, or any Loan Party or any
Affiliate of any Loan Party shall so assert, or any Lien created by any of
the Security Documents shall cease to be enforceable and of the same
effect and priority purported to be created thereby; or
(j) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason (other than by reason of
any act on the part of the Administrative Agent or a Lender), to be in
full force and effect or any Loan Party or any Affiliate of any Loan Party
shall so assert; or
(k) (i) the Permitted Investors shall cease to have the power to
vote or direct the voting of securities having a majority of the ordinary
voting power for the election of the Board of Directors of Holdings
(determined on a fully diluted basis); (ii) the Permitted Investors shall
cease to own of record and beneficially an amount of Capital Stock of
Holdings equal to at least 35% of the amount of Capital Stock of Holdings
owned by the Permitted Investors of record and beneficially as of the
Closing Date; (iii) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), excluding the Permitted Investors, shall
become, or obtain rights (whether by means or warrants, options or
otherwise) to become, the "beneficial owner" (as defined in Rules 13(d)-3
and 13(d)-5 under the Exchange Act), directly or indirectly, in the
aggregate more than the aggregate voting power of all classes of
outstanding Capital Stock of Holdings then held by the Permitted
Investors; (iv) the Board of Directors of Holdings shall cease to consist
of a majority of Continuing Directors; (v) Holdings shall cease to own and
control, of record and beneficially, directly, 100% of each class of
outstanding Capital Stock of the Company free and clear of all Liens
(except Liens created by the Guarantee and Collateral Agreement); (vi) the
Company shall cease to own and control, of record and beneficially,
directly, 100% of each class of outstanding Capital Stock of Grove Capital
free and clear of all Liens (other than, if the Company is reorganized as
a corporation, as a result of the liquidation of Grove Capital or merger
of Grove Capital with and into the Company); or (vii) a Specified Change
of Control shall occur; or
(l) the Senior Subordinated Notes or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or
the obligations of the Subsidiary Guarantors under the Guarantee and
Collateral Agreement, as the case may be, as provided in the Senior
Subordinated Note Indenture, or any Loan Party, any Affiliate of any Loan
Party, the trustee in respect of the Senior Subordinated Notes or the
holders of at least 25% in aggregate principal amount of the Senior
Subordinated Notes shall so assert;
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then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to
either Borrower, automatically the Commitments shall immediately terminate
and the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including
all amounts of L/C Obligations, whether or not the beneficiaries of the
then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable, and (B) if
such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Majority Revolving
Credit Facility Lenders, the Administrative Agent may, or upon the request
of the Majority Revolving Credit Facility Lenders, the Administrative
Agent shall, by notice to the Borrowers declare the Revolving Credit
Commitments to be terminated forthwith, whereupon the Revolving Credit
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the
Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which presentment
for honor shall not have occurred at the time of an acceleration pursuant
to this paragraph, the Borrowers shall at such time deposit in a cash
collateral account opened by the Administrative Agent an amount equal to
the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrowers hereunder and under the other
Loan Documents. After all such Letters of Credit shall have expired or
been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other monetary obligations of the Borrowers hereunder
and under the other Loan Documents shall have been paid in full, the
balance, if any, in such cash collateral account shall be returned to the
Borrowers (or such other Person as may be lawfully entitled thereto).
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes each Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.
9.2 Delegation of Duties. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
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9.3 Exculpatory Provisions. No Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (ii)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agents under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or for any failure
of any Loan Party a party thereto to perform its obligations hereunder or
thereunder. The Agents shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including counsel to
the Borrowers or the Loan Parties), independent accountants and other experts
selected by such Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. Each Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document unless it
shall first receive such advice or concurrence of the Required Lenders (or, if
so specified by this Agreement, all Lenders) as it deems appropriate or it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it (other than as a result of its
gross negligence or willful misconduct) by reason of taking or continuing to
take any such action. Each Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so
specified by this Agreement, all Lenders), and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
9.5 Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender, the Company or Grove Capital
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders (or, if so specified by this Agreement, all Lenders);
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
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9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that no Agent nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or affiliates have made any representations
or warranties to it and that no act by any Agent hereinafter taken, including
any review of the affairs of a Loan Party or any affiliate of a Loan Party,
shall be deemed to constitute any representation or warranty by any Agent to any
Lender. Each Lender represents to the Agents that it has, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates and made
its own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon any
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, no Agent shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by the Company or Grove
Capital and without limiting the obligation of the Company or Grove Capital to
do so), ratably according to their respective Aggregate Exposure Percentages in
effect on the date on which indemnification is sought under this Section 9.7
(or, if indemnification is sought after the date upon which the Commitments
shall have terminated and the Loans shall have been paid in full, ratably in
accordance with such Aggregate Exposure Percentages immediately prior to such
date), from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including at any time following the
payment of the Loans) be imposed on, incurred by or asserted against such Agent
in any way relating to or arising out of, the Commitments, this Agreement, any
of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by such Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements which are found by a final
and nonappealable decision of a court of competent jurisdiction to have resulted
from such Agent's gross negligence or willful misconduct. The agreements in this
Section 9.7 shall survive the payment of the Loans and all other amounts payable
hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent was not an Agent. With respect
to its Loans made or renewed by it and with respect to any Letter of Credit
issued or participated in by it, each Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it
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were not an Agent, and the terms "Lender" and "Lenders" shall include each Agent
in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 20 days' notice to the Lenders and the
Borrowers. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 8(a) or Section
8(f) with respect to the Borrowers shall have occurred and be continuing) be
subject to approval by the Borrowers (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. The Syndication Agent
and/or the Documentation Agent may, at any time, by notice to the Lenders and
the Administrative Agent, resign as Syndication Agent or Documentation Agent
hereunder, as the case may be, whereupon the duties, rights, obligations and
responsibilities hereunder of such Syndication Agent or Documentation Agent, as
the case may be, shall automatically be assumed by, and inure to the benefit of,
the Administrative Agent, without any further act by the Syndication Agent or
Documentation Agent, as the case may be, the Administrative Agent or any Lender.
After any retiring Agent's resignation as Agent, the provisions of this Section
9 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement and the other Loan Documents.
9.10 Authorization to Release Liens. The Administrative Agent is
hereby irrevocably authorized by each of the Lenders to release any Lien
covering any Property of Holdings, the Company or any of its Subsidiaries that
is the subject of a Disposition which is permitted by this Agreement or which
has been consented to in accordance with Section 10.1.
9.11 The Arranger. The Arranger, in its capacity as such, shall have
no duties or responsibilities, and shall incur no liability, under this
Agreement and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. (a) Neither this Agreement or any other
Loan Document, nor any terms hereof or thereof, except, in the case of Schedule
A in accordance with paragraph (b) of this Section 10.1, may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.1. The Required Lenders and each Loan Party party to the relevant
Loan Document may, or (with the written consent of the Required Lenders) the
Administrative Agent and each Loan Party party to the relevant Loan Document
may, from time to time, (x) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (y) waive as may be specified in such instrument or waiver, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall:
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(i) forgive the principal amount or extend the final scheduled date
of maturity of any Loan or Reimbursement Obligation, extend the scheduled
date of any amortization payment in respect of any Term Loan, reduce the
stated rate of any interest, fee or letter of credit commission payable
hereunder or extend the scheduled date of any payment thereof, or increase
the amount or extend the expiration date of any Lender's Revolving Credit
Commitment, in each case without the consent of each Lender directly
affected thereby;
(ii) amend, modify or waive any provision of this Section 10.1 or
reduce any percentage specified in the definition of Required Lenders,
Required Prepayment Lenders or Majority Facility Lenders, consent to the
assignment or transfer by the Borrowers of any of their rights and
obligations under this Agreement and the other Loan Documents, release all
or substantially all of the Collateral or release all or substantially all
of the Guarantors from their obligations under the Guarantee and
Collateral Agreement, in each case without the written consent of all
Lenders;
(iii) amend, modify or waive any condition precedent to any
extension of credit under the Revolving Credit Facility set forth in
Section 5.2 without the written consent of the Majority Revolving Credit
Facility Lenders;
(iv) reduce the percentage specified in the definition of Majority
Facility Lenders without the written consent of all Lenders under each
affected Facility;
(v) amend, modify or waive any provision of Section 9 without the
written consent of any Agent directly affected thereby;
(vi) amend, modify or waive any provision of Section 2.6 or 2.7
without the written consent of the Swing Line Lender; or
(vii) amend, modify or waive any provision of Section 3 without the
written consent of the Issuing Lender.
Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Administrative Agent and all future holders of the Loans. In the
case of any waiver, the Loan Parties, the Lenders and the Administrative Agent
shall be restored to their former position and rights hereunder and under the
other Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
(b) Schedule A may be amended, so long as no Default or Event of
Default shall have occurred and be continuing, to add additional Designated
Foreign Currencies upon execution and delivery by the Borrowers, all of the
Revolving Credit Lenders and the Administrative Agent of a written instrument
providing for such amendment. The Administrative Agent shall give prompt written
notice of any such amendment to Schedule A.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after
<PAGE>
85
being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received, addressed as follows in the case of the Company, Grove
Capital and the Administrative Agent, and as set forth in Schedule 1.1A in the
case of the other parties hereto, or to such other address as may be hereafter
notified by the respective parties hereto:
The Company: Grove Worldwide LLC
1565 Buchanan Trail East
Shady Grove, Pennsylvania 17256
Attention: Keith Simmons
Telecopy: (717) 593-5001
Grove Capital: c/o Grove Worldwide LLC
1565 Buchanan Trail East
Shady Grove, Pennsylvania 17256
Attention: Keith Simmons
Telecopy: (717) 593-5001
with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Matthew Nimetz
Telecopy: (212) 373-2522
The Administrative Agent: Chase Bank of Texas, National Association
Loan Syndication Services
1111 Fanin Street, 9th Floor
9-111 F-46
Houston, Texas 77002
Attention: Gale Manning
Telecopy: (713) 750-3810
with a copy to: Chase Bank of Texas, National Association
201 Main Street
Fort Worth, Texas 76102
Attention: Buddy Wuthrich
Telecopy: (817) 878-7591
provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agents or any Lender, any right, remedy,
power or privilege hereunder or under the other Loan Documents shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
<PAGE>
86
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5 Payment of Expenses. The Borrowers jointly and severally agree
(a) to pay or reimburse the Administrative Agent for all of its reasonable
out-of-pocket costs and expenses incurred in connection with the syndication of
the Facilities (other than any fees payable to syndicate members) and the
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including the reasonable fees and
disbursements of counsel to the Administrative Agent, (b) to pay or reimburse
each Lender and the Administrative Agent for all its costs and expenses incurred
in connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents, including the
reasonable fees and disbursements of counsel (including the allocated fees and
expenses of in-house counsel) to each Lender and of counsel to the
Administrative Agent, (c) to pay, indemnify, and hold each Lender and the Agents
harmless from, any and all recording and filing fees or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Agents and their respective
officers, directors, employees, affiliates and agents (each, an "indemnitee")
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including any of the foregoing relating
to the use of proceeds of the Loans or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of the
Company, Grove Capital or any of the Company's Subsidiaries or any of the
Properties (all the foregoing in this clause (d), collectively, the "indemnified
liabilities"), provided, that neither the Company nor Grove Capital shall have
any obligation hereunder to any indemnitee with respect to indemnified
liabilities (i) to the extent such indemnified liabilities resulted from the
gross negligence or willful misconduct of such indemnitee, (ii) in connection
with legal proceedings commenced against any such indemnified person by any
security holder or creditor (other than the Borrowers, their Subsidiaries and
Affiliates) thereof arising out of and based upon rights afforded any such
security holder or creditor solely in its capacity as such or (iii) of the types
referred to in clauses (a) through (c) above except as provided therein. To the
extent permitted by applicable law, the Company and Grove Capital agree not to
assert and the Company agrees to cause its Subsidiaries not to assert, and
hereby waive and agree to cause its Subsidiaries to so waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any indemnitee except where the
basis for the right of recovery involves the gross negligence or willful
misconduct of the indemnitee against whom recovery is sought. The agreements in
this Section shall survive repayment of the Loans and all other amounts payable
hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of the Company,
Grove Capital, the Lenders, the Agents, all future holders of the Loans and
their respective successors and assigns, except that the Borrowers
<PAGE>
87
may not assign or transfer any of their rights or obligations under this
Agreement without the prior written consent of the Administrative Agent and each
Lender.
(b) Any Lender may, without the consent of the Borrowers, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrowers and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event shall
any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except for those rights specified in
clauses (i) and (ii) of the proviso to Section 10.1, in each case to the extent
subject to such participation. The Borrowers agree that if amounts outstanding
under this Agreement and the Loans are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall, to the maximum extent permitted by applicable
law, be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement, provided that, in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrowers also agree that each Participant shall be entitled to
the benefits of Sections 2.19, 2.20 and 2.21 with respect to its participation
in the Commitments and the Loans outstanding from time to time as if it was a
Lender; provided that, in the case of Section 2.20, such Participant shall have
complied with the requirements of said Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable
law, at any time and from time to time assign to any Lender or any affiliate
thereof or a Person under common management with or having the same or an
affiliated investment advisor as such Lender or, with the consent of the
Borrowers and the Administrative Agent (which, in each case, shall not be
unreasonably withheld or delayed), to an additional bank, financial institution
or other entity (an "Assignee") all or any part of its rights and obligations
under this Agreement pursuant to an Assignment and Acceptance, substantially in
the form of Exhibit E, executed by such Assignee, such Assignor and the
Administrative Agent (and, where the consent of the Borrowers is required
pursuant to the foregoing provisions, by the Borrowers) and delivered to the
Administrative Agent for its acceptance and recording in the Register; provided
that no such assignment to an Assignee (other than any Lender or any affiliate
thereof or a Person under common management with, or having the same or an
affiliated investment advisor as, such Lender) shall be in an aggregate
principal amount of less than $5,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Borrowers and the Administrative Agent. Any such
assignment need not be ratable as among the Facilities. Upon such execution,
delivery, acceptance and recording, from and after the effective date
<PAGE>
88
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this Section 10.6, the consent of the Borrowers
shall not be required for any assignment which occurs at any time when any Event
of Default shall have occurred and be continuing.
(d) The Administrative Agent shall, on behalf of the Borrowers,
maintain at its address referred to in Section 10.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to time and any
Notes evidencing such Loans. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrowers, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register as
the owner of the Loan and any Note evidencing such Loan recorded therein for all
purposes of this Agreement. Any assignment of any Loan whether or not evidenced
by a Note shall be effective only upon appropriate entries with respect thereto
being made in the Register (and each Note shall expressly so provide). Any
assignment or transfer of all or part of a Loan evidenced by a Note shall be
registered on the Register only upon surrender for registration of assignment or
transfer of the Note evidencing such Loan, accompanied by a duly executed
Assignment and Acceptance, and thereupon one or more new Notes in the same
aggregate principal amount shall be issued to the designated Assignee and the
old Notes shall be returned by the Administrative Agent to the Borrowers marked
"cancelled". The Register shall be available for inspection by the Borrowers or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof or a Person under common management with
such Lender, by the Borrowers, the Administrative Agent and the Issuing Lender)
together with payment to the Administrative Agent of a registration and
processing fee of $3,000, the Administrative Agent shall (i) promptly accept
such Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give notice of such acceptance and recordation to the Lenders and the Borrowers.
On or prior to such effective date, the Borrowers, at their own expense, upon
request, shall execute and deliver to the Administrative Agent (in exchange for
the Revolving Credit Note and/or Term Notes, as the case may be, of the
assigning Lender) a new Revolving Credit Note and/or Term Notes, as the case may
be, to the order of such Assignee in an amount equal to the Revolving Credit
Commitment and/or applicable Term Loans, as the case may be, assumed or acquired
by it pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained a Revolving Credit Commitment and/or Term Loans, as the case may
be, upon request, a new Revolving Credit Note and/or Term Notes, as the case may
be, to the order of the assigning Lender in an amount equal to the Revolving
Credit Commitment and/or applicable Term Loans, as the case may be, retained by
it hereunder. Such new Notes shall be dated the Closing Date and shall otherwise
be in the form of the Note replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute
<PAGE>
89
assignments and that such provisions do not prohibit assignments creating
security interests, including any pledge or assignment by a Lender of any Loan
or Note to any Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Loans or the Reimbursement Obligations
owing to it, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Section 8(f), or otherwise), in a
greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans or the Reimbursement
Obligations owing to such other Lender, or interest thereon, such Benefitted
Lender shall purchase for cash from the other Lenders a participating interest
in such portion of each such other Lender's Loan and/or of the Reimbursement
Obligations owing to each such other Lender, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Borrowers,
any such notice being expressly waived by each of the Borrowers to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrowers hereunder (whether at the stated maturity, by acceleration or
otherwise) to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrowers. Each Lender agrees
promptly to notify the Borrowers and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrowers and the
Administrative Agent.
10.9 Severability. 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Borrowers, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent
<PAGE>
90
or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. (a) Each of the Borrowers
hereby irrevocably and unconditionally:
(i) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to the Company or Grove Capital, as the case may be, at its
address set forth in Section 10.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) Each of the Borrowers, Agents and the Lenders hereby irrevocably
and unconditionally waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this Section 10.12 any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgements. Each of the Company and Grove Capital hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Company or Grove Capital
arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between Administrative Agent and
Lenders, on one hand, and the Company and Grove Capital, on the other
hand, in connection herewith or therewith is solely that of debtor and
creditor; and
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91
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Company, Grove Capital and the
Lenders.
10.14 WAIVERS OF JURY TRIAL. THE COMPANY, GROVE CAPITAL, THE AGENTS
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.15 Confidentiality. Each of the Agents and each Lender agrees to
keep confidential all non-public information (as defined below) provided to it
by any Loan Party pursuant to this Agreement; provided that nothing herein shall
prevent any Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate of any Lender, (b) to
any Participant or Assignee (each, a "Transferee") or prospective Transferee
which agrees to comply with the provisions of this Section, (c) to the
employees, directors, agents, attorneys, accountants and other professional
advisors of such Lender or its affiliates, (d) upon the request or demand of any
Governmental Authority having jurisdiction over the such Agent or such Lender,
(e) in response to any order of any court, (f) in response to any order of any
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (g) if requested or required to do so in connection with any
litigation or similar proceeding, (h) which has been publicly disclosed other
than in breach of this Section 10.15, (i) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about a Lender's investment
portfolio in connection with ratings issued with respect to such Lender or (j)
in connection with the exercise of any remedy hereunder or under any other Loan
Document; provided, that with respect to clauses (e) and (g), the Administrative
Agent or such Lender shall use commercially reasonable efforts to provide notice
to the Borrowers before releasing such information. As used herein, the term
"non-public information" means all information contained in materials relating
to the Borrowers and their Subsidiaries provided to any Agent or any Lender by
any Loan Party or its representatives or agents other than (x) information which
is at the time so provided or thereafter becomes generally available to the
public other than as a result of a disclosure by an Agent or one or more
Lenders, (y) information which was available to any Agent or any Lender prior to
its disclosure to the Lenders by the Borrowers, its representatives or agents
and (z) information which becomes available to any Agent or any one or more
Lenders from a source other than the Borrowers, its representatives or agents.
10.16 Release of Collateral Security and Guarantee Obligations.
Notwithstanding anything to the contrary contained herein or in the Guarantee
and Collateral Agreement, upon request of the Company, the Administrative Agent
shall (without notice to or vote or consent of any Lender) take action having
the effect of releasing any Collateral and/or guarantee obligations provided for
in the Guarantee and Collateral Agreement to the extent necessary to permit
consummation of any transactions not prohibited hereunder, by the relevant
Person in accordance with the terms of this Agreement and the other Loan
Documents.
<PAGE>
92
10.17 Section Headings. The section and subsection headings in this
Agreement are for convenience in reference only and shall not deemed to alter or
affect the interpretation of any provisions hereof.
10.18 Judgment Currency. The obligation of the Borrowers under this
Agreement to make payments in respect of each Reimbursement Obligation in the
currency in which it is outstanding (the "Agreement Currency") shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any other currency (the "Judgment Currency")
except to the extent that such tender or recovery of the Judgment Currency
results in the effective receipt by the Lenders or the Issuing Bank, as the case
may be, of the full amount of the Agreement Currency payable under this
Agreement and the Borrowers agree to indemnify the Lenders or the Issuing Bank,
as the case may be (and the Lenders or the Issuing Bank, as the case may be,
shall have an additional legal claim) for any difference between such full
amount and the amount effectively received by such Lenders or the Issuing Bank,
as the case may be, pursuant to any such tender or recovery. Each Lender's or
the Issuing Bank's determination of amounts effectively received by such Lender
or Issuing Bank shall be presumed correct absent manifest error. If a judgment
in respect of the obligations of the Borrowers hereunder is rendered in a
currency other than the Agreement Currency and if, upon receipt of the full
amount of such judgment in such currency and the conversion into, and receipt of
such amount in the Agreement Currency, such amount of the Agreement Currency
exceeds the obligations of the Borrowers hereunder, such excess amount shall be
remitted to the Borrowers by the Lenders or the Issuing Bank, as the case may
be. The obligations of the Borrowers under this section shall survive the
termination of this Agreement and the repayment of the Loans and all other
amounts payable hereunder.
10.19 Borrowers Obligations Joint and Several. Each and every of the
payment obligations of the Borrowers under this Agreement and the other Loan
Documents (including each of the Obligations) shall be joint and several.
[rest of page intentionally left blank]
<PAGE>
93
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
GROVE WORLDWIDE LLC
By: /s/ Salvatore Bonanno
---------------------------------
Name: Salvatore Bonanno
Title: Chief Executive Officer
GROVE CAPITAL, INC.
By: /s/ Salvatore Bonanno
---------------------------------
Name: Salvatore Bonanno
Title: Chief Executive Officer
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, as Administrative Agent, Swing
Line Lender, Issuing Lender and a Lender
By: /s/ B.B. Wuthrich
---------------------------------
Name: B.B. Wuthrich
Title: Vice President
BANKBOSTON, N.A., as Syndication Agent
and as a Lender
By: /s/ C. Andrew Piculell
---------------------------------
Name: C. Andrew Piculell
Title: Vice President
<PAGE>
94
OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P.
its Genreal Partner
By: Oak Hill Securities MGP, Inc.,
its Genereal Partner
By: /s/ Scott D. Krase
--------------------------------
Name: Scott D. Krase
Title: Vice President
<PAGE>
95
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ John M. Johnson
--------------------------------
Name: John M. Johnson
Title: Authorized Signatory
ARCHEMEDES FUNDING, L.L.C.
By: ING Capital Advisors, Inc.
as Collateral Manager
By: /s/ Michael D. Hatley
--------------------------------
Name: Michael D. Hatley
Title: Vice President &
Portfolio Manager
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ John B. Wheeler
--------------------------------
Name: John B. Wheeler
Title: Managing Director
WELLS FARGO BANK, N.A.
By: /s/ Dana D. Cagle
--------------------------------
Name: Dana D. Cagle
Title: Vice President
<PAGE>
96
SANWA BUSINESS CREDIT CORP.
By: /s/ Stanley Kaminski
--------------------------------
Name: Stanley Kaminski
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ Linda M. Pace
--------------------------------
Name: Linda M. Pace
Title: Vice President
By: /s/ John D. Sykes
--------------------------------
Name: John D. Sykes
Title: Vice President
BALANCED HIGH YIELD FUND I LTD.
by: BHF-BANK AKTIENGESELLSCHAFT
acting through its New York Branch
as attorney-in-fact
By: /s/ Linda M. Pace
--------------------------------
Name: Linda M. Pace
Title: Vice President
By: /s/ John D. Sykes
--------------------------------
Name: John D. Sykes
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Walter C. Parelli
--------------------------------
Name: Walter C. Parelli
Title: Vice President
<PAGE>
97
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ David C. Oldani
--------------------------------
Name: David C. Oldani
Title: Associate
By: /s/ Christopher J. Speltz
--------------------------------
Name: Christopher J. Speltz
Title: Director-Head of SG Dallas
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Kurt D. Egertson
--------------------------------
Name: Kurt D. Egertson
Title: Vice President
BANQUE PARIBAS
By: /s/ Larry Robinson
--------------------------------
Name: Larry Robinson
Title: Vice President
By: /s/ Scott Clingan
--------------------------------
Name: Scott Clingan
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Attila Koc
--------------------------------
Name: Attila Koc
Title: First V. President
<PAGE>
98
CONTINENTAL ASSURANCE COMPANY
Separate Account (E)
By: TCW Asset Management Company
as Attorney-in-Fact
By: /s/ Mark L. Gold
--------------------------------
Name: Mark L. Gold
Title: Managing Director
By: /s/ Justin L. Driscoll
--------------------------------
Name: Justin L. Driscoll
Title: Senior Vice President
KZH-CYPRESSTREE-1 CORPORATION
By: /s/ Virginia Conway
--------------------------------
Name: Virginia Conway
Title: Authorized Signatory
KZH-IV CORPORATION
By: /s/ Virginia Conway
--------------------------------
Name: Virginia Conway
Title: Authorized Signatory
KZH-CRESCENT-2 CORPORATION
By: /s/ Virginia Conway
--------------------------------
Name: Virginia Conway
Title: Authorized Signatory
<PAGE>
99
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION, as
Documentation Agent and as a Lender
By: /s/ Eric Swanson
---------------------------------
Name Eric Swanson
Title: Managing Director
DLJ CAPITAL FUNDING, INC.,
as a Lender.
By: /s/ Eric Swanson
---------------------------------
Name: Eric Swanson
Title: Managing Director
<PAGE>
Exhibit 5.1
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
April 26, 1999
Grove Investors LLC
Grove Investors Capital, Inc.
1565 Buchanan Trail East
Shady Grove, Pennsylvania 17256
REGISTRATION STATEMENT ON FORM S-4
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by Grove Investors LLC, a Delaware limited
liability company (the "Company"), and Grove Investors Capital, Inc., a Delaware
corporation ("Grove Investors Capital" and, together with the Company, the
"Issuers"), with the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as
<PAGE>
Grove Investors LLC 2
amended (the "Act"), and the rules and regulations under it, we have been
requested to render our opinion as to the legality of the securities being
registered. The Registration Statement relates to the registration under the Act
of the Issuers' 14 1/2% Senior Debentures due 2010 (the "Exchange Debentures").
The Exchange Debentures are to be offered in exchange for the Issuers'
outstanding 14 1/2% Senior Debentures due 2010 (the "Existing Debentures")
issued and sold by the Issuers on April 29, 1998 in an offering exempt from
registration under the Act and issued as interest payments in lieu of paying
interest in cash. The Exchange Debentures will be issued by the Issuers in
accordance with the terms of the Indenture (the "Indenture"), dated as of April
29, 1998, among the Issuers and United States Trust Company of New York, as
trustee (the "Trustee"). Capitalized terms used in this opinion and not
otherwise defined shall have the respective meanings ascribed to them in the
Registration Statement.
In connection with this opinion, we have examined originals,
conformed copies or photocopies, certified or otherwise identified to our
satisfaction, of the following documents (collectively, the "Documents"):
(i) the Registration Statement (including its exhibits);
(ii) the Indenture included as Exhibit 4.1 to the Registration
Statement;
(iii) the Purchase Agreement, dated as of April 29, 1998,
among the Issuers and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") included as Exhibit 1.1 to the Registration Statement;
(iv) the proposed form of the Exchange Debentures included as
Exhibit 4.3 to the Registration Statement; and
(v) the Registration Rights Agreement, dated as of April 29,
1998, among the Issuers and DLJ (the "Registration Rights Agreement"), included
as Exhibit 4.4 to the Registration Statement.
In addition, we have examined: (i) corporate and limited
liability
<PAGE>
Grove Investors LLC 3
company records of the Issuers as we have considered appropriate; and (ii) other
certificates, agreements and other documents as we deemed relevant and necessary
as a basis for the opinions expressed below.
In our examination of the Documents and in rendering our
opinions, we have assumed without independent investigation, (i) the
enforceability of the Documents against each party to them (other than the
Issuers), (ii) that the authorization, execution and delivery by each of the
Issuers of each Document to which it is a party and the consummation by each of
the Issuers of the transactions contemplated by them do not violate or result in
a breach of or default under the party's charter documents, operating agreements
or other organizational documents, as the case may be, (iii) that the Exchange
Debentures will be issued as described in the Registration Statement and in the
form reviewed by us and that any information omitted from the form will be
properly added, (iv) the genuineness of all signatures, (v) the legal capacity
of all individuals who have executed any of the documents which we examined,
(vi) the authenticity of all documents submitted to us as originals, (vii) the
conformity to the original documents of all documents submitted to us as
certified, photostatic, reproduced or conformed copies of validly existing
agreements or other documents and (viii) the authenticity of all the latter
documents.
In expressing our opinions, we have relied upon the factual
matters contained in the representations and warranties of the Issuers made in
the Documents and upon certificates of public officials and officers of the
Issuers.
Based upon the above, and subject to the stated assumptions,
exceptions and qualifications, we are of the opinion that, when issued,
authenticated and delivered in accordance with the terms of the Indenture and
against exchange for the Existing Debentures in accordance with the terms set
forth in the Registration Rights
<PAGE>
Grove Investors LLC 4
Agreement, the Exchange Debentures will be legal, valid and binding obligations
of the Issuers enforceable against the Issuers in accordance with their terms.
The foregoing opinions are subject to the assumption and
qualification that the enforceability of the Indenture and the Exchange
Debentures may be limited by (i) bankruptcy, insolvency, fraudulent conveyance
or transfer, reorganization, moratorium and other similar laws affecting
creditors' rights generally and (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law).
Our opinion expressed above is limited to the laws of the
State of New York, the Delaware General Corporation Law and the Limited
Liability Company Act of the State of Delaware. Our opinion is rendered only
with respect to the laws, and the rules, regulations and orders under them, that
are currently in effect.
We consent to the use of our name in the Registration
Statement and in the prospectus contained in it as it appears under the caption
"Legal Matters" and to the use of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not admit that we come within the
category of persons whose consent is required by the Act or by the rules and
regulations promulgated under it.
Very truly yours,
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
Grove Investors LLC
April 26, 1999
Page -1-
[Exhibit 8.1]
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6064
April 26, 1999
Grove Investors LLC
201 Main Street
Fort Worth, Texas 76102
Re: Registration Statement on Form S-4
Dear Ladies and Gentlemen:
In connection with the Registration Statement on Form S-4 (the
"Registration Statement") filed by Grove Investors LLC (the "Company"), with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations thereunder (the "Rules"), we
have been requested to render our opinion as to the matters hereinafter set
forth. Capitalized terms used and not otherwise defined herein shall have the
meanings attributed thereto in the Registration Statement.
In this regard, we have reviewed copies of the Registration
Statement (including the exhibits and amendments thereto) with respect to the
offer by the Company to exchange up to $47,375,000 in aggregate principal amount
of its 14 1/2% Senior Debentures for up to $47,375,000 in aggregate principal
amount of its 14 1/2% Senior Debentures. We have also made such other
investigations of fact and law and have examined the originals, or copies
authenticated to our satisfaction, of such other documents, record, certificates
or other instruments as in our judgment are necessary or appropriate to render
the opinion expressed below.
The opinion set forth below is limited to the Internal Revenue
Code of 1986, as amended (the "Code"), administrative rulings, judicial
decisions, Treasury regulations and other applicable authorities, all as in
effect on the date hereof. The statutory provisions, regulations, and
interpretations upon which our opinion is based are subject to change, and such
changes could apply retroactively. Any such change could affect the continuing
validity of the opinion set forth below. We assume no responsibility to advise
you of any subsequent changes in existing law or facts, nor do we assume any
responsibility to update this opinion with respect to any matters
<PAGE>
Grove Investors LLC
April 26, 1999
Page -2-
expressly set forth herein, and no opinions are to be implied or may be inferred
beyond the matters expressly so stated.
Based upon and subject to the foregoing, we confirm that the
opinion set forth in the Registration Statement under the heading "Certain
Federal Income Tax Consequences" constitutes our opinion with respect to such
matters.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement, or any amendment pursuant to Rule 462 under the
Act, and to the reference to us under the heading "Legal Matters" in the
Prospectus included in the Registration Statement, or any amendment pursuant to
Rule 462 under the Act. In giving this consent, we do not hereby agree that we
come within the category of persons whose consent is required by the Act or the
Rules.
Very truly yours,
/s/ PAUL, WEISS, RIFKIND, WHARTON & GARRISON
<PAGE>
Exhibit 10.1
[EXECUTION COPY]
STOCK AND ASSET PURCHASE AGREEMENT
among
HANSON FUNDING (G) LIMITED,
DEUTSCHE GROVE CORPORATION,
HANSON AMERICA HOLDINGS (4) LTD.,
GROVE FRANCE SA,
KIDDE INDUSTRIES, INC.,
HANSON FINANCE PLC
and
GROVE WORLDWIDE LLC
Dated as of March 10, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.................................................................. 2
DEFINITIONS AND TERMS...................................................... 2
1.1 Specific Definitions........................................... 2
1.2 Other Terms.................................................... 14
1.3 Other Definitional and Interpretive Provisions................. 15
ARTICLE II
PURCHASE AND SALE OF THE GROVE OPERATIONS.................................. 16
2.1 Purchase and Sale of the Grove Operations...................... 16
2.2 Adjustment and Allocation of the Purchase Price................ 16
2.3 Sale and Purchase of Stock..................................... 18
2.4 Sale and Purchase of the Specified Grove Assets................ 19
2.5 Excluded Assets................................................ 19
2.6 Assumed Liabilities............................................ 19
2.7 Excluded Liabilities........................................... 20
2.8 Post-Closing Adjustment........................................ 21
2.9 Closing........................................................ 25
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS.............................. 25
3.1 The Grove Operations........................................... 25
3.1A Specified Grove Assets......................................... 26
3.2 Organization and Qualification................................. 26
3.3 Capitalization................................................. 27
3.4 Subsidiaries and Investments................................... 27
3.5 Corporate Authorization........................................ 28
3.6 Consents and Approvals......................................... 28
3.7 Non-Contravention.............................................. 29
3.8 Binding Effect................................................. 30
3.9 Financial Statements; Absence of Certain Changes............... 30
3.10 No Material Adverse Change..................................... 32
3.11 Litigation and Non-Warranty Claims; Orders and Judgments....... 32
3.12 Taxes.......................................................... 33
3.13 Employee Benefits.............................................. 35
3.14 Compliance with Laws; Certain Payments......................... 42
3.15 Environmental Matters.......................................... 43
3.16 Intellectual Property.......................................... 43
3.17 Labor Matters.................................................. 45
3.18 Contracts...................................................... 47
i
<PAGE>
3.19 Property....................................................... 48
3.20 Title to Shares................................................ 51
3.21 Product Warranties............................................. 51
3.22 Potential Conflicts of Interest................................ 51
3.23 Insurance...................................................... 52
3.24 Finders' Fees.................................................. 55
3.25 No Other Representations or Warranties......................... 55
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER................................ 55
4.1 Organization and Qualification................................. 55
4.2 Authorization.................................................. 56
4.3 Consents and Approvals......................................... 56
4.4 Non-Contravention.............................................. 57
4.5 Binding Effect................................................. 57
4.6 Finders' Fees.................................................. 58
4.7 Financial Capability........................................... 58
4.8 Purchase for Investment........................................ 58
4.9 No Other Representations or Warranties......................... 59
ARTICLE V
COVENANTS.................................................................. 59
5.1 Access......................................................... 59
5.2 Conduct of Business............................................ 60
5.3 Best Efforts................................................... 63
5.4 Further Assurances............................................. 64
5.5 Use of Corporate Names and Symbols............................. 65
5.6 Benefit Plans.................................................. 65
5.7 Preservation of Records........................................ 67
5.8 Supplemental Information....................................... 68
5.9 Success Fee Agreements......................................... 69
5.10 Termination of Certain Plans................................... 69
5.11 Insurance...................................................... 69
5.12 Intercompany Accounts.......................................... 71
5.13 Litigation and Warranty Claims................................. 71
5.14 Assignment of Beneficial Interests............................. 71
5.15 Collection of Receivables...................................... 73
5.16 Mail and Other Communications.................................. 73
5.17 Auditor Matters................................................ 74
5.18 Non-Competition; Confidentiality............................... 74
ARTICLE VI
CONDITIONS TO CLOSING...................................................... 75
6.1 Conditions to the Obligations of Purchaser and the Sellers..... 75
ii
<PAGE>
6.2 Conditions to the Obligations of Purchaser..................... 77
6.3 Conditions to the Obligations of the Sellers................... 79
ARTICLE VII
SURVIVAL; GENERAL INDEMNIFICATION.......................................... 81
7.1 Survival....................................................... 81
7.2 Indemnification by Purchaser................................... 82
7.3 Indemnification by Sellers..................................... 84
7.4 Indemnification Procedures..................................... 88
7.5 Certain Environmental Matters.................................. 91
7.6 Resale Payment................................................. 93
7.7 Characterization of Indemnification Payments................... 96
7.8 Computation of Losses Subject to Indemnification............... 96
ARTICLE VIII
TERMINATION................................................................ 96
8.1 Termination.................................................... 96
8.2 Effect of Termination.......................................... 97
ARTICLE IX
MISCELLANEOUS.............................................................. 98
9.1 Notices........................................................ 98
9.2 Amendment; Waiver.............................................. 99
9.3 Assignment..................................................... 99
9.4 Entire Agreement...............................................100
9.5 Fulfillment of Obligations.....................................100
9.6 Parties in Interest............................................100
9.7 No Third Party Rights..........................................101
9.8 Public Disclosure..............................................101
9.9 Return of Information..........................................101
9.10 Expenses.......................................................102
9.11 Sections of Disclosure Schedule................................102
9.12 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SELECTION OF FORUM.............................................102
9.13 Counterparts...................................................104
9.14 Headings.......................................................104
9.15 Severability...................................................104
iii
<PAGE>
EXHIBITS, ANNEXES AND DISCLOSURE SCHEDULE
EXHIBITS
Exhibit A - Guaranty of Hanson
Exhibit B - HSBC Agency Agreement
Exhibits C-1 and C-2 - Sunderland Leases and Option Agreement
Exhibits D-1 and D-2 - Tax Sharing and Indemnification Agreements
Exhibits E-1, E-2 and E-3 - Certain Tax Affidavits
ANNEXES
Annex 6.2 (d) - Opinions of Sellers' Counsel
Annex 6.3 (c) - Opinions of Purchaser's Counsel
SECTIONS OF DISCLOSURE SCHEDULE
Section 1.1(a) - Calculation of Base Net Worth and Determination of
Closing Net Worth
Section 1.1(b) - Change of Control Agreements
Section 1.1(c) - Knowledge of Sellers
Section 1.1(d) - Long Term Incentive Plans
Section 1.1(e) - Management Incentive Plans
Section 1.1(f) - Required Approvals
Section 2.2 - Allocation of Purchase Price
Section 2.3 - Sellers of Stock of Specified Grove Parent Corporations
Section 2.5 - Excluded Assets
Section 3.1(a) - Grove Companies
Section 3.1(b) - Corporate Structure Chart
Section 3.1(c) - Hanson Matters
Section 3.3 - Capitalization
Section 3.4 - Sellers' Subsidiaries and Investments
Section 3.6 - Consents and Approvals
Section 3.9(a)(1) - Audited Financial Statements
Section 3.9(a)(2) - Unaudited First Quarter Financial Statements
Section 3.9(c) - Certain Changes
iv
<PAGE>
Section 3.11(a) - Litigation and Non-Warranty Claims
Section 3.11(b) - Orders and Judgments
Section 3.12(l) - Material Tax Elections
Section 3.13 - Employee Benefit Plans
Section 3.15 - Environmental Matters
Section 3.15A - Special Environmental Matter
Section 3.16(b)(1) - Certain Intellectual Property
Section 3.16(c) - Intellectual Property Infringement
Section 3.16(d) - Claims Affecting Intellectual Property
Section 3.17 - Labor Matters
Section 3.18(a) - Contracts
Section 3.19(a) - Owned Real Property
Section 3.19(b) - Encumbrances
Section 3.19(c) - Certain Proceedings Involving Real Property
Section 3.19(d) - Real Property Leases
Section 3.21(a) - Standard Forms of Product Warranties
Section 3.21(b) - PIP
Section 3.23(a)(1) - Grove Insurance Policies
Section 3.23(a)(2) - Documentation Relating to Portfolio Transfer Agreement
Section 3.23(d) - Pending Claims; Insurance Loss Runs
Section 3.23(h) - Product Liability Insurance Matters
Section 4.7 - Purchaser's Financial Capability
Section 5.2 - Conduct of Business
Section 5.12 - Intercompany Accounts
Section 5.13 - Specific Reserves
Section 6.2(l) - Certain Insurance Matters
Section 7.4 - Certain Mediation Procedures
v
<PAGE>
STOCK AND ASSET PURCHASE AGREEMENT
Dated as of March 10, 1998
--------------------
The parties to this Agreement are Hanson Funding (G) Limited, a
limited company organized under the laws of England and Wales ("Hanson
Funding"), Deutsche Grove Corporation, a Delaware corporation ("Deutsche
Corp."), Hanson America Holdings (4) Limited, a limited company organized under
the laws of England and Wales ("Hanson America"), Grove France SA, a societe
anonyme organized under the laws of France ("Grove France"), Kidde Industries,
Inc., a Delaware corporation ("Kidde", and collectively with Hanson Funding,
Deutsche Corp., Hanson America and Grove France, the "Sellers"), Hanson Finance
PLC, a public limited company organized under the laws of England and Wales
("Hanson Finance"), and Grove Worldwide LLC, a Delaware limited liability
company (the "Purchaser"). Each of the Sellers and Hanson Finance is a wholly
owned subsidiary of Hanson PLC, a public limited company organized under the
laws of England and Wales ("Hanson").
Among other activities, the Sellers are engaged, directly and
through subsidiaries, in the business of designing, manufacturing, selling and
providing customer support for, mobile hydraulic cranes, self-propelled aerial
work platforms and truck-mounted cranes (the "Grove Operations").
The Sellers wish to sell to Purchaser, and Purchaser wishes to
purchase from the Sellers, all of the Sellers' business constituting the Grove
Operations, all as more fully described herein. In order to effect such sale and
purchase, the Sellers will sell, and
<PAGE>
Purchaser will purchase, pursuant to the terms of this Agreement, (i) all the
capital stock of the Specified Grove Parent Corporations (as defined) and (ii)
the Specified Grove Assets (as defined).
Accordingly, the parties agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.1 Specific Definitions. As used in this Agreement, the following
terms shall have the meanings set forth or as referenced below:
"Adjusted Balance Sheet" shall mean the Balance Sheet, as adjusted
in accordance with Section 1.1(a) of the Disclosure Schedule.
"Affiliate Guarantees" shall have the meaning set forth in Section
5.4(a).
"Affiliated Group" shall mean any affiliated group within the
meaning of ss. 1504 of the Code.
"Affiliates" shall mean, with respect to any Person, any Persons
directly or indirectly controlling, controlled by or under common control with,
such other Person as of the date on which, or at any time during the period for
which, the determination of affiliation is being made.
"Agreement" shall mean this Agreement, including all exhibits,
annexes and schedules hereto, as the same may be amended or supplemented from
time to time in accordance with the terms hereof.
"Apollo Entity" shall mean Apollo Advisors, L.P., Apollo Investment
Fund L.P., Apollo Investment Fund (2) L.P., Apollo Investment Fund (3) L.P. or
any other existing or future Person of which Apollo Advisors, L.P. or any of its
Affiliates is the principal investment advisor or any Person in which any such
Apollo Entity has an equity interest of not less than 5%.
2
<PAGE>
"Appraisals" shall have the meaning set forth in Section 2.2(b).
"Assumed Liabilities" shall have the meaning set forth in Section
2.6.
"Audited Financial Statements" shall have the meaning set forth in
Section 3.9(a).
"Auditors" shall have the meaning set forth in Section 5.17.
"Balance Sheet" shall have the meaning set forth in Section 3.9(a).
"Balance Sheet Date" shall have the meaning set forth in Section
3.9(a).
"Base Net Worth" shall mean U.S. $302,564,000, as calculated in the
Adjusted Balance Sheet.
"Benefit Plans" shall have the meaning set forth in Section 3.13(a).
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banks in New York City or London are authorized or obligated by
law or executive order to close.
"Change of Control Agreements" shall mean the agreements set forth
in Section 1.1(b) of the Disclosure Schedule.
"Chosen Court" shall have the meaning set forth in Section 9.12.
"Claim Notice" shall have the meaning set forth in Section 7.4.
"Closing" all shall mean the closing of the transactions
contemplated by this Agreement.
"Closing Balance Sheet" shall have the meaning set forth in Section
2.8(a).
"Closing Date" shall have the meaning set forth in Section 2.9.
"Closing Net Worth" shall mean the net worth of the Grove Companies
as of the Determination Date, to be calculated in the Closing Balance Sheet in
accordance with Section 1.1(a) of the Disclosure Schedule.
3
<PAGE>
"COBRA" means the provisions of Code section 4980B and Part 6 of
Title I of ERISA, as amended, and any applicable similar state law.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Competition Laws" shall mean Laws that are designed or intended to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade.
"Compliance Costs" shall mean capital and other costs and expenses
of compliance with Environmental Laws or conditions of operating permits
associated with the ongoing running of the Grove Operations after the Closing.
"Confidentiality Agreement" shall mean the Agreement, dated June 5,
1997, as amended February 3, 1998, between Arbor Investors, LLC and Hanson.
"Contracts" shall mean all agreements, permits, licenses, contracts,
leases, purchase orders, promotional, trade billback, refund and other
arrangements and commitments relating to the Grove Operations.
"CPA Firm" shall have the meaning set forth in Section 2.8(f).
"Delta Purchase Agreement" shall mean the Share Purchase Agreement,
dated October 27, 1995, by and among Hanson Electrical Holdings SAS and ADZ S.A.
for the acquisition of Delta Systems Group.
"Demerger Agreement" shall mean the Demerger Agreement, dated as of
September 30, 1996, among Millennium Chemicals Inc. ("Millennium"), Hanson and
Hanson Overseas Holding Limited ("HOH").
"Demerger Tax Indemnification Agreements" shall mean the Tax Sharing
and Indemnification Agreement, dated as of September 16, 1996, among HM
Anglo-American Ltd. ("HM Anglo-American"), HM Holdings, Inc. and Hanson, the Tax
Sharing Agreement, dated as of September 30, 1996, among Millennium, Hanson and
HOH and the Tax Sharing and Indemnification Agreement, dated as of September 30,
1996, among MHC Inc., Hanson and HM Anglo-American.
"Determination Date" shall mean the close of business in Shady
Grove, Pennsylvania on the date immediately preceding the Closing Date.
4
<PAGE>
"Disclosure Schedule" shall mean the separate Disclosure Schedule
delivered by the parties concurrently with the execution and delivery of this
Agreement.
"Employee Arrangements" shall have the meaning set forth in Section
3.13(a).
"Encumbrances" shall mean mortgages, deeds of trusts, liens,
pledges, charges, encumbrances, security interests, options, rights of first
refusal, easements, restrictive covenants, encroachments or any other
restrictions or third-party rights.
"Environmental Claim" shall mean any written claim, notice of
violation or administrative or judicial action by any Governmental Authority or
other Person other than Purchaser and its Affiliates with respect to either (x)
the operation of the Grove Operations (other than in Sunderland, England) prior
to the Closing Date or (y) the condition of any property owned, leased, operated
or held by or in connection with the Grove Operations (other than in Sunderland,
England) prior to the Closing Date, in the case of each of (x) and (y) arising
under, resulting from or alleging the violation of or liability under any
Environmental Law.
"Environmental Law" shall mean any applicable Law, including common
Law, relating to (x) pollution or protection of the environment (including,
without limitation, air, surface water, groundwater, surface or subsurface land)
or (y) the exposure of Persons to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, protection, release
or disposal of, Hazardous Substances.
"Excluded Assets" shall have the meaning set forth in Section 2.5.
"Excluded Liabilities" shall have the meaning set forth in Section
2.7.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Final Asset Allocation" shall have the meaning set forth in Section
2.2(b).
"Financial Statements" shall mean the Audited Financial Statements
and the Unaudited First Quarter Financial Statements.
"Financing Documents" shall have the meaning set forth in Section
4.7
"Foreign Plans" shall have the meaning set forth in Section 3.13(a).
5
<PAGE>
"GAAP" shall mean United States generally accepted accounting
principles consistently applied.
"GAAS" shall mean United States generally accepted auditing
standards.
"Governmental Authorizations" shall mean all licenses, permits,
certificates and other authorizations and approvals required from a Governmental
Authority to carry on the Grove Operations as conducted at the Balance Sheet
Date under applicable Laws.
"Governmental Authority" shall have mean any government or political
subdivision thereof, whether Federal, state, local, foreign or supranational, or
any agency (including any regulatory agency) or instrumentality of any such
government or political subdivision or any court or arbitrator.
"Grove Business Employees" shall have the meaning set forth in
Section 3.13(a).
"Grove Companies" shall mean the Specified Grove Corporations and
Kidde solely with respect to the Grove Operations.
"Grove Europe" shall mean Grove Europe Limited, a limited company
organized under the laws of England and Wales.
"Grove Insurance Policies" shall have the meaning set forth in
Section 3.23(a).
"Grove Operations" shall have the meaning set forth in the recitals
of this Agreement.
"Guaranty" shall mean the Guaranty, to be dated the Closing Date, of
Hanson in favor of Purchaser, substantially in the form of Exhibit A.
"Hanson" shall have the meaning set forth in the recitals of this
Agreement.
"Hanson Properties" shall mean Hanson Properties Limited, a limited
company organized under the laws of England and Wales and, on the date hereof, a
subsidiary of Hanson.
"Hazardous Substances" shall mean any hazardous substances within
the meaning of 101(14) of CERCLA, 42 U.S.C. ss. 9601(14), or any other
substance, material,
6
<PAGE>
pollutant or waste, the use, storage, recycling, transportation, generation,
treatment, processing, handling, release or disposal of which is regulated under
any Environmental Law.
"HSBC" shall mean HSBC International Trade Finance Limited.
"HSBC Agency Agreement" shall mean the Agency Agreement, to be dated
the Closing Date, among HSBC, Kidde and the Purchaser, substantially in the form
of Exhibit B.
"HSBC Letter" shall mean the dealer receivables facility letter,
dated December 19, 1997, between HSBC and Kidde.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Inactive Companies" shall mean Grove Manufacturing Company and
Grove International Corporation.
"Income Taxes" shall mean all federal, state, local or foreign
income or franchise Taxes (including, without limitation, any income taxes
imposed as transferee, successor, by contract, or arising out of inclusion in
any U.S. Federal consolidated Tax Return) or in any consolidated, combined, or
unitary state Tax Return (or by reason of any comparable foreign law that
provides for joint or several liability), together with interest, penalties, or
additions imposed with respect thereto, including, without limitation, net
income, gross receipts, franchise and withholding (pursuant to Chapter 3 of the
code or any similar state, local or foreign law) Taxes.
"Indemnified Parties" shall have the meaning set forth in Section
7.3(a).
"Indemnifying Party" shall have the meaning set forth in Section
7.4.
"Individual Arrangements" shall have the meaning set forth in
Section 3.13(a).
"Industrial Actions" shall have the meaning set forth in Section
3.17(b).
"Intellectual Property" shall mean all United States and foreign (i)
utility and design patents (including provisionals, divisionals, continuations,
continuations-in-part, reissues and re-examinations thereof) and patent
applications whether or not patents are
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issued on such applications and whether or not such applications are modified,
withdrawn or resubmitted; (ii) registered and unregistered trade names,
trademarks, service names and service marks (and applications for registration
of the same) and all goodwill associated therewith; (iii) copyright
registrations (and applications for the same) and any non-registered copyrights;
(iv) trade secrets and confidential information; (v) inventions, processes and
designs (whether or not patentable or reduced to practice); (vi) any computer
software programs source code, object code, data and documentation; and (vii)
all other intellectual property rights and assets, in each case relating to the
Grove Operations.
"IP Licenses" shall have the meaning set forth in Section 3.16(b).
"IRS" shall mean the Internal Revenue Service.
"Kidde Retained Environmental Liabilities" shall mean any and all
Losses arising out of or related to the businesses, actions or omissions of
Sellers or their current or former Subsidiaries or Affiliates under or pursuant
to Environmental Law except for (but only to the extent of) Losses arising out
of or related to the businesses, actions or omissions of the current and former
Grove Operations (including, but not limited to, any such Losses imposed as
transferee or successor by contract or otherwise).
"Kidde Retained ERISA Liabilities" shall mean any and all Losses,
whether or not incurred prior to the Closing Date, under Code Section 412,
Chapter 43 of the Code, Title I or IV of ERISA or otherwise (or comparable
foreign Laws) with respect to any savings, retirement, pension or welfare plan
or arrangement maintained or contributed to by any Seller or any current or
former corporation, trade or business under common control or treated as a
single employer with any Seller (excluding any Losses on account of benefits
provided to current and former employees of the Grove Operations).
"Kidde Retained Tax Liabilities" shall mean (i) any and all Income
Taxes of Kidde or its Affiliates with respect to all taxable periods ending on
or prior to the Closing Date or, for the taxable period that includes the
Closing Date, the portion of such period up to and including the Closing Date
(such portion to be determined based upon an interim closing of the books as of
the close of the Closing Date) and (ii) any and all Taxes with respect to
operations of Kidde or its Affiliates that are not Grove Operations.
"Knowledge of Sellers" or any similar phrase means the actual
knowledge of the individuals identified in Section 1.1(c) of the Disclosure
Schedule.
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"Krupp Purchase Agreements" shall mean the Krupp Asset Purchase
Agreement, dated August 30, 1995, whereby Jacuzzi Whirlpool GmbH (future
Deutsche Grove GmbH) acquired the assets of Krupp Mobile Krane GmbH; Grove NA
acquired the assets of Krupp Kranes of North America, Inc.; and Grove Europe
acquired the assets of Krupp Industries Limited and Krupp Gruas Hidaulicas S.A.
and the Asset Purchase Agreement dated August 31, 1995 by and among Grove France
S.A. and Krupp T.I.S.A. for the acquisition of the Krupp T.I.S.A. assets.
"Laws" shall include any federal, state, foreign, supranational or
local law, statute, ordinance, rule, regulation, order, judgment or decree.
"Leased Real Property" shall have the meaning set forth in Section
3.19(d).
"LIBOR" shall mean the London Interbank Offered Rate paid in London
on 3- month dollar deposits from other banks as quoted by The Chase Manhattan
Bank on the Closing Date or, if such quotation is not available, the rate
published on the first publication date following the Closing Date under "Money
Rates" in the New York City edition of The Wall Street Journal.
"LLC Owner" shall mean, collectively, Grove Holdings LLC and Grove
Investors LLC.
"Long-Term Incentive Plans" shall mean the Long-Term Incentive Plans
listed in Section 1.1(d) of the Disclosure Schedule.
"Losses" shall mean any liabilities, damages, claims, losses,
charges, actions, suits, proceedings, deficiencies, Taxes, interest, penalties,
and reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees, removal costs, remediation costs, closure costs, fines,
penalties and expenses of investigation, litigation and ongoing monitoring)
known or unknown, fixed or contingent.
"Lowest Cost Response" means the response required or allowed under
Environmental Law that addresses the Hazardous Substances present at the lowest
cost (considered as a whole taking into consideration any negative impact such
response may have on the conduct of the Grove Operations and any potential
additional costs or liabilities that may arise as a result of such response) and
causes the property or operation at issue to be in compliance with Environmental
Law at the lowest cost, as compared to any other response, that is consistent
with Environmental Law.
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"Management Incentive Plans" shall mean the Management Incentive
Plans listed in Section 1.1(e) of the Disclosure Schedule.
"Material Adverse Change" shall mean a change that is, or could
reasonably be expected to be, materially adverse to the assets, liabilities,
condition (financial or otherwise) or results of operations of the Grove
Operations as conducted at the Balance Sheet Date taken as a whole; provided,
however, that a Material Adverse Change shall not be deemed to have occurred (i)
exclusively as a result of the impact of any Industrial Actions on the results
of operations at the Sunderland Facility or (ii) as a result of any developments
in, prognosis for or expenditures for the Enterprise Project.
"Material Adverse Effect" shall mean an effect that is, or could
reasonably be expected to be, (i) materially adverse to the assets, liabilities,
condition (financial or otherwise) or results of operations of the Grove
Operations as conducted at the Balance Sheet Date taken as a whole, (ii)
materially impair or delay any of the Sellers' ability to consummate the
material transactions contemplated hereby or (iii) materially adversely affect
Purchaser's ability to operate the Grove Operations following the Closing in a
manner consistent with the manner in which the Grove Operations were being
operated at the Balance Sheet Date; provided, however, that a Material Adverse
Effect shall not be deemed to have occurred (i) exclusively as a result of the
impact of any Industrial Actions on the results of operations at the Sunderland
Facility or (ii) as a result of any developments in, prognosis for or
expenditures for the Enterprise Project.
"Net Worth" shall have the meaning set forth in Section 1.1(a) of
the Disclosure Schedule and shall be calculated in accordance with Modified GAAP
as described in Section 1.1(a) of the Disclosure Schedule.
"Non-Basket Representations" shall have the meaning set forth in
Section 7.1(b).
"Non-Surviving Representations" shall have the meaning set forth in
Section 7.1(b).
"Notice Period" shall have the meaning set forth in Section 7.4.
"Objection Date" shall have the meaning set forth in Section 2.8(h).
"Owned Real Property" shall have the meaning set forth in Section
3.19(a).
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"Permitted Encumbrances" shall have the meaning set forth in Section
3.19(b).
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"Peterhead Receivables" shall mean the amount set forth in the
Closing Balance Sheet, not to exceed (pound)5.3 million, relating to receivables
of Grove Europe payable by Peterhead, together with interest thereon from the
Closing Date through the date of any payment made by Sellers pursuant to Section
7.3(a)(xii) at the rate specified in Section 2.8(h).
"Portfolio Transfer Agreement" shall mean, collectively, (i) the
Indemnity Agreement between National Union Fire Insurance Company of Pittsburgh,
PA, Birmingham Fire Insurance Company of Pennsylvania, American Home Assurance
Company, the Insurance Company of the State of Pennsylvania and Landmark
Insurance Company (collectively, the "Insurers") and Hanson Finance, effective
as of October 1, 1997, (ii) the Side Letter between the Insurers and Hanson
Finance, effective as of October 1, 1997, and (iii) the Portfolio Transfer
Agreement and Novation among National Union Fire Insurance Company of
Pittsburgh, PA, Bulldog Insurance Company Ltd. and Insurance Company of North
Carolina, Pacific Employers Insurance Company, Bankers Standard Insurance
Company, Indemnity Insurance Company of North America, Cigna Indemnity Insurance
Company (f/k/a Alaska Pacific Assurance Company) and Cigna Insurance Company of
Canada, effective as of October 1, 1997 and (iv) the Commutation and Release
between the Insurers and Bulldog Insurance Company Ltd. effective as of October
1, 1997.
"Proposed Asset Allocation" shall have the meaning set forth in
Section 2.2(b).
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Purchaser" shall have the meaning set forth in the recitals of this
Agreement.
"Purchaser Indemnified Parties" shall have the meaning set forth in
Section 7.3(a).
"Purchaser's Objection" shall have the meaning set forth in Section
2.8(d).
"Real Property" shall mean, collectively, Owned Real Property and
Leased Real Property.
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"Real Property Leases" shall have the meaning set forth in Section
3.19(d).
"Required Approvals" shall mean the consents and approvals set forth
in Section 1.1(f) of the Disclosure Schedule.
"Resale Event" shall have the meaning set forth in Section
7.6(d)(i).
"Residual Value Guarantee Contracts" shall mean any Contracts
between any Grove Company and any leasing or financing company or other Person,
including, without limitation, the Contracts listed in Section 3.18(a) of the
Disclosure Schedule, whereby any Grove Company (or any other Person on its
behalf) is obliged to reacquire, identify a purchaser for (or make any payment
in respect of) any product of the Grove Operations.
"Retiree Welfare Plan" shall mean any Benefit Plan which is a
welfare plan within the meaning of ERISA section 3(1) (regardless of whether the
plan is covered by ERISA) which provides benefits to current or former employees
beyond their retirement or other termination of service (other than coverage
mandated by COBRA, the cost of which is fully paid by the current or former
employee or his dependents).
"Retirees" shall have the meaning set forth in Section 5.6(c).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Sellers" shall have the meaning set forth in the recitals of this
Agreement.
"Shared Environmental Matters" shall mean (i) any Environmental
Claims that arise on or before the second anniversary of the Closing Date other
than (x) the Special Environmental Matter and (y) any matters specifically
identified in the conclusion sections of the reports listed in Item 1(a) through
(d), and in Items 2 through 7, of Section 3.15 of the Disclosure Schedule and
any immaterial matters directly related to any such specifically identified
matters and (ii) any Losses arising pursuant to Environmental Laws in connection
with the off-site migration of Hazardous Substances where (A) such migration
arises out of the operation of the Grove Operations prior to the Closing Date or
such Hazardous Substances are located on, in or under any property owned,
leased, operated or held by or in connection with the Grove Operations prior to
the Closing Date and (B) it can be reasonably
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demonstrated that prompt mitigative action would decrease materially the
ultimate liability to any Person (other than Purchaser and its Affiliates)
arising therefrom.
"Special Environmental Matter" shall have the meaning set forth in
Section 3.15A of the Disclosure Schedule.
"Seller Indemnified Parties" shall have the meaning set forth in
Section 7.2.
"Significant Distributor" shall mean a distributor or customer to
which the Grove Companies sold or leased more than $3,000,000 of finished
products in fiscal 1997.
"Specified Grove Assets" shall mean the assets, properties, rights
and business of Kidde relating to the Grove Operations, excluding the Excluded
Assets, as they existed on the Balance Sheet Date, with such additions thereto
and deletions therefrom as shall have occurred in the ordinary course of
business (unless not permitted by this Agreement) or as otherwise permitted by
this Agreement between the Balance Sheet Date and the Closing Date.
"Specified Grove Corporations" shall mean the Specified Grove Parent
Corporations, National Crane Corporation, Manlift Limited, Grove Cranes Limited,
Grove Europe Pension Trustees Limited and Grove Cranes SL.
"Specified Grove Parent Corporations" shall mean Grove Europe, Crane
Holding Inc., Deutsche Grove GmbH, Grove France, Delta Manlift SAS and Grove
Manlift Pty. Ltd.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership, joint venture or other legal entity of which such
Person, either directly or through or together with any other Subsidiary of such
Person, owns 50% or more of the equity interests or has the right to elect or
designate a majority of the Board of Directors or similar governing body,
whether through the ownership of voting securities, by contract or otherwise.
"Success Fee Agreements" shall mean any Contract for which any of
the Grove Companies has liability pursuant to which any Person may become
entitled to receive any payment as a result of his or its efforts in furtherance
of the consummation of the purchase and sale contemplated by this Agreement,
other than the Change of Control Agreements.
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"Sunderland Facility" shall mean the property described in the
Sunderland Property Transfer Agreement.
"Sunderland Leases and Option Agreement" shall mean the Lease of
Crown Works Sunderland, dated February 27, 1998, as amended, and Lease of land
and buildings at Sunderland, dated February 27, 1998 each between Hanson
Properties and Grove Europe relating to the Sunderland Facility, substantially
in the forms of Exhibit C-1 and C-2.
"Sunderland Property Transfer Agreement" shall mean the Transfer of
Whole dated February 27, 1998, pursuant to which Grove Europe transferred the
property including the Sunderland Facility to Hanson Properties.
"Supplemental Agreements" shall mean the Sunderland Leases and
Option Agreement and each of the other agreements and instruments contemplated
by this Agreement (other than the Tax Sharing and Indemnification Agreements).
"Tax Returns" shall have the meaning set forth in the Tax Sharing
and Indemnification Agreements.
"Tax Sharing and Indemnification Agreements" shall mean the
agreements to be dated the Closing Date substantially in the forms of Exhibit
D-1 and Exhibit D-2.
"Taxes" means any federal, state, local, foreign, or other tax of
any kind whatsoever (together with any interest, penalties, or additions imposed
with respect thereto), including, without limitation, income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, service,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, rental,
lease, ad valorem, or other tax.
"Terex Entity" shall mean Terex Corp. or any of its controlled
Affiliates.
"Transferred Employees" shall have the meaning set forth in Section
5.6(a).
"Treasury Regulations" shall mean the Treasury regulations
promulgated under the Code.
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"Unaudited First Quarter Financial Statements" shall have the
meaning set forth in Section 3.9(a).
"Welfare Plans" shall have the meaning set forth in Section 5.6(c).
1.2 Other Terms. Other terms may be defined elsewhere in the text of
this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
1.3 Other Definitional and Interpretive Provisions.
(a) The words "hereof," "herein," and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars. The term "(pound)" shall mean pounds sterling. The term "DM" shall mean
Deutsche Marks.
(d) Unless otherwise expressly provided in this Agreement, the
obligation to use "commercially reasonable best efforts" shall not require the
party so obligated to pay any money.
(e) Unless otherwise expressly provided in this Agreement, the
term "material" shall exclude, with respect to any conflict, violation, breach,
default, failure,
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claim or similar matter referred to in Article III of this Agreement that is
reasonably capable of quantification, one that would be reasonably expected not
to result in a Loss in excess of $100,000 individually, provided, however, that
for purposes of the Financial Statements, "material" shall be defined in
accordance with GAAP.
(f) The term "ordinary course" shall mean "ordinary course
consistent with the past practices of the Grove Operations".
(g) The term "individually and in the aggregate" or
"individually or in the aggregate" shall mean "individually and/or in the
aggregate."
(h) The term "Purchaser and/or its Affiliates" shall include
the Grove Companies (other than Kidde) from and after the Closing.
(i) The term "Seller" shall not include Grove France from and
after the Closing.
ARTICLE II
PURCHASE AND SALE OF THE GROVE OPERATIONS
2.1 Purchase and Sale of the Grove Operations. On the terms and
subject to the conditions set forth herein, and as set forth in greater detail
in this Article II, at the Closing, Sellers agree to sell, transfer and deliver
to Purchaser, and Purchaser agrees to purchase from Sellers, the Specified Grove
Parent Corporations and the Specified Grove
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Assets for an aggregate of $605,000,000 subject to adjustment as provided in
Section 5.12 of the Disclosure Schedule (the "Purchase Price").
2.2 Adjustment and Allocation of the Purchase Price.
(a) The Purchase Price shall be subject to adjustment as
provided in Section 2.8.
(b) The Purchase Price and the Assumed Liabilities shall be
allocated among the capital stock of each of the Specified Grove Parent
Corporations and the Specified Grove Assets (as an entirety) as set forth in
Section 2.2 of the Disclosure Schedule. As soon as reasonably practicable after
the Closing Date, Purchaser shall prepare and deliver to Sellers (a) a schedule
that sets forth an allocation among the Specified Grove Assets, as reasonably
determined by Purchaser, of the portion of the Purchase Price allocated to the
Specified Grove Assets as an entirety (the "Proposed Asset Allocation"), and (b)
copies of any appraisals prepared by independent appraisers selected by
Purchaser ("Appraisals") upon which the Proposed Asset Allocation has been
based. The portions of the Proposed Asset Allocation based upon Appraisals shall
be conclusive and binding upon the parties. In the event Purchaser and Kidde are
unable to agree within 30 days following Kidde's receipt of the Proposed Asset
Allocation on any portion of the Proposed Asset Allocation that is not based
upon Appraisals, Purchaser and Kidde shall jointly engage Deloitte & Touche LLP
to resolve their disagreement as promptly as possible. The resolution made by
Deloitte & Touche LLP shall be conclusive and binding upon the parties (together
with the portions of
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the Proposed Asset Allocation based upon Appraisals, the "Final Asset
Allocation"). The fees and disbursements of Deloitte & Touche LLP shall be borne
equally by Purchaser and Kidde.
(c) All Tax Returns and other financial reports filed by the
Purchaser, Sellers and their Affiliates shall be prepared consistently with the
allocations set forth in Section 2.2 of the Disclosure Schedule, as adjusted
pursuant to Section 2.2(d), and the Final Asset Allocation (subject to any
departure required to comply with applicable Law).
2.3 Sale and Purchase of Stock. On the terms and subject to the
conditions set forth herein, at the Closing the following transactions shall
occur in the following sequence and in accordance with Section 5.12 of the
Disclosure Schedule: (a) Grove France shall sell to Purchaser, and Purchaser
shall purchase from Grove France, all the outstanding capital stock of Delta
Manlift SAS, (b) Hanson Funding shall sell to Purchaser, and Purchaser shall
purchase from Hanson Funding, all of the outstanding capital stock of Grove
France, and (c) each Seller listed in Section 2.3 of the Disclosure Schedule
shall sell to Purchaser, and Purchaser shall purchase from such Seller, shares
constituting all the outstanding capital stock of each of the other Specified
Grove Parent Corporations. The capital stock to be sold pursuant to this Section
2.3 shall include, without limitation, the shares held by nominees listed in
Section 3.3 of the Disclosure Schedule.
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2.4 Sale and Purchase of the Specified Grove Assets. On the terms
and subject to the conditions set forth herein, at the Closing, Kidde shall
sell, transfer and deliver to Purchaser, and Purchaser shall purchase from
Kidde, the Specified Grove Assets.
2.5 Excluded Assets. Notwithstanding anything to the contrary
herein, there shall be excluded from the Specified Grove Assets those assets set
forth in Section 2.5 of the Disclosure Schedule (the "Excluded Assets"). The
term Specified Grove Assets does not include the Excluded Assets.
2.6 Assumed Liabilities. As additional consideration for the
Specified Grove Assets, at the Closing, Purchaser shall assume, and undertake to
pay, perform and discharge when due, and Purchaser shall hold Sellers harmless
with respect to, all of the obligations and liabilities of Kidde related to the
Grove Operations whatsoever, whether arising before, on or after the Closing and
whether known or unknown, actual, fixed, contingent or otherwise, excluding the
Excluded Liabilities, but including (1) matters for which Purchaser is required
to indemnify Sellers pursuant to Section 7.2 and (2) the obligations and
liabilities of Kidde under the Sales Contracts (as such term is defined in the
HSBC Letter (the "Assumed Liabilities"). The payment, discharge, settlement and
compromise of all Assumed Liabilities with respect to which a claim or demand
for payment or performance is made by a third party to Kidde after the Closing
shall be conducted solely in accordance with the indemnification procedures
contained in Article VII hereof.
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2.7 Excluded Liabilities. Notwithstanding anything to the contrary
herein, Purchaser shall not assume or in any way be responsible for, and Kidde
shall pay, perform and discharge when due, and Kidde shall hold Purchaser
harmless with respect to, all of the following obligations and liabilities,
whether arising before, on or after the Closing and whether known or unknown,
actual, fixed, contingent or otherwise, of Kidde: (1) the Kidde Retained
Environmental Liabilities, (2) the Kidde Retained ERISA Liabilities, (3) the
Kidde Retained Tax Liabilities, (4) liabilities with respect to indebtedness for
borrowed money and guarantees, letters of credit and similar obligations in
respect thereof, (5) liabilities with respect to payment obligations under the
Success Fee Agreements and the Change of Control Agreement identified as item
No. 6 on Section 1.1(b) of the Disclosure Schedule, (6) matters for which
Sellers are required to indemnify Purchaser pursuant to Section 7.3 and (7)
obligations of Kidde under the HSBC Letter (without prejudice to the obligations
which Purchaser has agreed to perform by virtue of its appointment as Agent
under the HSBC Agency Agreement) (together, the "Excluded Liabilities").
2.8 Post-Closing Adjustment.
(a) As promptly as practicable, but in any event, within 60
days following the Closing, Sellers shall, at their expense, prepare, or cause
to be prepared, and deliver to Purchaser a combined balance sheet of the Grove
Companies as of the Determination Date (the "Closing Balance Sheet"). The
Closing Balance Sheet shall be audited by Ernst & Young LLP, Sellers'
independent accountants. The Closing Balance
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Sheet shall be prepared in accordance with the principles, methods and examples
set forth in Section 1.1(a) of the Disclosure Schedule, and shall reflect the
taking of a physical inventory, which shall occur with reasonable advance notice
to Purchaser and its accountants, who shall have the opportunity to review and
observe the taking of such inventory count. The physical inventory shall be
taken in a manner consistent with the past practice of the Grove Operations;
provided, however, that at Purchaser's election, more extensive inventory
procedures not inconsistent with GAAS shall be employed.
(b) Within two Business Days following issuance of the Closing
Balance Sheet, the following adjustment payment, if any, shall be made:
(i) If the amount of the Closing Net Worth as set forth
on the Closing Balance Sheet is less than the Base Net Worth, the Sellers
shall make an adjustment payment in an amount equal to the excess of (x)
the Base Net Worth over (y) the Closing Net Worth as set forth on the
Closing Balance Sheet.
(ii) If the amount of the Closing Net Worth as set forth
on the Closing Balance Sheet is greater than the Base Net Worth, the
Purchaser shall make an adjustment payment in an amount equal to the
excess of (x) the Closing Net Worth as set forth on the Closing Balance
Sheet over (y) the Base Net Worth; provided, however, that the Purchaser's
adjustment payment shall in no event exceed $17,000,000.
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(c) During the 90-day period referred to in Section 2.8(d),
Purchaser or its representatives may request from Sellers, and Sellers shall
deliver promptly, any additional information reasonably required by Purchaser
for its review of the Closing Balance Sheet.
(d) Purchaser and Purchaser's accountants shall, within 90
days after the delivery by the Sellers of the Closing Balance Sheet, complete
their review of the Closing Balance Sheet. In the event that Purchaser does not
agree with Sellers' Closing Balance Sheet and the calculation of Closing Net
Worth therein, Purchaser shall inform Sellers in writing (the "Purchaser's
Objection"), setting forth a specific description of the basis of Purchaser's
Objection and the adjustments to such Closing Net Worth which Purchaser believes
should be made, on or before the last day of such 90-day period.
(e) Sellers shall have 30 days to review and respond to
Purchaser's Objection. Any further adjustment resulting from the resolution of
any aspects of Purchaser's Objection by the parties within such 30-day period
shall be paid promptly by the party required to make such payment to the party
entitled to receive it on or prior to the end of such 30-day period.
(f) If Sellers and Purchaser are unable to resolve any of
their remaining disagreements with respect to Purchaser's Objection within 10
days following Sellers' response to Purchaser's Objection, they shall refer
their remaining disagreements to Deloitte & Touche LLP, or another
internationally recognized firm of independent public
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accountants as to which the Sellers and Purchaser mutually agree (the "CPA
Firm"), who shall determine on the basis of the standards set forth in Section
1.1(a) of the Disclosure Schedule, and only with respect to the remaining
disagreements so submitted, whether and to what extent, if any, Closing Net
Worth as derived from the Closing Balance Sheet, requires adjustment. Sellers
and Purchaser shall direct the CPA Firm to use its best efforts to render its
determination within 45 days. The CPA Firm's determination shall be conclusive
and binding upon Purchaser and the Sellers. The fees and disbursements of the
CPA Firm shall be shared equally by Purchaser, on the one hand, and Sellers, on
the other hand. Purchaser and the Sellers shall make readily available to the
CPA Firm and to each other all relevant books and records and any work papers
(including those of the parties' respective accountants) relating to the Closing
Balance Sheet and all other items reasonably requested by the CPA Firm or a
party hereto.
(g) In the event the CPA firm makes a determination in the
favor of one party, the other party shall promptly make an adjustment payment to
the party in whose favor the determination was made in accordance with such
determination.
(h) All payments required to be made by this Section 2.8 shall
include interest thereon from the Closing Date through the date of payment at
the LIBOR rate; provided, however, that, with respect to any amount paid after
the date of delivery of Purchaser's Objection (the "Objection Date"), the
interest rate shall be increased to the LIBOR rate plus 2.75% from the Objection
Date through the date of payment; and further
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provided that if any payment under this Section 2.8 is not made within 10 days
of the date payable, the applicable rate of interest shall be increased by 2%
per annum for the period from the day following such date through the date such
payment is made. All adjustment payments payable pursuant to this Section 2.8
shall be paid in dollars by wire transfer of immediately available funds to an
account designated by the party entitled to receive the adjustment payment.
(i) The parties shall provide each other and their accountants
and their representatives reasonable access during normal business hours to the
books and records of the Grove Companies, other relevant information, including
work papers of their accountants, and to any employees to the extent necessary
for the Sellers to prepare the Closing Balance Sheet and for Purchaser to
respond thereto.
(j) Any adjustment payment made pursuant to this Section 2.8
shall be allocated among the Specified Grove Corporations and the Specified
Grove Assets (as an entirety) other than Grove France and Delta Manlift SAS in
proportion to the amounts set forth in Section 2.2 of the Disclosure Schedule
other than amounts allocated to Grove France and Delta Manlift SAS.
2.9 Closing. The Closing shall take place at the offices of Paul,
Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, New
York 10019 at 10:00 A.M. (New York City time), on the second business day
following the satisfaction or waiver (by the party entitled to waive the
condition) of all conditions to the Closing set
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forth in Article VI, or at such other time and place (including local
jurisdictions, in the case of the sale of the capital stock of the non-U.S.
Specified Grove Parent Corporations) as the parties hereto may mutually agree.
The date on which the Closing occurs is called the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Sellers jointly and severally represent and warrant to Purchaser as
follows:
3.1 The Grove Operations. Section 3.1(a) of the Disclosure Schedule
sets forth a list of the corporations that directly conduct the Grove Operations
and the jurisdiction of incorporation of each such corporation. Section 3.1(b)
of the Disclosure Schedule sets forth a complete and accurate corporate
structure chart showing each of such corporations in relation to Hanson. Except
for the matters described in Section 3.1(c) of the Disclosure Schedule, the
entirety of the Grove Operations are conducted, owned and managed by such
corporations.
3.1A Specified Grove Assets. At the Closing, the Specified Grove
Assets will constitute all rights, properties and other assets that are,
individually or in the aggregate, material to the conduct of the Grove
Operations as they were conducted by Kidde on the Balance Sheet Date, with such
additions thereto and deletions therefrom as may have occurred thereafter in the
ordinary course or as otherwise contemplated by this Agreement.
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3.2 Organization and Qualification. Each of the Sellers and each of
the Specified Grove Corporations is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its assets and properties and to carry on its business as currently
conducted. Each of the Specified Grove Corporations is duly licensed or
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership, lease or operation of its assets and
properties or the conduct of its business requires such license or
qualification, except where the failure to be so licensed or qualified or in
good standing, as the case may be, would not have a Material Adverse Effect.
Sellers have delivered or otherwise made available to Purchaser, with respect to
each of the Specified Grove Corporations, true, complete and correct copies of
(i) its charter, bylaws or other organizational documents, as currently in
effect, and (ii) minutes of all meetings (or written consents in lieu of
meetings) of its Boards of Directors and stockholders. All material action taken
by the Boards of Directors and stockholders of each of the Specified Grove
Corporations is reflected in such minutes and written consents.
3.3 Capitalization. Subject to such changes as shall be made in
compliance with Section 5.12, the authorized, issued and outstanding capital
stock of each of the Specified Grove Corporations, and the record and beneficial
owner or owners thereof, are set forth in Section 3.3 of the Disclosure
Schedule. All of the outstanding shares of capital stock of each of the
Specified Grove Corporations are duly authorized, validly issued, fully
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paid and nonassessable. Other than pursuant to this Agreement, there is no
preemptive right, subscription right, option, warrant, call, right, contract,
agreement, commitment, understanding or arrangement with respect to the
issuance, sale, delivery or transfer of the capital stock of any of the
Specified Grove Corporations, including any right of conversion or exchange
under any security or other instrument. No Person (other than Sellers or another
Grove Company) has any right arising out of any interest in the capital stock of
any of the Specified Grove Corporations to participate in, or receive any
payment based on any amount relating to, the revenue, income, value, net worth
or other financial measure of the Specified Grove Corporations or any component
or portion thereof, or any increase or decrease in any of the foregoing.
3.4 Subsidiaries and Investments. (a) Section 3.4 of the Disclosure
Schedule sets forth the name and jurisdiction of incorporation of each
Subsidiary or other entity in which any of the Specified Grove Corporations
directly or indirectly owns any shares of any capital stock or other ownership
interest. Except for the entities listed in Section 3.4 of the Disclosure
Schedule, the Specified Grove Corporations do not directly or indirectly own any
equity interest in any other Person.
(b) Grove Manlift Pty. Ltd. is an Australian limited
corporation organized on December 9, 1996 and has incurred no liabilities,
contingent or otherwise, other than in the ordinary course since the date of its
formation.
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3.5 Corporate Authorization. Each of Sellers and their Affiliates
has full corporate power and authority, and full legal right, to enter into,
execute and deliver those of this Agreement, the Tax Sharing and Indemnification
Agreements and the Supplemental Agreements to which it is or will become a
party, and to perform its obligations hereunder and thereunder. The execution,
delivery and performance by the Sellers of this Agreement, and by each of
Sellers and their Affiliates of the Tax Sharing and Indemnification Agreements
and the Supplemental Agreements have been duly and validly authorized by all
necessary corporate and shareholder consent and approval and no additional
corporate or shareholder authorization or consent is required in connection with
the execution, delivery and performance by the Sellers of this Agreement, and by
each of Sellers and their Affiliates of the Tax Sharing and Indemnification
Agreements or any Supplemental Agreements.
3.6 Consents and Approvals. Except as specifically set forth in
Section 6.1(a) of this Agreement or Section 3.6 of the Disclosure Schedule, no
material consent, approval, waiver, license, permit or authorization is required
to be obtained by any Seller or any of the Specified Grove Corporations from,
and no material notice or filing is required to be given by any Seller or any of
the Specified Grove Corporations to or made by any Seller or any of the
Specified Grove Corporations with, any Governmental Authority or other Person in
connection with the execution, delivery or performance by any Seller of this
Agreement, and by any Seller or any of their Affiliates of the Tax Sharing and
Indemnification Agreements or any Supplemental Agreement.
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3.7 Non-Contravention. The execution, delivery and performance by
each Seller of this Agreement, and by each of Sellers and their Affiliates of
the Tax Sharing and Indemnification Agreements and the Supplemental Agreements,
and the consummation of the transactions contemplated hereby and thereby, does
not and will not (i) violate any provision of the charter, bylaws or other
organizational documents of any Seller, any such Affiliate, or any of the
Specified Grove Corporations; (ii) subject to obtaining the consents and
approvals referred to in Sections 3.6 and 6.1(a) and, to the Knowledge of
Sellers with respect to the Specified Grove Assets conflict with, or result in
the breach of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the filing of notice or the lapse of
time or both) of any right or obligation of any of the Grove Companies under, or
to a loss of any benefit to which any of the Grove Companies is entitled under,
any Contract; (iii) assuming compliance with the matters set forth in Sections
3.6, 4.3 and 6.1(a), violate, or result in a breach of or constitute a default
under any Law to which any Seller, any such Affiliate, (to the Knowledge of
Sellers) or any of the Specified Grove Corporations is subject; or (iv) results
in the creation of any Encumbrances on the assets of the Specified Grove
Corporations or, to the Knowledge of Sellers, on the Specified Grove Assets,
other than in the cases of clauses (ii), (iii) and (iv), any conflict, breach,
termination, default, cancellation, acceleration, loss or violation which would
not individually be material.
3.8 Binding Effect. This Agreement constitutes and, when executed
and delivered at the Closing, the Tax Sharing and Indemnification Agreements and
any
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Supplemental Agreement will constitute, a valid and legally binding obligation
of each Seller and Affiliate of Sellers party thereto, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
3.9 Financial Statements; Absence of Certain Changes.
(a) The audited combined balance sheets of the Grove Companies
at September 30, 1997 (the "Balance Sheet") and at September 30, 1996 and the
audited combined statements of operations of the Grove Companies for the three
fiscal years ended September 30, 1997, September 30, 1996 and September 30,
1995, attached as Section 3.9(a)(1) of the Disclosure Schedule (collectively,
the "Audited Financial Statements") fairly present, in all material respects,
the combined financial condition of the Grove Companies as of the dates thereof,
or their combined results of operations for the periods then ended, as the case
may be, in accordance with GAAP. September 30, 1997 is referred to herein as the
"Balance Sheet Date." The unaudited combined balance sheets of the Grove
Companies at December 31, 1997 and December 31, 1996 and the combined statements
of operations of the Grove Companies for the fiscal quarters ended December 31,
1997 and December 31, 1996 attached as Section 3.9(a)(2) of the Disclosure
Schedule (the "Unaudited First Quarter Financial Statements") fairly present, in
all material respects, the combined financial condition of the Grove Companies
as of the dates thereof, or their combined results of operations for the periods
then ended, as the case may be, in accordance with GAAP, except
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for normal year-end audit adjustments which will not, individually or in the
aggregate, be material.
(b) The Grove Companies have no indebtedness, obligation,
claims or liability of a nature required to be reflected on a balance sheet
prepared in accordance with GAAP, except for (i) liabilities reflected or
reserved for in the Balance Sheet; (ii) liabilities incurred after the Balance
Sheet Date and disclosed (or below the threshold requiring disclosure) in the
Disclosure Schedule to this Agreement; and (iii) liabilities that would not
individually or in the aggregate have a Material Adverse Effect and will either
be satisfied prior to the Closing or reflected in the Closing Balance Sheet. All
accounts receivable to be reflected on the Closing Balance Sheet shall have
arisen in the ordinary course.
(c) Except as set forth in Section 3.9(c) of the Disclosure
Schedule or otherwise disclosed in this Agreement, since the date of the Balance
Sheet, each of the Grove Companies has conducted its business in the ordinary
course and, other than in the ordinary course, has not: (i) sold, assigned,
pledged, hypothecated or otherwise transferred any assets or properties; (ii)
terminated (other than in accordance with its terms) or amended in a manner
materially adverse to the Grove Operations any material Contract; (iii) suffered
any damage, destruction or other casualty loss material to the Grove Operations
(whether or not covered by insurance); (iv) increased or accelerated, or taken
any action that could increase or accelerate, the compensation payable or to
become payable to any employees or
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increased or accelerated, or taken any actions that could increase or
accelerate, any benefits under any Benefit Plan or Employee Arrangement; (v) in
the case of the Specified Grove Corporations, incurred or assumed, or agreed to
incur or assume, any liability (whether or not currently due and payable) not
relating to the Grove Operations; or (vi) entered into an agreement to do any of
the foregoing.
3.10 No Material Adverse Change. Since the Balance Sheet Date, there
has been no Material Adverse Change.
3.11 Litigation and Non-Warranty Claims; Orders and Judgments.
(a) Section 3.11(a) of the Disclosure Schedule sets forth a
complete and accurate list of any individually material civil, criminal or
administrative action, suit, claim (other than warranty claim), hearing,
arbitration, proceeding or investigation pending or, to the Knowledge of
Sellers, threatened, against any of the Grove Companies.
(b) Except as set forth in Section 3.11(b) of the Disclosure
Schedule, there is no individually material order, writ, judgment, award,
injunction or decree of any Governmental Authority of competent jurisdiction
against or affecting any of the Grove Companies.
3.12 Taxes.
(a) All federal, state, local and foreign income Tax Returns
and all other material Tax Returns required to be filed by or on behalf of any
of the Specified Grove Corporations or any Affiliated Group of which any of the
Specified Grove Corporations is or
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was a member have been timely filed and all such Tax Returns are true and
complete in all material respects, and all material Taxes owed by the Specified
Grove Corporations or any Affiliated Group for each taxable period during which
any of the Specified Grove Corporations was a member of such group have been
paid.
(b) No audit examination, deficiency assessment, refund
litigation or other administrative or court proceeding with respect to any Tax
Returns or Taxes of the Specified Grove Corporations is pending or, to the
Knowledge of Sellers, threatened. There are no material unpaid Tax deficiency
assessments or adjustments concerning any Tax Return or Tax liability of any of
the Specified Grove Corporations.
(c) There are no outstanding agreements or waivers to extend
the period of limitations for the filing of any Tax Return of any Specified
Grove Corporation or the assessment or collection of any Tax from any Specified
Grove Corporation and no power of attorney relating to Tax matters is currently
in force. None of the Specified Grove Corporations has entered into any closing
agreement pursuant to Section 7121 of the Code or any predecessor provision
thereof or any similar provision of state, local or foreign Law.
(d) Each of the Specified Grove Corporations has withheld and
timely deposited or paid all material Taxes required to have been withheld and
deposited or paid in connection with amounts paid or owing to any independent
contractor, stockholder or other third party.
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(e) None of the Specified Grove Corporations is a party to any
agreement, contract, arrangement or plan that would result, separately or in the
aggregate, in the payment of any "excess parachute payment" within the meaning
of Section 280G of the Code either as a result of the transaction contemplated
hereunder or otherwise.
(f) Except for the Demerger Tax Indemnification Agreements,
the Krupp Purchase Agreements and the Delta Purchase Agreement, none of the
Specified Grove Corporations is a party to, bound by or subject to any
obligation under any Tax sharing, Tax indemnification, or similar agreement.
(g) None of the Specified Grove Corporations has filed a
consent pursuant to Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by any of them.
(h) No property owned by any of the Grove Companies is
property that the Purchaser, any of the Grove Companies or any of their
Affiliates is or will be required to treat as being owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended and in effect immediately prior to the enactment of the Tax
Reform Act of 1986, is tax-exempt use property within the meaning of Section
168(h)(1) of the Code or tax-exempt bond financed property within the meaning of
Section 168(g) of the Code.
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(i) None of the Specified Grove Corporations is now, or during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code, was, a
United States real property holding corporation within the meaning of Section
897 of the Code.
(j) None of the Specified Grove Corporations has agreed to or
is required to make any adjustments under Section 481(a) of the Code by reason
of a change in accounting method or otherwise.
(k) None of the foreign Specified Grove Corporations owns any
United States property as defined in Section 956(c) of the Code.
(l) Section 3.12(l) of the Disclosure Schedule sets forth all
material Federal, state, local and foreign Tax elections that are in effect with
respect to the Specified Grove Corporations that would be binding on the
Specified Grove Corporations after the Closing.
3.13 Employee Benefits. Except as set forth in Section 3.13 of the
Disclosure Schedule:
(a) There are no (i) "employee benefit plans," as defined in
Section 3(3) of ERISA, maintained with respect to current or former employees of
the Grove Companies (the "Grove Business Employees"), other than any plan,
including any statutory plan, maintained outside the United States with respect
to Grove Business Employees substantially all of whom are employed outside of
the United States ("Foreign Plans"), to which any of the Grove Companies has an
obligation to make contributions, or for which any
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of the Grove Companies has any direct, indirect, actual or contingent liability,
other than joint and several liability with any Seller or its other Affiliates
for plans maintained or contributed to by such Seller or any Affiliate ("Benefit
Plans"); or (ii) material bonus or other incentive compensation, deferred
compensation, salary continuation during any absence from active employment for
disability or other reasons, severance, sick days, stock award, stock option,
stock purchase, tuition assistance, vacation pay or other employee benefit
agreements, policies or arrangements (other than Benefit Plans, Individual
Arrangements or Foreign Plans), or similar agreements, policies or arrangements
applicable to non-employee service providers, to which any of the Grove
Companies is a party or for which any of the Grove Companies has any liability,
other than joint and several liability with any Seller or its other Affiliates
for plans or arrangements maintained or contributed to by such Seller or
Affiliate, ("Employee Arrangements"); or (iii) individual employment, severance,
termination, bonus or other compensation arrangements or agreements with respect
to Grove Business Employees, other than arrangements or agreements applicable to
non-U.S. Grove Business Employees who are not officers, to which any of the
Grove Companies is a party or for which any of the Grove Companies has any
liabilities, other than joint and several liability with any Seller or its other
Affiliates for arrangements or agreements maintained or contributed to by such
Seller or Affiliate (the "Individual Arrangements").
(b) With respect to each Benefit Plan, Employee Arrangement
and Individual Arrangement, a complete and correct copy of each of the following
documents (if
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applicable) has been provided or made available to Purchaser: (i) the most
recent plan or governing document and related trust documents, and all material
amendments thereto; (ii) the most recent summary plan description and all
related summaries of material modifications; (iii) the most recent Form 5500
(including schedules); (iv) the most recent IRS determination letter (and any
pending application therefor); and (v) the most recent annual audited financial
statement and opinion (including for purposes of Financial Accounting Standards
Board Report no. 87, 106 and 112) and actuarial reports, with respect to any
Benefit Plan or Employee Arrangement which is an employee pension benefit plan
(as defined in Section 3(2) of ERISA) or which provides post-retirement benefits
or, if none, as of the most recent date available, information regarding the
value of plan assets, the current liability for benefits under such Benefit Plan
or Employee Arrangement and all actuarial and other assumptions used to
determine such funded status and current liability.
(c) None of the Benefit Plans is subject to Section 4063 or
4064 of ERISA.
(d) All Benefit Plans, Employee Arrangements and Individual
Arrangements are in material compliance with all applicable Laws. The Benefit
Plans and their related trusts intended to qualify under Section 401 of the Code
and 501(a) of the Code, respectively, have been determined by the IRS to qualify
or be exempt under such Sections and, no event has occurred which, individually
or in the aggregate, would reasonably be
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expected to give rise to disqualification of such Benefit Plan under the Code or
to a material liability.
(e) All payments or contributions required to have been made
under any Benefit Plan, Employee Arrangement or Individual Arrangement or any
Law relating thereto have been made by the due date therefor (including any
valid extensions). All amounts properly accrued as liabilities to or expenses of
any Benefit Plan or Employee Arrangement which have not been paid have been
properly reflected on the Balance Sheet to the extent required by GAAP.
(f) The Benefit Plans, Employee Arrangements and Individual
Arrangements have been maintained and administered, in all material respects, in
accordance with their terms and applicable Laws, including but not limited to
Laws relating to the filing of applicable reports, documents and notices
regarding any Benefit Plans, Employee Arrangements and Individual Arrangements
with the Secretary of Labor and the Secretary of the Treasury, or the furnishing
of such documents to participants in the Benefit Plans, Employee Arrangements
and Individual Arrangements.
(g) There are no material pending or, to the Knowledge of
Sellers, threatened actions, claims or proceedings against either (i) any
Benefit Plan or Employee Arrangement or its assets, plan sponsor, plan
administrator or fiduciaries with respect to such Benefit Plan or Employee
Arrangement (other than benefit claims in the ordinary course), or
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(ii) any of the Grove Companies on account of any Individual Arrangement,
Benefit Plan or Employee Arrangement.
(h) Except for the Long-Term Incentive Plans, the Management
Incentive Plans and the Excluded Liabilities, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any Grove Business Employee becoming entitled to any
severance, unemployment or similar payment, (ii) increase any benefits under any
Benefit Plan or Employee Arrangement or the amount payable under any Individual
Arrangement, (iii) result in the acceleration of the time of (x) payment or
vesting of any benefits under any Benefit Plan or Employee Arrangement or (y)
the amount payable under any Individual Arrangement, (iv) constitute or involve
a "prohibited transaction" (as described in Section 406 of ERISA or Section 4975
of the Code), or (v) give rise to any claim directly or indirectly against the
Purchaser or any of the Grove Companies whether under any Benefit Plan, Employee
Arrangement, Individual Arrangement or otherwise, for severance or other
payments resulting from the transactions contemplated by this Agreement.
(i) There have been no "prohibited transactions" and there
have been no acts or omissions, with respect to any Benefit Plan, other than
Foreign Plans, which have given rise to or may give rise to any material fines,
penalties, Taxes or related charges under Sections 502(c), 502(i), 502(l) or
4071 of ERISA or Chapter 43 of the Code for which Purchaser or any of the Grove
Companies may directly or indirectly be liable.
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(j) With respect to each Benefit Plan subject to either Code
Section 412 or ERISA Section 302 (i) such plan uses a funding method permissible
under ERISA and the actuarial assumptions used in connection therewith are
individually and in the aggregate reasonable; and (ii) since the date of the
last actuarial reports, except as set forth in Section 3.9(c) of the Disclosure
Schedule, there has been no material change in the level of benefits provided
thereunder, the number of participants in or the amount of assets under any
Benefit Plan which is a "pension plan" (as defined in Section 3(2) of ERISA).
(k) Each Benefit Plan and Employee Arrangement which is a
"group health plan" (as defined in ERISA section 607(1) or Code Section
5001(b)(1)) has been operated at all times in good faith compliance in all
material respects with the provisions of COBRA. No Benefit Plan or Employee
Arrangement is a multiple employer welfare arrangement as defined in ERISA
Section 3(40).
(l) No assets of the Grove Operations are subject to any lien
under ERISA Section 302(f) or Code Section 412(n).
(m) There are no (i) Retiree Welfare Plans; (ii) material
unfunded benefit obligations with respect to any Grove Business Employee as of
the Balance Sheet Date which are not fairly reflected by reserves shown on the
Balance Sheet; or (iii) reserves, assets, surpluses or prepaid premiums with
respect to any welfare plan (as defined in Section 3(l) of ERISA).
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(n) No Benefit Plan is a "multiple employer plan" or a
"multiemployer plan" within the meaning of the Code or ERISA or the regulations
promulgated thereunder.
(o) No reportable event (within the meaning of ERISA Section
4043) has occurred or, to the Knowledge of Sellers, may reasonably be expected
to occur with respect to any Benefit Plan.
(p) Within the five years prior to the Closing, no Benefit
Plan that is or was subject to Title IV has been terminated, no filing of a
notice of intent to terminate such a Benefit Plan has been made, and the Pension
Benefit Guaranty Corporation has not initiated any proceeding to terminate any
such Benefit Plan. To the Knowledge of Sellers, no event has occurred, and no
condition or circumstance exists, which presents a material risk that any
Benefit Plan has experienced or is likely to experience a partial termination,
within the meaning of Code Section 411(d)(3).
(q) With respect to each Foreign Plan, to the extent
applicable: (i) such plan is duly registered where required by, and in good
standing under, all applicable Laws, and any regulations thereunder, and, to the
Knowledge of Sellers, no events have occurred or conditions exist that could
jeopardize such status, (ii) such plan is in material compliance and has been
maintained in all material respects in accordance with its terms and applicable
Law, and (iii) during the last three years, no actuarial surplus has been
removed
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nor has any surplus been used to offset any contribution obligations of any of
the non-U.S. Grove Companies under any such plan.
3.14 Compliance with Laws; Certain Payments.
(a) Except as set forth in Sections 3.6, 3.15 or 3.15A of the
Disclosure Schedule, each of the Grove Companies is in material compliance with
all Laws and has all material Governmental Authorizations, it being understood
that nothing in this representation is intended to address any compliance issue
that is the subject of any other representation or warranty set forth herein.
(b) To the Knowledge of Sellers, none of the Grove Companies
has made any illegal payment to officers or employees of any Governmental
Authority, or any insurance company or fire rating and any other similar board
or organization or other non-governmental regulating body to the extent that the
rules, regulations or orders of such body have the force of law, or made any
illegal payment to customers for the sharing of fees or to customers or
suppliers for rebating of charges, or engaged in any other illegal reciprocal
practice, or made any illegal payment or given any other illegal consideration
to purchasing agents or other representatives of customers in respect of sales
made or to be made by the Grove Companies.
3.15 Environmental Matters. Except as specifically set forth in
Sections 3.15 or 3.15A of the Disclosure Schedule:
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(a) Each of the Grove Companies is in compliance in all
material respects with all applicable Environmental Laws and has no material
liabilities under any Environmental Law;
(b) None of the Sellers nor any of the Grove Companies has
received any written notice of any violation or alleged violation by any of the
Grove Companies of, or any liability of any of the Grove Companies under, any
Environmental Law, during the past three years; and
(c) There are no writs, injunctions, decrees, orders or
judgments outstanding, or any actions, suits, proceedings or investigations
pending or, to the Knowledge of Sellers, threatened, relating to compliance by
any of the Grove Companies with, or the liability of any of the Grove Companies
under, any Environmental Law.
3.16 Intellectual Property.
(a) The Grove Companies own or are licensed or otherwise have
the right to use all of the material Intellectual Property that is used in
connection with the Grove Operations as conducted at the Balance Sheet Date.
(b) Section 3.16(b)(1) of the Disclosure Schedule sets forth a
true and correct list of all registered Intellectual Property (and all pending
applications for registration of Intellectual Property) owned by the Grove
Companies and all material Intellectual Property licensed by or to the Grove
Companies ("IP Licenses"). The Grove Companies have performed in all material
respects all obligations imposed upon them under
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all IP Licenses and to the Knowledge of Sellers, no material default has
occurred under any Intellectual Property required to be listed in Section
3.16(b)(1) of the Disclosure Schedule which default has not been cured or
waived. To the Knowledge of Sellers, all of the registered Intellectual Property
and IP Licenses listed in Section 3.16(b)(1) of the Disclosure Schedule are
valid, enforceable and are full force and effect.
(c) To the Knowledge of Sellers, except as set forth in
Section 3.16(c) of the Disclosure Schedule, no product (or component thereof or
process) currently used, advertised, distributed, imported, sold or manufactured
by any of the Grove Companies and no material Intellectual Property of the Grove
Companies infringes on or otherwise violates any Intellectual Property rights of
any other Person.
(d) Except as set forth in Section 3.16(d) of the Disclosure
Schedule, there are no actions or proceedings pending or, to the Knowledge of
Sellers, threatened challenging the validity, enforceability, use or ownership
of any material Intellectual Property of any of the Grove Companies, and, to the
Knowledge of Sellers, no Person is infringing or otherwise violating any
material Intellectual Property of any of the Grove Companies.
3.17 Labor Matters. Except as disclosed in Section 3.17 of the
Disclosure Schedule:
(a) None of the Grove Companies is a party to any labor or
collective bargaining agreement or similar (outside the United States) Contract
with any
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Person with respect to its employees and the terms and conditions of their
employment (other than Individual Arrangements), no employees of any of the
Grove Companies are represented by any labor or equivalent organization (other
than as required by applicable Law) with respect to the terms and conditions of
their employment, and there are no organizing activities (including any demand
for recognition or certification proceedings) pending or, to the Knowledge of
Sellers, threatened to be brought or filed with the National Labor Relations
Board or other labor relations tribunal or Governmental Authority involving any
of the Grove Companies or their respective employees;
(b) There are, and for the past three years there have been,
no strikes, material work stoppages, material disputes, slowdowns or lockouts
("Industrial Actions") pending or, to the Knowledge of Sellers, threatened
against or involving any of the Grove Companies or their respective employees;
(c) There are no material audits, complaints, charges, claims
or proceedings against any of the Grove Companies pending or, to the Knowledge
of Sellers, threatened to be brought or filed with any Governmental Authority
(i) based on or arising out of (x) the employment of or termination of
employment by any of the Grove Companies of any employee or (y) the terms and
conditions of employment of any employee;
(d) Each of the Grove Companies is in material compliance with
all Laws pertaining to the employment of labor, including (i) all material
applicable requirements of the Occupational Safety and Health Act of 1970, as
amended, within the
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United States and comparable workplace-safety Laws of all other applicable
jurisdictions; (ii) all material applicable Laws affecting or in any way
relating to labor union activities, civil rights or employment, including
without limitation, in the United States, Title VII, Civil Rights Act of 1964 as
amended; the Age Discrimination in Employment Act of 1967, as amended; the Equal
Employment Opportunity Act of 1972, as amended; the Employee Retirement Income
Security Act of 1974, as amended; the Equal Pay Act; the National Labor
Relations Act; the Rehabilitation Act; the Vietnam Era Veteran Reemployment Act;
the Immigration Reform Control Act, as amended; the Fair Labor Standards Act, as
amended; the Family and Medical Leave Act of 1993; the Americans with
Disabilities Act of 1990, as amended; Sections 1981 through 1988 of Title 42 of
the United States Code, as amended; and (iii) all material applicable Laws
relating to workers compensation, immigration and visa matters and the
collection and payment of withholding and/or payroll Taxes and similar Taxes
with respect to all employees and former employees of any of the Grove
Companies;
(e) During the last three years, (i) there has not been
effectuated with respect to the Grove Operations a "plant closing" (as defined
in the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the Grove
Operations or a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of the Grove Operations and (ii) the Grove Operations
have not been engaged in layoffs or employment terminations sufficient in number
to trigger application of any similar state, local or foreign Law. During the
six
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months prior to the date hereof none of the employees of the Grove Companies has
suffered an "employment loss" (as defined in the WARN Act); and
(f) No executive of, or other employee whose services are
otherwise material to, the Grove Operations as conducted on the Balance Sheet
Date is employed by any Affiliate of the Grove Companies or any other party.
3.18 Contracts.
(a) Section 3.18(a) of the Disclosure Schedule sets forth a
list, as of the date hereof, of each Contract (other than (i) purchase and sale
orders or arrangements in the ordinary course of business, (ii) any Contract
(other than one referred to in clause (i)) involving the payment of less than
$250,000 in the aggregate and with a term of one year or less and (iii)
confidentiality agreements entered into in the usual course of business).
Section 3.18(a) of the Disclosure Schedule does not omit any Contract with a
Significant Distributor or any Contract that is material to the Grove Operations
taken as a whole.
(b) Each Contract required to be listed in Section 3.18(a) is
a valid and binding agreement of one of the Grove Companies and, to the
Knowledge of Sellers, is in full force and effect. To the Knowledge of Sellers,
no material default has occurred under any Contract required to be listed in
Section 3.18(a) of the Disclosure Schedule which default has not been cured or
waived.
(c) To the Knowledge of Sellers, as of the date of this
Agreement no Significant Distributor has terminated or threatened to terminate
its Contract with the
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Grove Companies upon the consummation of the sale and purchase contemplated by
this Agreement.
3.19 Property.
(a) Section 3.19(a) of the Disclosure Schedule sets forth a
list of all real property owned by each of the Grove Companies as of the date
hereof, other than easements, rights-of-way and similar interests in real
property (the "Owned Real Property").
(b) As of the Closing, each of the Grove Companies will have
good and marketable title to all of the assets and properties which it then owns
and which will be reflected on the Closing Balance Sheet, including the Owned
Real Property, free and clear of all Encumbrances, except (i) as set forth in
Section 3.19(b) or the footnote to Section 3.19(d) of the Disclosure Schedule;
(ii) as disclosed in the Balance Sheet; (iii) liens for Taxes, assessments,
water and sewer rents and other governmental charges not yet due and payable or
being contested in good faith by appropriate proceedings; and (iv) (A)
easements, quasi easements, licenses, covenants, rights of way, utility
agreements and other similar restrictions, (B) any conditions that may be shown
by a current survey, (C) any exceptions and conditions contained in any title
insurance policies to be obtained by Purchaser prior to the Closing, (D) Laws
that affect the use of the Owned Real Property including zoning, building and
other similar restrictions and (E) other Encumbrances that in the case of
clauses, A, B, C, D and E do not, individually or in the aggregate, in any
material respect
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interfere with or impair the continued use of the material Owned Real Property
in the ordinary course (clauses (i) through (iv) collectively, "Permitted
Encumbrances").
(c) Except as disclosed in Section 3.19(c) of the Disclosure
Schedule, there is no pending or, to the Knowledge of Sellers, threatened or
proposed proceeding or governmental action to condemn, to take by the power of
eminent domain (or to purchase in lieu thereof) or otherwise to take or restrict
in any material respect the right to use, develop or alter, all or any part of
any material Real Property, it being understood that the proposal or adoption of
Laws of general application shall not be deemed to be a breach of this
representation and warranty.
(d) Section 3.19(d) of the Disclosure Schedule is a true,
correct and complete schedule of all leases, subleases, licenses and other
Contracts (including "Inheritable Building Rights" in Germany) under which any
of the Grove Companies uses or occupies any material Real Property
(collectively, the "Real Property Leases") (the land, buildings and other
improvements covered by the Real Property Leases being herein called the "Leased
Real Property") which Section 3.19(d) of the Disclosure Schedule sets forth the
date of and parties to each Real Property Lease, and each material amendment,
modification and supplement thereto. Each of the Sellers have heretofore
delivered to Purchaser true, correct and complete copies of all Real Property
Leases (including all material modifications, amendments and supplements). Each
Real Property Lease is valid and binding on the relevant Grove Company and, to
the Knowledge of Sellers, is in full force and effect, and, to
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the Knowledge of Sellers, no material default has occurred under any Real
Property Lease which default has not been cured or waived. None of the Grove
Companies has failed to make any payment payable by the Grove Companies as
tenants under any Real Property Lease, the non-payment of which would permit the
respective landlord to terminate such Real Property Lease. Except for
Encumbrances that do not, individually or in the aggregate, interfere in any
material respect with, or materially increase the cost of, the use, occupancy or
operation of the applicable parcel of Leased Real Property as currently used,
occupied and operated (collectively, the "Permitted Leased Real Property
Exceptions"), the Grove Companies hold the leasehold estates under and interests
in each Real Property Lease free and clear of all Encumbrances.
(e) Upon transfer of the Specified Grove Assets to be conveyed
by Sellers to Purchaser in accordance with the terms of Article II hereof,
Purchaser will receive valid and marketable title to all of the Specified Grove
Assets, free and clear of all Encumbrances, except Permitted Encumbrances.
3.20 Title to Shares. Each Seller is the record (except as disclosed
in Section 3.3 of the Disclosure Schedule) and beneficial owner of all of the
shares of the Specified Grove Parent Corporations to be conveyed by such Seller,
free and clear of all Encumbrances. The shares of the Specified Grove Parent
Corporations held by nominees as listed in Section 3.3 of the Disclosure
Schedule are subject to valid, binding and duly executed stock powers or other
transfer forms in favor of Sellers. Upon transfer of the
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shares of the Specified Grove Parent Corporations to the Purchaser in accordance
with the terms of Article II hereof, Purchaser will receive valid and marketable
title to the shares of the Specified Grove Parent Corporations free and clear of
all Encumbrances.
3.21 Product Warranties. Set forth in Section 3.21(a) of the
Disclosure Schedule are the standard forms of product warranties given during
the last three years by the Grove Companies in connection with the Grove
Operations. To the Knowledge of Sellers, Section 3.21(b) of the Disclosure
Schedule sets forth, as of the date hereof, a complete list of product
improvement programs currently in process or contemplated by Sellers.
3.22 Potential Conflicts of Interest. Neither Hanson nor any of its
Subsidiaries nor, to the Knowledge of Sellers, any officers or directors of
Sellers or the Grove Companies:
(a) owns, directly or indirectly, in whole or in part, any
material tangible or intangible property used in the conduct of the Grove
Operations or is party to any material Contract that relates to such business in
any manner;
(b) has any cause of action or other claim whatsoever against,
or owes any amount to, the Grove Companies, except for warranty or employee
benefits claims in the ordinary course of business; or
(c) is a party to any transaction with the Grove Companies
other than those which are at an arm's length basis or on terms more favorable
than those that
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could be available from an unaffiliated third party; provided, however, that
this clause (c) shall not apply to any matter disclosed (or below the threshold
requiring disclosure) in Section 3.13 of the Disclosure Schedule.
3.23 Insurance.
(a) Section 3.23(a)(1) of the Disclosure Schedule sets forth a
list of all policies or binders of fire, liability, business interruption,
property, product liability, worker's compensation, vehicular, and other
insurance held since January 1, 1988 by or on behalf of or for the benefit of
the Grove Companies or any Affiliates and relating to the Grove Operations,
including the Portfolio Transfer Agreement but excluding any directors and
officers insurance ("Grove Insurance Policies"). Purchaser acknowledges that it
has received from Sellers copies of the documentation relating to the Portfolio
Transfer Agreement identified in Section 3.23(a)(2) of the Disclosure Schedule.
To the Knowledge of Sellers, Sellers have provided Purchaser with all relevant
documentation (including, without limitation, correspondence with and
submissions to the brokers and insurers) relating to the Portfolio Transfer
Agreement.
(b) The Grove Insurance Policies are valid and binding in
accordance with their terms, and are in full force and effect.
(c) Neither any Grove Company, Seller nor any of their
Affiliates is in material default with respect to any provision contained in any
Grove Insurance Policy or has failed to give any notice or present any claim
under any Grove Insurance Policy in
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proper and timely fashion except, in the case of occurrence-based
umbrella/excess policies, claims which it did not reasonably expect would give
rise to coverage under such policies.
(d) Except as set forth in Section 3.23(d) of the Disclosure
Schedule, there are no outstanding unpaid claims (other than any claims incurred
but not reported) under any Grove Insurance Policy, and neither any Seller nor
any of their Affiliates has received from any insurer any notice of cancellation
or non-renewal of any Grove Insurance Policy other than normal expiry.
(e) Section 3.23(d) of the Disclosure Schedule contains true
and accurate copies of the insurance loss runs as at December 31, 1997 for the
last five years related to the Grove Operations (except that insurance loss runs
in respect of Delta Manlift SAS and Deutsche Grove GmbH are for a period of less
than five years).
(f) There is no material inaccuracy in any application for the
Grove Insurance Policies, no failure to pay premiums when due and no similar
state of facts that might form the basis for termination of any Grove Insurance
Policy or disallowance of all or any part of any claim thereunder.
(g) There have been no payments made under any umbrella/excess
policy listed in Section 3.23(a) of the Disclosure Schedule in excess of $5
million in the aggregate in any policy year beginning on January 1, 1988 and
ending on the date hereof.
(h) Except as set forth in Section 3.23(h) of the Disclosure
Schedule, no insurer providing product liability insurance under any Grove
Insurance Policy
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has reserved any rights or declined to provide coverage in respect of any
product liability claim relating to any product manufactured, distributed,
licensed, serviced or sold by any Grove Company.
(i) Hanson Funding or an Affiliate has properly reported to
the appropriate underwriters of the umbrella/excess policies listed in Section
3.23(a) of the Disclosure Schedule all product liability claims made against
Grove Europe for the policy years 1992 and 1994 which it reasonably expected
would give rise to coverage under such policies.
(j) Hanson Funding or an Affiliate has properly reported to
the umbrella/excess underwriter, A.E.I.A., all claims relating to the Grove
Companies which it reasonably expected would be covered under umbrella policy
#HR000099795 and prior year extended reporting period policies which were not
renewed as of October 1, 1995.
3.24 Finders' Fees. Except for Goldman, Sachs & Co., whose fees will
be paid by the Sellers, there is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of the
Sellers or any of the Grove Companies who might be entitled to any fee or
commission from any of the Grove Companies in connection with the transactions
contemplated by this Agreement.
3.25 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, neither the
Sellers nor any other Person makes any other express or implied representation
or warranty on behalf of any
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Seller, including, without limitation, any representation or warranty (a) that
the Intellectual Property is "millennium compliant" or (b) as to the physical
condition of the Real Property (including fixtures) or tangible personal
property of the Grove Companies.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Sellers as follows:
4.1 Organization and Qualification. Purchaser is a limited liability
company duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite power and authority to
own, lease and operate and to carry on its business as currently conducted.
Purchaser is duly licensed or qualified to do business and is in good standing
in each jurisdiction where the ownership of its properties or the operation of
its business requires such license or qualification, except where the failure to
be so licensed or qualified or in good standing, as the case may be, would not
be materially adverse to the business, financial condition or results of
operation of Purchaser.
4.2 Authorization. Purchaser has full power and authority, and full
legal right, to enter into, execute and deliver this Agreement, the Tax Sharing
and Indemnification Agreements and the Supplemental Agreements and to perform
its obligations hereunder and thereunder. The execution, delivery and
performance by Purchaser of this Agreement, the
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Tax Sharing and Indemnification Agreements and the Supplemental Agreements have
been duly and validly authorized by all necessary limited liability company
(including LLC Owner) action and no additional limited liability company
(including LLC Owner) authorization or consent is required in connection with
the execution, delivery and performance by Purchaser of this Agreement, the Tax
Sharing and Indemnification Agreements or any Supplemental Agreements.
4.3 Consents and Approvals. Except as specifically set forth in
Section 6.1(a) of this Agreement or Section 3.6 of the Disclosure Schedule, no
consent, approval, waiver or authorization is required to be obtained by
Purchaser, any Subsidiary of Purchaser or any LLC Owner from, and no material
notice or filing is required to be given by Purchaser, any Subsidiary of
Purchaser or any LLC Owner to, or made by Purchaser, any Subsidiary of Purchaser
or any LLC Owner with, any Governmental Authority or other Person in connection
with the execution, delivery or performance by Purchaser of this Agreement, the
Tax Sharing and Indemnification Agreements or any Supplemental Agreements.
4.4 Non-Contravention. Except as set forth in Section 6.1(a) of this
Agreement or Section 3.6 of the Disclosure Schedule, the execution, delivery and
performance by Purchaser of this Agreement, the Tax Sharing and Indemnification
Agreements or any Supplemental Agreements and the consummation of the
transactions contemplated hereby and thereby, does not and will not (i) violate
any provision of the
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certificate of formation or other organizational documents of Purchaser or any
LLC Owner or (ii) assuming compliance with the matters set forth in Sections 3.6
and 4.3, violate or result in a breach of or constitute a default under any Law
to which Purchaser or any LLC Owner is subject.
4.5 Binding Effect. This Agreement constitutes and, when executed
and delivered at the Closing, each of the Tax Sharing and Indemnification
Agreements and the Supplemental Agreements will constitute a valid and legally
binding obligation of Purchaser enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors' rights and to
general equity principles.
4.6 Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Purchaser or any Subsidiary of Purchaser who might be entitled to any fee or
commission from Purchaser in connection with the transactions contemplated by
this Agreement.
4.7 Financial Capability. Section 4.7 of the Disclosure Schedule
contains true and correct copies of the following financing documents (the
"Financing Documents"): (a) executed commitment letters from Keystone, Inc. and
F.W. Strategic Partners, L.P. relating to certain equity of Purchaser's indirect
parent company Grove Investors LLC, (b) an executed commitment letter from Chase
Securities Inc. and The Chase Manhattan Bank relating to senior revolving and
term bank debt, and (c) a "highly confident" letter from
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Donaldson, Lufkin & Jenrette Securities Corporation relating to senior
subordinated notes of Purchaser and senior discount notes of Purchaser's parent
company Grove Holdings LLC and related term sheets and (d) a term sheet relating
to participating preferred return equity of Grove Holdings LLC.
4.8 Purchase for Investment. Purchaser is acquiring the shares of
the Specified Grove Parent Corporations for investment and not with a view
toward, or for the purpose of, the resale or distribution thereof. Purchaser
acknowledges that the sale of the shares of the Specified Grove Parent
Corporations hereunder has not been registered under the Securities Act and that
the shares of the Specified Grove Parent Corporations may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act, pursuant to an exemption
therefrom or in a transaction not subject thereto.
4.9 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither Purchaser
nor any other Person makes any other express or implied representation or
warranty on behalf of Purchaser.
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ARTICLE V
COVENANTS
5.1 Access. Prior to the Closing, Sellers shall, and shall cause the
Grove Companies to, permit Purchaser and its representatives to have access,
during regular business hours and upon reasonable advance notice, to all books,
records, plants, offices, warehouses and other facilities, properties and
employees of the Grove Companies, including the Grove Insurance Policies,
subject to reasonable rules and regulations of the Sellers and the Grove
Companies, and shall furnish, or cause to be furnished, to Purchaser, any
financial and operating data and other information that is available with
respect to each of the Grove Companies as Purchaser shall from time to time
reasonably request; it being understood that such right of access shall not
grant Purchaser the right to conduct invasive environmental testing of any kind.
In connection with such access, Purchaser's representatives shall cooperate with
representatives of the Sellers and the Grove Companies and shall use their best
efforts to minimize any disruption of the Grove Companies. Purchaser agrees to
abide by the terms of the Confidentiality Agreement with respect to such access
and any information furnished to it or its representatives pursuant to this
Section 5.1.
5.2 Conduct of Business. During the period from the date hereof to
the Closing, except as set forth in Sections 5.2 and 5.12 of the Disclosure
Schedule, as otherwise contemplated by this Agreement or as Purchaser shall
otherwise agree in writing in advance, Sellers covenant and agree to cause the
Grove Operations to be conducted in the ordinary
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course and to cause the Grove Companies to use their commercially reasonable
best efforts to preserve intact their business and their relationships with
employees and third parties. During the period from the date hereof to the
Closing, except as set forth in Sections 5.2 and 5.12 of the Disclosure
Schedule, as otherwise provided for in this Agreement or as Purchaser shall
otherwise consent (which consent shall not be unreasonably withheld), Sellers
covenant and agree that they shall cause each of the Grove Companies not to:
(i) sell, transfer, convey, assign or otherwise dispose of any
of its assets or properties, except (A) sales of fixed assets in the ordinary
course not in excess of $3,000,000 in the aggregate, (B) sales of inventory in
the ordinary course and (C) sales of notes receivable (other than trade
receivables) pursuant to the HSBC Letter;
(ii) waive, release or cancel any material claims against
third parties or material debts owing to it, or any rights which have any
material value, including any rights under the Krupp Purchase Agreements and the
Delta Purchase Agreement;
(iii) make any change in its accounting systems, policies,
principles or practices, including methodologies and assumptions for calculating
accruals;
(iv) take any of the actions specified in Section 3.9(c);
(v) enter into, authorize, or permit any transaction with any
Seller or any Affiliate of any Seller other than (A) commercial transactions in
the ordinary course of business on an arms-length basis, (B) remittance of
proceeds from transactions permitted under clause (i) above, and (C) continuance
of cash management practices; it being
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understood that Sellers shall notify Purchaser of any material transaction
comprehended by clause (A) of which Sellers becomes aware;
(vi) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, convertible or exchangeable securities, commitments,
subscriptions, rights to purchase or otherwise) any shares of capital stock or
any other securities of any of the Grove Companies, or amend any of the terms of
any such capital stock or other securities or, except as permitted by clause
(v)(C) above, declare or pay any dividend or other distribution in respect of
its capital stock or redeem or otherwise acquire any capital stock or other
securities of the Grove Companies;
(vii) except in the ordinary course or with respect to
intercompany indebtedness, incur any indebtedness for borrowed money, or
guarantee or otherwise become liable (whether directly, contingently or
otherwise) for the monetary obligations of any other Person;
(viii) make any capital contributions to, or investments in,
any Person other than another Grove Company other than Kidde;
(ix) enter into commitments for capital expenditures in excess
of $500,000 in the aggregate;
(x) incur, create or assume any Encumbrance other than
Permitted Encumbrances;
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(xi) make any Tax election or change any Tax accounting
method, or waive or extend the statute of limitations in respect of any Taxes if
such action would have a material adverse effect on the Specified Grove
Corporations or the Specified Grove Assets post-Closing;
(xii) enter into any new Benefit Plan or new Employee
Arrangement or grant to any officer or generally to employees any salary or wage
increases or change or amend any existing Benefit Plan or existing Employee
Arrangement;
(xiii) voluntarily recognize (to the extent not already
recognized) any Person as the bargaining representative of any of its employees
pursuant to any applicable Laws governing labor relations at any facilities
managed or maintained by any of the Grove Companies;
(xiv) enter into Contracts with any labor organization
representing employees at the Sunderland Facility that would (x) interfere in
any manner with the consummation of the transactions contemplated herein or (y)
have any material adverse effect on the operations or business of the Sunderland
Facility or the cessation of such operations after the consummation of the
transactions contemplated herein; it being understood that Purchaser shall not
unreasonably withhold or delay its approval of any such Contract;
(xv) agree, in writing or otherwise, to do any of the
foregoing; provided that Sellers and their Affiliates shall not take any action
pursuant to clauses (vii) or (viii) above that would have a material impact on
the allocation of the Purchase Price among
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the Specified Grove Corporations and the Specified Grove Assets (as an entirety)
pursuant to Sections 2.2 or 2.8(j) or within the categories of the Specified
Grove Assets, in each case compared to what such allocation would have been in
the absence of such action.
5.3 Best Efforts. The Sellers and Purchaser will cooperate and use
their respective commercially reasonable best efforts to fulfill the conditions
precedent to the other party's obligations hereunder, including, but not limited
to, securing as promptly as practicable all consents, approvals, waivers and
authorizations required in connection with the transactions contemplated hereby.
In addition, Purchaser and Sellers will execute and deliver and cause the
execution and delivery by their Affiliates, where contemplated, of the
Supplemental Agreements. The Sellers and Purchaser will promptly file any
documentary materials required by the HSR Act and the Competition Laws of France
and the United Kingdom, as the case may be, and promptly file any additional
information requested as soon as practicable after receipt of request therefor.
Prior to the Closing, the Sellers shall (x) cause the Grove Companies to satisfy
all notice and bargaining obligations arising under applicable Laws in
connection with any labor relations matters with respect to the transactions
contemplated by this Agreement herein, and (y) apprise the Purchaser in a timely
manner of any proposals submitted by, or counter-proposals received by, any of
the Grove Companies in connection with any collective bargaining with any
representatives of employees of any Grove Companies occurring prior to the
Closing.
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5.4 Further Assurances.
(a) As soon as practicable after the Closing Date, Purchaser
shall use its commercially reasonable best efforts to obtain the unconditional
release and discharge of the Sellers and their then Affiliates from any
obligation any of them may have under any guarantee (other than the Guaranty),
indemnity or bond supporting any obligation of any of the Grove Companies,
including without limitation the Residual Value Guarantee Contracts
(collectively, the "Affiliate Guarantees"). To the extent that the Sellers and
their Affiliates are not so released and discharged from such obligations,
Purchaser shall indemnify the Sellers and their Affiliates against any Losses
arising therefrom and shall cause the relevant Grove Companies (other than
Kidde) to perform the obligations which are supported by the Affiliate
Guarantees in accordance with their respective terms.
(b) At any time after the Closing Date, the Sellers, on the
one hand, and Purchaser, on the other hand, shall promptly execute, acknowledge
and deliver any other assurances or documents, including assignments or change
of name documents relating to the Intellectual Property reasonably requested by
Purchaser or the Sellers, as the case may be, and necessary for it to satisfy
its respective obligations hereunder or obtain the benefits contemplated hereby.
(c) If, at any time after the Closing, the Purchaser shall
determine or be advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are reasonably necessary or desirable to vest,
perfect or confirm of record or
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otherwise in the Purchaser, the right, title or interest in, to or under any of
the Specified Grove Assets, Kidde shall use its commercially reasonable best
efforts to execute and deliver all such deeds, bills of sale, assignments and
assurances and to take and do all such other actions and things as may be
reasonably necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under the Specified Grove Assets in the Purchaser.
5.5 Use of Corporate Names and Symbols. Following the Closing, (a)
neither Purchaser nor any of the Specified Grove Corporations shall use the
"Hanson" name, the "Kidde" name or the "Bunting" symbol (except for historical
references to Hanson or its Affiliates as the former owners of the Grove
Operations) and (b) none of the Sellers or any of their Affiliates shall use the
"Grove", "Delta Manlift", "National Crane" or "Coles" name or symbol and the
Inactive Companies shall change their corporate names so that none of the names
include any of the words "Grove", "Crane", "Manlift" or "Coles".
5.6 Benefit Plans.
(a) Hiring of Grove Business Employees. On the Closing Date,
the Purchaser or its Affiliates shall offer employment to the then current
employees of Kidde, and shall employ the employees of Kidde who accept such
offer of employment and all then current employees of the Specified Grove
Corporations (collectively, the "Transferred Employees") at no less than their
same wage or salary rate and on substantially the same other terms and
conditions of employment in effect immediately prior to the Closing Date;
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provided, that nothing herein shall be construed to require the Purchaser or its
Affiliates to continue any Transferred Employee in the employ of the Purchaser
or any of the Specified Grove Corporations or maintain the terms of such
employment, including any particular level of benefits, for any specified period
of time following the Closing Date. At the Closing, the Sellers shall deliver to
Purchaser a schedule of all employees whose employment with any of the U.S.
Grove Companies was terminated within 60 days prior to the Closing Date.
(b) Assumption of Benefit Plans. Effective as of the Closing
Date, Purchaser or an Affiliate of Purchaser shall assume the sponsorship of
each of the Benefit Plans and Employee Arrangements, together with all of the
assets and liabilities accrued thereunder. Effective as of the Closing Date,
Sellers shall transfer to a trust or trusts to be established by Purchaser or an
Affiliate of Purchaser, and such trust or trusts shall assume as of such date,
all assets, rights and obligations for benefit payments with respect to such
Benefit Plans and Employee Arrangements for which a trust exists immediately
prior to the Closing Date.
(c) Welfare Plans. As of the Closing Date, Purchaser or one of
its Affiliates shall cover the Transferred Employees in the welfare benefit
plans (as defined in ERISA Section 3(1)) ("Welfare Plans") assumed from Sellers
or such other welfare benefit plans not less favorable in the aggregate than the
Welfare Plans in which such employees participated immediately prior to the
Closing Date. Purchaser or one of its Affiliates shall give the Transferred
Employees service credit for their period of employment with the Grove
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Companies for eligibility and vesting purposes under all such plans of Purchaser
or one of its Affiliates as if such services had been performed for Purchaser or
one of its Affiliates and shall waive all preexisting condition exclusions with
respect to group health plans of Purchaser or one of its Affiliates (to the
extent such preexisting condition exclusions were satisfied prior to the Closing
Date under Sellers' group health plans). Purchaser or one of its Affiliates
shall also enroll in group health plans all former employees of the Grove
Companies and their dependents who, immediately prior to the Closing Date, are
covered under the Grove Companies' group health plans ("Retirees"). Purchaser or
one of its Affiliates shall credit each Transferred Employee and Retiree with
all deductible payments and co-payments paid by such Transferred Employee or
Retiree under the Grove Companies' group health care plan prior to the Closing
Date during the current plan year for purposes of determining the extent to
which any such Transferred Employee or Retiree has satisfied any deductible or
maximum out-of-pocket limitation under the group health plan of Purchaser or one
of its Affiliates for such plan year.
5.7 Preservation of Records. Purchaser agrees that it shall, at its
own expense, preserve and keep the records held by it and its Affiliates
relating to the Grove Operations (x) for a period of seven years from the
Closing Date in the case of Tax records, (y) for such period as shall be
requested by Kidde or HSBC in the case of records relating to notes receivable
sold pursuant to the HSBC Letter or retained by Kidde and (z) in accordance with
past practice of the Grove Companies in the case of all other records; and shall
make
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such records and relevant personnel available to the Sellers or their designees
(including HSBC in the case of the records referred to in clause (y)) as may be
reasonably required by the Sellers. Each Seller agrees that it shall, at its own
expense, preserve and keep the records held by it relating to the Grove
Operations for a period of seven years from the Closing Date; and shall make
such records and relevant personnel available to the Purchaser as may reasonably
be required by the Purchaser. In the event Purchaser or any Seller wishes to
destroy any such records after the applicable retention period, the party or
parties wishing to destroy such records shall first give ninety (90) days prior
written notice to the other party or parties, who shall then have the right at
their option and expense, upon prior written notice given to the party or
parties wishing to destroy such records within that ninety (90) day period, to
take possession of the records within one hundred and eighty (180) days after
the date of such notice.
5.8 Supplemental Information. From time to time prior to the
Closing, each party shall promptly disclose in writing to the other any matter
hereafter arising which, if existing, occurring or known at the date of this
Agreement would have been required to be disclosed to the other party or which
would render inaccurate any of the representations and warranties set forth in
Article III or Article IV hereof. No information provided to a party pursuant to
this Section shall be deemed to cure any breach of any representation, warranty
or covenant made in this Agreement.
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5.9 Success Fee Agreements. Hanson Funding shall pay all amounts
which may be now, or in the future become, due and owing pursuant to the Success
Fee Agreements and the Change of Control Agreement identified as item no. 6 in
Section 1.1(b) of the Disclosure Schedule.
5.10 Termination of Certain Plans. Immediately prior to the Closing,
the Sellers shall pay to participants all sums owing under and terminate and
extinguish the Long Term Incentive Plans. All sums owing to participants under
the Management Incentive Plans at Closing shall be accrued on the Closing
Balance Sheet and paid by Purchaser or its Affiliates.
5.11 Insurance.
(a) Until all claims arising from any occurrences prior to the
Closing Date have been settled, Hanson Funding shall on or before October 30 of
each year inform the Purchaser of any payments made pursuant to any
umbrella/excess policy listed in Section 3.23(a) of the Disclosure Schedule in
excess of the underlying primary policy limit per policy year. Until all claims
arising from any occurrences prior to the Closing Date have been settled,
Purchaser shall notify Hanson Funding, as soon as practicable (but no less
frequently than July 31 of each year), as to each claim, if any, made by
Purchaser or its Affiliates under any umbrella/excess policy listed in Section
3.23(a) of the Disclosure Schedule, including the relevant Grove Insurance
Policy, amounts claimed, amounts paid,
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date of loss, date claim reported, claim status and any other related
non-privileged and non- confidential information reasonably requested by Hanson
Funding.
(b) If CIGNA policies CGO G1 896535-5 effective 10/1/96-97;
CGO G1 423000-2 effective 10/1/95-96; CGO G1 658779-5 effective 10/1/94-95; or
CGO G1 658513-0 effective 10/1/93-94 exhaust their products/completed operations
annual aggregate limit of liability, Hanson Funding or an Affiliate shall, if
requested by Purchaser, use its reasonable best efforts to obtain reinstatement
per policy of said annual aggregate at Hanson Funding's expense not to exceed
$30,000 after which Hanson Funding and Purchaser shall share equally in any
additional costs.
(c) Hanson Funding shall prior to the Closing Date at Hanson
Funding's cost provide to the Purchaser a directors' and officers' liability
policy for a run-off period of six years from the Closing Date in the name of
the Purchaser (and endorsed to include all Grove Companies other than Kidde as
named insureds) insuring the wrongful acts committed from the dates the
respective Grove Companies became direct or indirect subsidiaries of Hanson up
to the Closing Date by the directors and officers of the Grove Companies and the
Grove Companies (but including the Purchaser as if the Purchaser had been
substituted for Kidde), such policy to contain substantially similar limits and
retentions and in a form substantially similar to New Hampshire Policy 33010129
and reflecting the above mentioned understanding.
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5.12 Intercompany Accounts. The parties shall take the actions set
forth in Section 5.12 of the Disclosure Schedule.
5.13 Litigation and Warranty Claims. From the date hereof through
the Closing Date, the Sellers shall promptly notify the Purchaser of any
material investigations, lawsuits, warranty claims or other claims or
proceedings, and all material developments therein, involving the Grove
Operations or, to the Knowledge of Sellers, threatened against any Grove
Company, the Grove Operations or against any officer, director, employee,
consultant, agent, stockholder or other representative of any Seller arising out
of or relating to the affairs or conduct of the Grove Operations or relating to
any of the Specified Grove Assets or Specified Grove Corporations. None of the
Grove Companies shall settle any lawsuit, claim (other than a warranty claim) or
proceeding involving the Grove Operations without the prior written consent of
the Purchaser (which shall not be unreasonably delayed or withheld) if such
settlement involves (x) any terms other than the payment of money or (y) the
payment of more than $100,000 if such payment represents more than 110% of the
amount of the specific reserves established for such matter as set forth in
Section 5.13 of the Disclosure Schedule.
5.14 Assignment of Beneficial Interests. Notwithstanding anything to
the contrary contained in this Agreement (but without limiting Purchaser's
rights to indemnification as specifically provided in Article VII or Purchaser's
right to rely upon the closing condition under Section 6.2(c)), to the extent
that the sale, assignment, transfer,
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conveyance or delivery to Purchaser of any Specified Grove Asset is prohibited
by any applicable Law or would require any governmental or third party consent,
authorization, waiver or approval ("Consent") and such Consent shall not have
been obtained on or prior to the Closing, this Agreement shall not constitute a
sale, assignment, transfer, conveyance or delivery thereof. Following the
Closing, the parties shall use commercially reasonable best efforts and shall
cooperate with one another to obtain promptly such Consent. Pending such
Consent, the parties shall cooperate with each other in any reasonable and
lawful arrangements to provide Purchaser the economic benefits and liabilities
of use of such Specified Grove Asset which arrangements shall be at Purchaser's
expense if such Consent would not have been required if Purchaser purchased the
stock of Kidde rather than the Specified Grove Assets. Once such Consent is
obtained, Kidde shall promptly assign, transfer, convey and deliver such
Specified Grove Asset to Purchaser for no additional consideration. Purchaser
shall indemnify Kidde against any liabilities arising from Purchaser's use of
any such Specified Grove Assets after the Closing (except to the extent
Purchaser is entitled to indemnification under Article VII). Any payments
required to be made to obtain a Consent which is a closing condition under
Section 6.2(c) that would not have been required if Purchaser had purchased the
stock of Kidde rather than the Specified Grove Assets shall be borne by
Purchaser.
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5.15 Collection of Receivables.
(a) Except for Purchaser's obligations to collect identified
notes receivable for the benefit of HSBC, Kidde or Hanson Funding pursuant to
the HSBC Agency Agreement or otherwise, the Sellers agree that, from and after
the Closing, the Purchaser shall have the right and authority to collect for its
own account all receivables of Kidde included in the Specified Grove Assets and
to endorse the name of Kidde on any checks received on account of any such
receivable. Kidde agrees to promptly transfer and deliver to the Purchaser any
cash or other property that Kidde may receive in respect of such receivables.
(b) Purchaser and its Affiliates shall use the same level of
diligence in seeking to (i) collect the Peterhead Receivables as they use in
seeking to collect the other receivables of Grove Europe set forth in the
Closing Balance Sheet and (ii) market any equipment recovered by Grove Europe
related to the Peterhead Receivables as they use in marketing other equipment
recovered by Grove Europe related to past due receivables.
5.16 Mail and Other Communications. Kidde agrees that, at any time
and from time to time after the Closing, the Purchaser shall have the right and
authority to open all mail and other communications, including service of
process, received by it addressed to Kidde for processing or forwarding to Kidde
or handling itself, as appropriate.
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5.17 Auditor Matters.
(a) Sellers shall use their commercially reasonable best
efforts to cause Ernst & Young LLP and Price Waterhouse (the "Auditors") to
provide Purchaser, at Purchaser's expense with respect to work performed by the
Auditor subsequent to Closing, with all opinions and consents (including,
without limitation, audit reports) with respect to the Audited Financial
Statements necessary for the completion of Purchaser's filings with the
Securities and Exchange Commission under the Securities Act and the Securities
Exchange Act, until such time as such financial statements, opinions and
consents are no longer required to be included in such filings by the Securities
Act, the Securities Exchange Act or the rules and regulations promulgated
thereunder.
(b) Sellers shall use their commercially reasonable best
efforts to make available to Purchaser all such accountant work papers, audit
reports, opinions and other documentation prepared by the Auditors as may
reasonably be required by the Purchaser for the completion of Purchaser's
filings with the Securities and Exchange Commission under the Securities Act and
the Securities Exchange Act, until such time as such work papers, audit reports,
opinions and other documentation are no longer required for the preparation of
such filings by Purchaser.
5.18 Non-Competition; Confidentiality. For a period of two years
after the Closing, the Sellers agree that (a) they and their Affiliates shall
not commence or acquire any business competitive with the Grove Operations as
conducted on the Balance Sheet Date
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(provided, however, that this clause (a) shall not prohibit an acquisition or
investment in any Person not more than 20% of the revenues of which were, for
the four most recent complete fiscal quarters ended prior to the date of the
consummation of such acquisition or investment generated by a business
competitive with the Grove Operations as they were conducted at the Balance
Sheet Date); and (b) they and their Affiliates shall not disclose or use for the
benefit of themselves or others any confidential information of the Grove
Companies obtained by them or their Affiliates prior to or following the
Closing, including any such information concerning distributors (provided,
however, that they or their Affiliates shall not be precluded from the use or
disclosure of such information as required by applicable Law or in connection
with any claim against or involving them or their Affiliates in either case
(after reasonable notice to Purchaser to the extent practicable to allow it to
seek a protective order) or if such information is readily available from public
or published information or trade sources).
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of Purchaser and the Sellers. The
obligations of the parties hereto to effect the Closing are subject to the
satisfaction (or waiver) prior to the Closing of the following conditions:
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(a) Compliance with Competition Laws. All required filings
shall have been made and all required waiting periods shall have expired or been
earlier terminated under the HSR Act. Details of the acquisition hereunder shall
have been notified to the United Kingdom Office of Fair Trading in a form agreed
between the Sellers and the Purchaser as a potential "merger qualifying for
investigation" within the meaning of the United Kingdom Fair Trading Act 1973.
French antitrust authorities shall have been asked to confirm in terms
reasonably satisfactory to Purchaser that it is not the intention of the
Minister for the Economy ("Ministre de l'Economie") to refer the transactions
contemplated by this Agreement to the French Competition Council ("Conseil de la
Concurrence").
(b) No Injunctions. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, non-appealable judgment, decree, injunction or other
order which is in effect on the Closing Date and enjoins, restrains or prohibits
this Agreement or the consummation of any of the transactions contemplated
hereby.
(c) No Pending or Threatened Actions. There shall not be
pending any action or proceeding or threatened any governmental action or
proceeding, in either case seeking to enjoin or restrain consummation of the
transactions contemplated by this Agreement.
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6.2 Conditions to the Obligations of Purchaser. The obligation of
Purchaser to effect the Closing is subject to the satisfaction (or waiver) prior
to the Closing of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Sellers contained herein shall be true on and as of the
Closing Date (except for those representations and warranties which are by their
terms made as of an earlier date, which shall be true on and as of such date)
without giving effect to any qualifications as to materiality, Material Adverse
Effect or Knowledge included in any representation or warranty, except where the
failures to be true, both individually and in the aggregate, would not have a
Material Adverse Effect and Purchaser shall have received a certificate to such
effect dated the Closing Date and executed by a duly authorized officer of each
Seller.
(b) Covenants. The covenants and agreements of Sellers
contained in Section 5.11 to be performed on or prior to the Closing shall have
been duly performed in all respects, and all other covenants and agreements of
Sellers to be performed on or prior to the Closing shall have been duly
performed in all material respects, and Purchaser shall have received a
certificate to such effect dated the Closing Date and executed by a duly
authorized officer of each Seller.
(c) Consents and Approvals. All Required Approvals shall have
been obtained.
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(d) Legal Opinions. Purchaser shall have received the opinions
of Sellers' counsel, dated as of the Closing Date, addressed to Purchaser
substantially to the effect set forth in Annex 6.2(d) hereto.
(e) Tax Sharing and Indemnification Agreements and Guaranty.
Hanson Funding shall have executed and delivered the Tax Sharing and
Indemnification Agreements and Hanson shall have executed and delivered a copy
of the Guaranty.
(f) Financing. The funds referred to in the Financing
Documents shall be available to Purchaser on the terms and conditions
communicated to Hanson Funding.
(g) Sunderland Leases and Option Agreement. Hanson Properties
and Grove Europe shall have executed and delivered the Sunderland Leases and
Option Agreement.
(h) Liquidity. At Closing, cash on hand transferred as part of
the Specified Grove Assets or held by the Specified Grove Corporations shall be
not less than the difference between (x) $28,524,000 and (y) the National Crane
Note Receivable balances (including accrued interest thereon) such amount not to
exceed $4,000,000.
(i) Lawsuits. There shall not be pending or threatened any
action or proceeding by a Governmental Authority or other Person seeking damages
of $10,000,000 or more from Purchaser or any of its Affiliates in connection
with the transactions contemplated by this Agreement, or seeking to impose any
restrictions on Purchaser's ability
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to operate the Grove Operations in a manner consistent with a manner in which
they were being operated as of the Balance Sheet Date that, if imposed, could
reasonably be expected to result in Losses of $10,000,000 or more.
(j) Tax Affidavits. Purchaser shall have received affidavits
substantially in the forms of Exhibit E-1 and E-2 attached hereto.
(k) HSBC Agency Agreement. Kidde and HSBC shall have executed
and delivered the HSBC Agency Agreement.
(l) Certain Insurance Matters. The documents set forth in
Section 6.2(l) of the Disclosure Schedule shall be unamended and in full force
and effect.
6.3 Conditions to the Obligations of the Sellers. The obligation of
the Sellers to effect the Closing is subject to the satisfaction (or waiver)
prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained herein shall be true on and as of the Closing
Date (except for those representations and warranties which are by their terms
made as of an earlier date, which shall be true on and as of such date), without
giving effect to any qualifications as to materiality, Material Adverse Effect
or Knowledge included in any representation or warranty, except where the
failures to be true, both individually and in the aggregate, does not, and could
not reasonably be expected to, materially adversely affect the assets,
liabilities, condition (financial or otherwise) or results of operation of the
Purchaser or
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materially impair or delay Purchaser's ability to consummate the material
transactions contemplated hereby, and the Sellers shall have received a
certificate to such effect dated the Closing Date and executed by a duly
authorized officer of Purchaser.
(b) Covenants. The covenants and agreements of Purchaser to be
performed on or prior to the Closing shall have been duly performed in all
material respects, and the Sellers shall have received a certificate to such
effect dated the Closing Date and executed by a duly authorized officer of
Purchaser.
(c) Legal Opinions. The Sellers shall have received the
opinion of Purchaser's counsel, dated as of the Closing, addressed to the
Sellers substantially to the effect set forth in Annex 6.3(c) hereto.
(d) Tax Sharing and Indemnification Agreements. Purchaser
shall have executed and delivered the Tax Sharing and Indemnification
Agreements.
(e) HSBC Agency Agreement. Purchaser and HSBC shall have
executed and delivered the HSBC Agency Agreement.
(f) Lawsuits. There shall not be pending or threatened any
action or proceeding by a Governmental Authority or other Person seeking damages
of $10,000,000 or more from Sellers or any of their Affiliates in connection
with the transactions contemplated by this Agreement.
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ARTICLE VII
SURVIVAL; GENERAL INDEMNIFICATION
7.1 Survival.
(a) Notwithstanding any right of any party fully to
investigate the affairs of the other parties hereto and their business and
notwithstanding any knowledge of facts determined or determinable by such party
pursuant to such investigation or right of investigation, such party shall have
the right to rely fully upon each of the representations, warranties, covenants
and agreements contained in this Agreement, the Tax Sharing and Indemnification
Agreements and any Supplemental Agreement.
(b) All of the representations and warranties of the Sellers
contained in this Agreement and all claims and causes of action with respect
thereto shall survive until June 30, 1999, except that (i) the representations
and warranties in Sections 3.1 (the Grove Companies), 3.3 (Capitalization), 3.5
(Corporate Authorization), 3.8 (Binding Effect), 3.20 (Title to Shares) and 3.23
(Insurance) to the extent related to product liability insurance (collectively,
the "Non-Basket Representations") shall have no expiration date and shall
survive indefinitely and (ii) the representations and warranties in Sections
3.12 (Taxes) and 3.15 (Environmental Matters) (collectively, the "Non-Surviving
Representations") shall not survive the Closing. The representations and
warranties of Purchaser contained in this Agreement shall have no expiration
date and shall survive indefinitely.
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(c) In the event notice of any claim for indemnification for
breach of representation or warranty under Section 7.2 (Indemnification by
Purchaser) or Section 7.3 (Indemnification by Sellers) is given (within the
meaning of Section 9.1 (Notices)) within the applicable survival period, the
representations and warranties that are the subject of such indemnification
claim shall survive until such time as such claim is finally resolved.
7.2 Indemnification by Purchaser. Purchaser hereby agrees that, from
and after the Closing, it shall indemnify, defend and hold harmless the Sellers,
their Affiliates and, if applicable, their respective directors, officers,
shareholders and employees (other than directors, officers or employees of the
Grove Companies) and their heirs, successors and assigns (the "Seller
Indemnified Parties") from, against and in respect of any Losses imposed on,
sustained, incurred or suffered by or asserted against any of the Seller
Indemnified Parties, directly or indirectly, relating to or arising out of:
(i) the breach of any representation or warranty made by
Purchaser contained in this Agreement;
(ii) the breach of any covenant or agreement of Purchaser
contained in this Agreement;
(iii) all liabilities and obligations of any of the Specified
Grove Corporations and the Assumed Liabilities, regardless of when they arose or
arise and regardless of by whom or when asserted, including without limitation
any Losses arising from product liability claims, Affiliate Guarantees,
Compliance Costs and any other Losses,
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in each case to the extent Sellers are not required to indemnify Purchaser
therefor pursuant to Section 7.3 (Indemnification by Sellers) or otherwise
required to bear the costs thereof pursuant to any Tax Sharing and
Indemnification Agreements or Supplemental Agreements;
(iv) Hanson Finance's indemnification obligations under the
Portfolio Transfer Agreement;
(v) to the extent, and only to the extent, any and all claims
are specifically based upon the use of (i) any pro forma adjustments to the
information contained in the Financial Statements, (but not with respect to the
Financial Statements or information contained therein) or (iii) any other
information (other than the Financial Statements or information contained
therein) appearing in a registration statement, prospectus or other offering
document prepared by Purchaser and/or its Affiliates, in connection with any
debt and/or equity financings by Purchaser and/or its Affiliates (including, at
and after the Closing, the Grove Companies) which is commenced on or before
March 31, 1999 (including any registered exchange offers for securities sold
pursuant to Regulation S/Rule 144A under the Securities Act) except to the
extent that Sellers would be obligated to indemnify Purchaser with respect to
the subject matter of such claims pursuant to Section 7.3 of this Agreement
(assuming for such purpose that such indemnification by Sellers is not subject
to 7.3(b)); and
(vi) any liability under the WARN Act with respect to any
former employees of the Grove Companies whose employment terminated prior to the
Closing Date,
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which liability arises as a result of the termination of employment of
Transferred Employees following the Closing Date; provided, that if and to the
extent that the indemnification provided for in any of clauses (i) through (vi)
above is unenforceable for any reason, the Purchaser Indemnifying Party shall
make the maximum contribution permissible under applicable Laws to the payment
and satisfaction of such Losses for which the Seller Indemnified Party was
otherwise entitled to indemnification hereunder.
7.3 Indemnification by Sellers.
(a) The Sellers hereby agree, severally and jointly, that,
from and after the Closing, they shall indemnify, defend and hold harmless
Purchaser, its Affiliates and, if applicable, their respective directors,
officers, shareholders and employees (other than the employees of the Grove
Companies) and their heirs, successors and assigns (the "Purchaser Indemnified
Parties" and, collectively with the Seller Indemnified Parties, the "Indemnified
Parties") from, against and in respect of any Losses imposed on, sustained,
incurred or suffered by or asserted against any of the Purchaser Indemnified
Parties, directly or indirectly, relating to or arising out of:
(i) subject to Section 7.3(b) (the basket), the breach
of any representation or warranty made by any Seller contained in this Agreement
(other than the Non-Basket Representations and the Non-Surviving
Representations) for the period such representation or warranty survives;
(ii) the breach of any Non-Basket Representation;
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(iii) the breach of any covenant or agreement of any
Seller contained in this Agreement;
(iv) any businesses or operations conducted or assets
held by or obligations of Hanson Funding and its past and current Affiliates and
related parties, including Millennium and any other demerged business or any of
the Grove Companies (or their predecessors) and their Affiliates, prior to the
Closing Date other than the Grove Operations (including any former businesses,
operations, assets or obligations thereof);
(v) the Special Environmental Matter;
(vi) 50% of the Shared Environmental Liabilities;
(vii) all Excluded Liabilities;
(viii) all liabilities and obligations of the Inactive
Companies;
(ix) any claim by a third party with whom Hanson
Funding, any of its Affiliates or any of their representatives had any contact
or relationship in connection with the proposed sale of the Grove Operations;
(x) the agreements and transactions contemplated by or
entered into in connection with or in anticipation of the Demerger Agreement;
(xi)(A) any claim by any third party against Grove
France or Delta Manlift SAS which (x) (i) is brought in any federal or state
court of the United States or (ii) relates to the use of any product
manufactured, distributed, licensed, serviced or sold by Grove France or Delta
Manlift SAS in the United States, (y) has occurred prior to the
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Closing and (z) is not covered by any of the Grove Insurance Policies to the
same extent such claim would have been covered had it been brought in France
relating to any product manufactured, distributed, licensed, serviced or sold in
France; and (B) any claim by any third party against Grove France or Delta
Manlift SAS resulting from an insured primary policy occurrence prior to the
Closing which (x) is in excess of the dollar limitation of the relevant Grove
Insurance Policies and is (y) not covered by the umbrella/excess policies listed
in Section 3.23(a) of the Disclosure Schedule; and
(xii) Purchaser's and its Affiliates' failure (after
complying with their obligations under Section 5.15(b)) to collect the Peterhead
Receivables within six months after the Closing Date, net of the net proceeds of
sale of any related equipment recovered by Grove Europe and the net realizable
value of any such unsold equipment (provided, however, that, in the event of any
disagreement over such net realizable value, Sellers shall have the right to
either accept the net realizable value amount proposed by Purchaser or take
delivery of such equipment in lieu of a credit against the amount of such Loss
and further provided that Grove Europe shall assign to Sellers any Peterhead
Receivables for which Sellers have paid any amounts pursuant to this clause
(xii) to Purchaser);
and provided, that if and to the extent that the indemnification provided for in
any of clauses (i) through (xii) above is unenforceable for any reason, the
Sellers shall make the maximum contribution permissible under applicable Laws to
the payment and satisfaction of such
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Losses for which the Purchaser Indemnified Party was otherwise entitled to
indemnification hereunder.
(b) Sellers shall not be liable to the Purchaser Indemnified
Parties for any Losses with respect to (w) the matters contained in Section
7.3(a)(i) (indemnities subject to basket) except to the extent (and then only to
the extent) the Losses therefrom exceed an aggregate amount equal to $6,000,000
and then only for all such Losses in excess thereof up to an aggregate amount
equal to the Purchase Price; (x) the matters contained in Section 7.3(a)(ii)
(indemnities not subject to basket) in excess of the Purchase Price; (y) the
Shared Environmental Liabilities in excess of 50% thereof; or (z) for the
avoidance of doubt, the termination of any Contract by a Significant Distributor
provided that Sellers' representation and warranty contained in Section 3.18(c)
is true and correct as of the date as of which it speaks and Sellers comply with
their notification obligations under Section 5.8 with respect thereto.
(c) The Sellers, on the one hand, and Purchaser, on the other
hand, acknowledge that in the event this Agreement is not performed in
accordance with its terms by the other, the party seeking performance shall be
entitled to specific performance of the terms hereof and other equitable relief,
without the posting of a bond or other security. In addition, Purchaser
acknowledges that the indemnification provisions contained in this Article VII,
elsewhere in this Agreement in the Tax Sharing and Indemnification Agreements
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and in the Supplemental Agreements constitute Purchaser's only other remedies
with respect to any of the matters referred to herein and therein.
7.4 Indemnification Procedures. With respect to third-party claims
(other than for Taxes covered by the Tax Sharing and Indemnification
Agreements), all claims for indemnification by any Indemnified Party hereunder
shall be asserted and resolved as set forth in this Section 7.4 (Indemnification
Procedures). In the event that any written claim or demand for which either
Purchaser or the Sellers, as the case may be (an "Indemnifying Party"), would be
liable to any Indemnified Party hereunder is asserted against or sought to be
collected from any Indemnified Party by a third party, such Indemnified Party
shall promptly, but in no event more than 30 days following such Indemnified
Party's receipt of such claim or demand, notify the Indemnifying Party of such
claim or demand and the amount or the estimated amount thereof to the extent
then feasible (which estimate shall not be conclusive of the final amount of
such claim or demand) (the "Claim Notice"); provided, however, that the
Indemnified Party's failure to provide such notice in not more than 30 days
shall not preclude the Indemnified Party from being indemnified for such claim
or demand, except to the extent that the failure to give timely notice results
in the forfeiture of substantive defenses available to the Indemnifying Party.
The Indemnifying Party shall have 30 days (or such shorter period as may be
necessary under the circumstances) from the personal delivery or mailing of the
Claim Notice (the "Notice Period") to notify the Indemnified Party (a) whether
or not the Indemnifying Party disputes the liability of the
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Indemnifying Party to the Indemnified Party hereunder with respect to such claim
or demand and (b) whether or not it desires to defend the Indemnified Party
against such claim or demand. All costs and expenses incurred by the
Indemnifying Party in defending such claim or demand shall be a liability of,
and shall be paid by, the Indemnifying Party. Except as hereinafter provided, in
the event that the Indemnifying Party notifies the Indemnified Party within the
Notice Period that it desires to defend the Indemnified Party against such claim
or demand, the Indemnifying Party shall have the right to defend the Indemnified
Party by appropriate proceedings and shall have the sole power to direct and
control such defense. If any Indemnified Party desires to participate in any
such defense, it may do so at its sole cost and expense. The Indemnified Party
shall not settle a claim or demand without the prior written consent of the
Indemnifying Party unless such settlement is at its sole cost and expense and
does not result in the imposition of a consent order, injunction or decree which
would materially restrict the future activity or conduct of the Indemnifying
Party or any Subsidiary or Affiliate thereof. The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party, settle, compromise
or offer to settle or compromise any such claim or demand on a basis which would
result in the imposition of a consent order, injunction or decree which would
materially restrict the future activity or conduct of the Indemnified Party or
any Subsidiary or Affiliate thereof. If the Indemnifying Party elects not to
defend the Indemnified Party against such claim or demand, whether by not giving
the Indemnified Party timely notice as provided above or otherwise, then the
amount of any such
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claim or demand or, if the same be contested by the Indemnified Party, then that
portion thereof as to which such defense is unsuccessful (and the reasonable
costs and expenses pertaining to such defense), shall be the liability of the
Indemnifying Party hereunder, subject to the limitations set forth in Section
7.3(b) (the basket). To the extent the Indemnifying Party shall direct, control
or participate in the defense or settlement of any third-party claim or demand,
the Indemnified Party will give the Indemnifying Party and its counsel, without
charge, access to, during normal business hours, the relevant business records
and other documents, and shall permit them to consult with the employees and
counsel of the Indemnified Party. The Indemnified Party shall use its
commercially reasonable best efforts in the defense of all such claims or
demands. Notwithstanding the foregoing, the Indemnified Party shall have the
right to employ separate counsel at the Indemnifying Party's expense and solely
to control its own defense of such asserted liability if in the reasonable
written opinion of counsel to Indemnified Party, a conflict or potential
conflict exists between the Indemnifying Party and the Indemnified Party that
would make such separate representation necessary under the applicable canons of
ethics. Notwithstanding anything to the contrary contained in this Section 7.4,
if a claim or demand is asserted by a Significant Distributor and the Sellers
are the Indemnifying Party, the Indemnifying Party shall consult with Purchaser
with a view to managing the claim resolution process in a manner reasonably
designed to preserve the Grove Companies' business relationship with the
distributor to the extent practicable under the circumstances; provided,
however, that (x) the Indemnifying
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Party shall not be required to take any action or refrain from taking any action
that could reasonably be expected to result in the Indemnifying Party's ultimate
liability being greater than it would otherwise be; (y) Purchaser may, at its
option, require the Indemnifying Party to participate in mediation in accordance
with the procedures set forth in Section 7.4 of the Disclosure Schedule if the
Significant Distributor is willing to so participate; and (z) the Indemnifying
Party will settle any such claim at Purchaser's request if such settlement does
not result in the imposition of a consent order, injunction or decree applicable
to the Indemnifying Party and Purchaser pays the costs of such settlement.
7.5 Certain Environmental Matters.
(a) Notwithstanding anything to the contrary herein, Purchaser
shall have the right to control the defense of any Shared Environmental Matter
and the planning and implementation of any investigatory or remedial work,
including negotiations and settlements with regulators and the retention of
consultants and other professionals; provided that, in the case of any such
claim, Purchaser (i) uses its commercially reasonable best efforts to achieve
the Lowest Cost Response and (ii) provides Sellers with the opportunity to: (x)
review, comment upon and approve (which approval shall not be unreasonably
delayed or withheld) any and all investigatory and work plans for any remedial
action prior to finalization and implementation and (y) have a representative
present during the performance of any investigatory or remedial work and any
meetings with regulators.
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(b) Notwithstanding anything to the contrary herein, Sellers
shall have the right to control the defense of the Special Environmental Matter
and the planning and implementation of any investigatory or remedial work,
including negotiations and settlements with regulators and the retention of
consultants and other professionals; provided, that (i) Sellers shall have the
right to effect the Lowest Cost Response and (ii) Sellers shall use their
reasonable efforts to conduct any investigatory or remedial work in a manner
that would not materially disrupt or impair the Grove Operations at the Shady
Grove facility; provided, however, that if, notwithstanding such efforts, such
material disruption or impairment would occur, Sellers shall provide Purchaser
with the opportunity to: (x) review, comment upon and approve (which approval
shall not be unreasonably delayed or withheld) any and all investigatory and
work plans for any remedial action prior to finalization and implementation and
(y) have a representative present during the performance of any investigatory or
remedial work and any meetings with regulators..
(c) Notwithstanding anything to the contrary herein, the
parties' indemnification obligations under Environmental Laws with respect to
the Grove Operations conducted in Sunderland, England shall be exclusively set
forth in the Sunderland Leases and Option Agreement.
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7.6 Resale Payment.
(a) If Purchaser shall consummate a Resale Event (as defined
below) pursuant to any binding agreement entered into with (x) any Terex Entity
directly or indirectly prior to the first anniversary of the date hereof, or (y)
any Apollo Entity directly or indirectly prior to the first anniversary of the
date hereof and such Apollo Entity shall thereafter consummate a Resale Event
with any Terex Entity pursuant to any binding agreement entered into with such
Terex Entity directly or indirectly prior to the first anniversary of the date
of the execution of the binding agreement for the initial Resale Event between
Purchaser and such Apollo Entity, then Purchaser shall pay to the Sellers, as
additional consideration allocated in accordance with Section 2.2, upon the
consummation of such Resale Event (or as otherwise provided in Section 7.6(b)),
an amount equal to 35% of the Resale Equity Value (as defined below).
(b) Notwithstanding anything to the contrary contained in
Section 7.6(a), to the extent that Purchaser or its Affiliates assume (or
retain) any liabilities relating to the Grove Operations in connection with such
Resale Event (including for indemnification under the relevant agreements
relating to the Resale Event) and, in connection therewith, Purchaser or its
Affiliates establishes reserves or enters into escrow arrangements relating to
such assumed or retained liabilities, then any portion of the consideration
payable in such Resale Event that is made subject to such reserve or escrow
arrangement shall not be deemed to be included in the calculation of Resale
Equity Value at the time of consummation of the
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Resale Event. Thereafter, when, as, and if any amounts are released from such
reserves or escrow arrangements, and are actually received by Purchaser (or its
Affiliates in respect of equity interests in Purchaser), such amounts shall, at
such time, be deemed included in the calculation of Resale Equity Value
(together with any amounts not previously included in clause (y) of the
definition of Resale Equity Value) and the Sellers shall be entitled to an
additional payment which, when taken together with all payments previously made
pursuant to this Section 7.6, is equal to 35% of the cumulative Resale Equity
Value at such time.
(c) If any or all of the consideration on a Resale Event is
payable by delivery or retention of property (including, but not limited to,
promissory notes or other evidences of indebtedness or stock or other securities
or assets), for the purpose of determining the amount payable to the Sellers
pursuant to this Section 7.6, that property shall be valued by an independent
nationally-recognized financial advisor reasonably acceptable to Purchaser and
whose fees shall be borne by the Sellers at its fair market value at the time of
receipt and Purchaser may either (i) make a cash payment to the Sellers or (ii)
transfer to the Sellers in kind a proportionate share of the property.
(d) For purposes of this Section 7.6, the following terms
shall have the following meanings:
(i) "fair market value" means the value at which property would
change hands between a willing buyer and a willing seller, neither under
compulsion to act, and both with knowledge of all relevant facts.
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(ii) "Resale Equity Value" means the excess of (x) the aggregate
fair market value of the gross consideration actually received by Purchaser (or
its Affiliates in respect of equity interests in Purchaser) upon a Resale Event
over (y) the sum of (A) the Purchase Price, (B) the aggregate amount of the
reasonable out-of-pocket expenses (including reasonable attorneys' fees)
incurred by Purchaser and its Affiliates directly in connection with the due
diligence, negotiation and purchase of the capital stock of the Specified Grove
Corporations and Specified Grove Assets pursuant to this Agreement and the
transactions entered into in connection with the Resale Event (including third
party financing fees, non-recurring management hiring and retention compensation
arrangements and incentive compensation arrangements payable in connection with
a Resale Event), and (C) the fair market value of any additional capital
contributions (net of non-Income Tax distributions) to the Grove Operations.
"Resale Event" means a transaction or series of transactions
(including a merger, stock sale, asset sale or other structure) pursuant to
which Keystone, Inc. and FW Strategic Partners L.P. and their Affiliates (and,
in the case of Section 7.6(a)(y), such Apollo Entities and their Affiliates)
collectively cease to own beneficially, directly or indirectly, a majority of
the common equity or voting interests in the Purchaser (or, in the case of
Section 7.6(a)(y), its successors) or Purchaser and its Affiliates (or, in the
case of Section 7.6(a)(y), their successors) shall cease to own a majority of
the common equity or voting interests in the Grove Companies or a majority of
the assets of the Grove Operations.
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7.7 Characterization of Indemnification Payments. All amounts paid
by Purchaser or the Sellers, as the case may be, under Article II, Article V or
this Article VII shall be treated as adjustments to the Purchase Price for all
Tax purposes.
7.8 Computation of Losses Subject to Indemnification. The amount of
any Loss for which indemnification is provided under this Article VII shall be
computed net of any third party insurance proceeds received by the Indemnified
Party in connection with such Loss and any applicable reserves on the Closing
Balance Sheet, and shall exclude consequential damages and lost profits (except
to the extent due to a party other than Purchaser or its Affiliates). The
Indemnified Party shall use its commercially reasonable best efforts to obtain
third party insurance proceeds to which the Indemnified Party is entitled in
connection with any Loss for which the Indemnified Party seeks indemnification
pursuant to this Article VII.
ARTICLE VIII
TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior
to the Closing:
(a) by agreement of Purchaser and the Sellers;
(b) by either Purchaser, on the one hand, or the Sellers, on
the other hand, by giving written notice of such termination to the other, if
the Closing shall not
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have occurred on or prior to May 22, 1998; provided that the terminating party
is not in material breach of its obligations under this Agreement;
(c) by either Purchaser, on the one hand, or the Sellers, on
the other hand, if there shall be in effect any Law or regulation that prohibits
the consummation of the Closing or if consummation of the Closing would violate
any non-appealable final order, decree or judgment of any court or governmental
body having competent jurisdiction; or
(d) by Sellers if, as a result of action or inaction by the
Purchaser, the Closing shall not have occurred on or prior to the date that is
10 Business Days following the date on which all of the conditions to Closing
set forth in Section 6.1 and 6.2 are satisfied or waived.
8.2 Effect of Termination. In the event of the termination of this
Agreement in accordance with Section 8.1, this Agreement shall thereafter become
void and have no effect, and no party hereto shall have any liability to the
other party hereto or their respective Affiliates, directors, officers or
employees, except for the obligations of the parties hereto contained in this
Section 8.2 and in Sections 9.1 (Notices), 9.7 (No Third Party Rights), 9.8
(Public Disclosure), 9.9 (Return of Information) and 9.10 (Expenses), and except
that nothing herein will relieve any party from liability for any breach of this
Agreement prior to such termination (except for the other party's consequential
damages or
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lost profits as a result of the failure of the transactions contemplated hereby
to have been consummated).
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices or other communications hereunder shall be
deemed to have been duly given and made if (i) in writing and served by personal
delivery upon the party for whom it is intended or (ii) if delivered by
registered mail, certified mail, courier service, or telecopier, return receipt
received:
To Purchaser:
GROVE WORLDWIDE LLC
c/o Keystone, Inc.
210 Main Street, Suite 2600
Fort Worth, Texas 76102
Attn: Robert B. Henske
Robert Cotham
With a copy to:
PAUL, WEISS, RIFKIND, WHARTON & GARRISON
1285 Avenue of the Americas
New York, New York 10019-6064
Telephone: (212) 373-3000
Telecopy: (212) 757-3990
Attn: James H. Schwab, Esq.
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To Sellers:
HANSON FUNDING (G) LIMITED
1 Grosvenor Place
London SWIX 7JH
England
Telephone: 011-44-171-245-1245
Telecopy: 011-44-171-235-3455
Attn: Graham Dransfield, Esq.
Legal Director
With a copy to:
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
Attn: Ellen J. Odoner, Esq.
9.2 Amendment; Waiver. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchaser and any Seller, or in the case
of a waiver, by the party against whom the waiver is to be effective. No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
9.3 Assignment. No party to this Agreement may assign any of its
rights or delegate any of its obligations under this Agreement without the prior
written consent of
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the other party hereto, except that Purchaser may assign any and all of its
rights and remedies and delegate its obligations under this Agreement, including
its rights to acquire the shares of the Specified Grove Corporations and the
Specified Grove Assets, to any wholly-owned Subsidiary (provided, however, that
Purchaser shall not be released from any of its obligations hereunder).
9.4 Entire Agreement. This Agreement, the Tax Sharing and
Indemnification Agreements and the Supplemental Agreements (including the
Disclosure Schedule and all Exhibits and Annexes hereto and thereto) contain the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or written,
with respect to such matters, except for the Confidentiality Agreement which
will remain in full force and effect for the term specified therein.
9.5 Fulfillment of Obligations. Any obligation of any party to any
other party under this Agreement or any of the Tax Sharing and Indemnification
Agreements or Supplemental Agreements, which obligation is performed, satisfied
or fulfilled by an Affiliate of such party, shall be deemed to have been
performed, satisfied or fulfilled by such party.
9.6 Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns.
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9.7 No Third Party Rights. Except as otherwise provided in Article
VII, nothing in this Agreement, express or implied, is intended to confer on any
Person not a party hereto, any rights or remedies by reason of this Agreement.
9.8 Public Disclosure. Notwithstanding anything herein to the
contrary, each of the parties to this Agreement hereby agrees with the other
party or parties hereto that, except as may be required to comply with the
requirements of any applicable Laws and the rules and regulations of any stock
exchange upon which the securities of one of the parties (or its Affiliate) is
listed, the parties shall agree in advance as to the contents of any press
release with respect to the transactions contemplated by this Agreement issued
through the time of Closing.
9.9 Return of Information. If for any reason whatsoever the
transactions contemplated by this Agreement are not consummated, Purchaser
shall, in addition to satisfying the requirements of the Confidentiality
Agreements, promptly return to the Sellers or destroy (and certify to Sellers
the return or destruction of) all books and records and other information
furnished by or on behalf of the Sellers, their Affiliates, any of the Grove
Companies or any of their respective agents, employees or representatives
(including all copies, if any, thereof), and shall not use or disclose the
information contained in such books and records for any purpose or make such
information available to any other entity or person.
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9.10 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, all out-of-pocket costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by
Sellers if the costs and expenses are incurred by Sellers or their Affiliates
(including the Grove Companies), or by Purchaser if the costs and expenses are
incurred by Purchaser or its Affiliates. All costs, including, transfer and
stamp taxes, duties, notarial fees or other equivalent taxes, fees or duties
resulting from the sale of (i) the Specified Grove Assets that would not have
been required if Purchaser purchased the stock of Kidde and (ii) the capital
stock of the non-U.S. Specified Grove Parent Corporations shall be borne by the
Purchaser. The costs of all title insurance shall be borne by the Purchaser. The
costs of the surveys of the properties identified in Section 9.10 of the
Disclosure Schedule shall be borne equally by Kidde and Purchaser.
9.11 Sections of Disclosure Schedule. The disclosure of any matter
in any section of the Disclosure Schedule shall be deemed to be a disclosure for
all purposes of the Disclosure Schedule to which such matter could reasonably be
expected to be pertinent, but shall expressly not be deemed to constitute an
admission by Sellers or to otherwise imply that any such matter is material for
the purposes of this Agreement.
9.12 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK.
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EACH PARTY HERETO AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN RESPECT
OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN TORT OR CONTRACT OR
AT LAW OR IN EQUITY, EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK (THE "CHOSEN COURT") AND (I) IRREVOCABLY SUBMITS
TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURT, (II) WAIVES ANY OBJECTION TO
LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN COURT, (III) WAIVES
ANY OBJECTION THAT THE CHOSEN COURT IS AN INCONVENIENT FORUM OR DOES NOT HAVE
JURISDICTION OVER ANY PARTY HERETO AND (IV) AGREES THAT SERVICE OF PROCESS UPON
SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS
GIVEN IN ACCORDANCE WITH SECTION 9.1 OF THIS AGREEMENT. EACH OF THE SELLERS
IRREVOCABLY DESIGNATES BEAZER EAST INC., 1 OXFORD CENTER, SUITE 3000,
PITTSBURGH, PENNSYLVANIA 15219 (ATTENTION: JILL BLUNDEN, ESQ.), AND PURCHASER
IRREVOCABLY DESIGNATES JOHN R. MONSKY, C/O OAK HILL PARTNERS, 65 EAST 55TH
STREET, 32ND FLOOR, NEW YORK, NY 10022, AS ITS AGENT AND ATTORNEY IN FACT FOR
THE ACCEPTANCE OF SERVICE OF PROCESS AND MAKING AN APPEARANCE ON ITS BEHALF IN
ANY SUCH ACTION OR PROCEEDING AND
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TAKING ALL SUCH ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER
JURISDICTION OVER IT UPON THE CHOSEN COURT, AND THE SELLERS AND PURCHASER
STIPULATE THAT SUCH CONSENT AND APPOINTMENT ARE IRREVOCABLE AND COUPLED WITH AN
INTEREST.
9.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
9.14 Headings. The heading references herein and the table of
contents hereto are for convenience purposes only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
9.15 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
HANSON FUNDING (G) LIMITED
By: /s/ Graham Dransfield
-------------------------------------
Name: Graham Dransfield
Title: Director
DEUTSCHE GROVE CORPORATION
By: /s/ Robert C. Stift
-------------------------------------
Name: Robert C. Stift
Title: Director
HANSON AMERICA HOLDINGS (4) LTD.
By: /s/ Graham Dransfield
-------------------------------------
Name: Graham Dransfield
Title: Director
GROVE FRANCE SA
By: /s/ Robert C. Stift
-------------------------------------
Name: Robert C. Stift
Title: Director
<PAGE>
KIDDE INDUSTRIES, INC.
By: /s/ Robert C. Stift
-------------------------------------
Name: Robert C. Stift
Title: Director
HANSON FINANCE PLC
By: /s/ Graham Dransfield
-------------------------------------
Name: Graham Dransfield
Title: Director
GROVE WORLDWIDE LLC
By: Grove Holdings LLC, its managing
member
By: Grove Investors LLC, its managing
member
By: /s/ Robert B. Henske
-------------------------------------
Name: Robert B. Henske
Title: President
<PAGE>
Exhibit 10.2
AMENDMENT
AMENDMENT, dated as of April 29, 1998 (this "Amendment"), to the
Stock and Asset Purchase Agreement dated as of March 10, 1998 (as amended,
supplemented or otherwise modified, the "Purchase Agreement"), by and among
Hanson Funding (G) Limited, a limited company organized under the laws of
England and Wales, Deutsche Grove Corporation, a Delaware corporation, Hanson
America Holdings (4) Limited, a limited company organized under the laws of
England and Wales, Grove France SA, a societe anonyme organized under the laws
of France, Kidde Industries, Inc., a Delaware corporation, Hanson Finance PLC, a
public limited company organized under the laws of England and Wales, and Grove
Worldwide LLC, a Delaware limited liability company.
W I T N E S S E T H:
WHEREAS, the Sellers and the Purchaser are parties to the Purchase
Agreement; and
WHEREAS, the Sellers and Purchaser desire to amend the Purchase
Agreement, subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Sellers and the
Purchaser hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in
the Purchase Agreement shall have such meanings when used herein.
2. Amendment of Section 2.1 (Purchase and Sale of the Grove
Operations). Section 2.1 of the Purchase Agreement is hereby amended as follows:
the amount "$605,000,000" is hereby deleted and replaced with the amount
"$583,000,000." For purposes of the Purchase Agreement, this $22,000,000
reduction in the Purchase Price shall be treated as an adjustment to the amount
of Purchase Price allocated to the Specified Grove Assets pursuant to Section
2.8 of the Purchase Agreement with the effect set forth in Section 2.8(j)
thereof.
3. Amendment of Section 6.2(h) (Liquidity). Section 6.2(h) of the
Purchase Agreement is hereby amended as follows: the amount "$28,524,000" in
clause (x) thereof is hereby deleted and replaced with the amount "$6,524,000."
4. Amendment of Section 9.3 (Assignment). Section 9.3 is hereby
amended as follows: the phrase "to any wholly-owned Subsidiary" is hereby
deleted and
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2
replaced with the phrase "to any direct or indirect wholly-owned Subsidiary
(without giving effect to foreign statutory share ownership or similar
requirements)."
5. Amendment to Section 2.2 of the Disclosure Schedule. Section 2.2
of the Disclosure Schedule is hereby amended as follows: the amount
"442,499,000" of purchase price allocated to the Specified Grove Assets is
hereby deleted and replaced with the amount "420,499,000." The amount
"605,000,000" in the first paragraph under "Specified Grove Assets" is hereby
deleted and replaced with the amount "583,000,000."
6. Amendment to Section 2.5 of the Disclosure Schedule. Section 2.5
of the Disclosure Schedule is hereby amended as follows: in the sixth entry, at
the end of the second line, after the words "the HSBC Letter," there shall be
added the phrase: "as the same are more particularly identified in the second
paragraph on page 2 of the HSBC Agency Agreement, and".
7. Amendment to Section 1.1(a) of the Disclosure Schedule. Section
1.1(a) of the Disclosure Schedule is hereby amended as follows: as an additional
adjustment under the heading "Adjustments to Be Made Only to The Closing Balance
Sheet," there shall be added:
"The Closing Balance Sheet will reflect the receipt of U.S.
$3.5 million by Grove France SA representing the proceeds from the
sale of Delta Manlift SAS, the repayment by Grove France SA to Grove
Europe Limited of the sum of (pound)2,097,441 (being $3,500,000 at
$1.6687 to (pound)1) or if a lesser amount, the remaining balance of
the debt due from Grove France SA to Grove Europe Limited, and any
net cash retained by Grove France SA as a consequence of such
transactions as if such transactions had taken place on the
Determination Date and not on the Closing Date."
8. Amendment of Section 5.6 (Benefit Plans). Section 5.6 of the
Purchase Agreement is hereby amended to add the following subsection:
"(d) Additional Contributions. Sellers (for themselves and for
Hanson) and Purchaser hereby agree that each of them will contribute
$2.25 million to Grove's hourly pension plan within five (5)
Business Days of the Closing Date. The cost of the Sellers'
contribution will be borne by them and will not be indirectly passed
on to increase the Purchase Price (as an adjustment to the Closing
Balance Sheet or otherwise). Similarly, the cost of Purchaser's
contribution will be borne by Purchaser and will not be used to
decrease the Purchase Price (as an adjustment to the Closing Balance
Sheet or otherwise)."
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3
9. Amendment to Section 7.3(a)(viii) (Indemnification by Sellers).
Section 7.3(a)(viii) of the Purchase Agreement is hereby amended as follows:
after the words "Inactive Companies," insert the phrase ", other than those that
constitute Assumed Liabilities."
10. Amendment to Section 2.6 (Assumed Liabilities). Section 2.6 of
the Purchase Agreement is hereby amended by inserting the following sentence
after the first sentence thereof:
"For the avoidance of doubt, the parties agree that the term
"Assumed Liabilities" shall include all of the obligations and
liabilities of Kidde related to the Grove Operations that were
transferred to or assumed or performed by Kidde, any Specified Grove
Corporation or any predecessor in interest pursuant to the
resolutions, instruments and other arrangements set forth in Annexes
A and B hereto."
11. Amendment to Section 2.3 (Sale and Purchase of Stock) Regarding
Grove Manlift Pty. Ltd. ("Manlift"). Notwithstanding anything to the contrary
contained in Section 2.3 or elsewhere in the Agreement, the Agreement shall not
constitute the sale, assignment, transfer, conveyance or delivery of the Shares
of Manlift until the expiration of all required waiting periods and/or receipt
of all necessary approvals under the Competition Laws of Australia (the
"Australian Closing Date"). Paul, Weiss, Rifkind, Wharton & Garrison shall hold
the Shares of Manlift and the applicable portion of the Purchase Price ($1,000)
in escrow until the Australian Closing Date, at which time it may deliver the
Shares of Manlift to Purchaser and the $1,000 in cash to Hanson America without
any further action of the parties. During the period from the Closing until the
Australian Closing Date, the parties shall cooperate with each other in any
reasonable and lawful arrangements, at Purchaser's expense, to provide Purchaser
the economic benefits and liabilities of ownership of the Shares of Manlift
under Purchaser. Purchaser shall indemnify Sellers against any liabilities
arising from the operation of Manlift pursuant to such arrangements prior to the
Australian Closing Date (except to the extent Purchaser would have been entitled
to indemnification relating to Manlift under Article VII had the Australian
Closing Date occurred).
12. Amendment to Section 1.1(f) of the Disclosure Schedule. Section
1.1(f) of the Disclosure Schedule is hereby amended by deleting number 11,
entitled: "Software License Agreement dated June 30, 1997, between Grove NA
(f/k/a Grove Manufacturing Company) and Cincom Systems, Inc."
13. Continuing Effect of Purchase Agreement. This Amendment shall
not constitute a waiver, amendment or modification of any other provision of the
Purchase Agreement not expressly referred to herein and shall not be construed
as a waiver or consent to any further or future action on the part of the
Sellers that would require a waiver or consent of the Purchaser. Except as
expressly amended or modified
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4
herein, the provisions of the Purchase Agreement are and shall remain in full
force and effect.
14. Counterparts. This Amendment may be executed by one or more of
the parties hereto on any number of separate counterparts and all such
counterparts shall be deemed to be one and the same instrument. Each party
hereto confirms that any facsimile copy of such party's executed counterpart of
this Amendment (or its signature page thereof) shall be deemed to be an executed
original thereof.
15. Effectiveness. This Amendment shall be effective upon receipt by
the Purchaser of counterparts hereof, duly executed and delivered by the
Sellers.
16. Governing Law. This Amendment shall be governed by, and
interpreted and construed in accordance with, the internal laws of the State of
New York, without regard to principles of conflicts of law.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
HANSON FUNDING (G) LIMITED
By: /s/ Graham Dransfield
------------------------
Name: Graham Dransfield
Title: Director
DEUTSCHE GROVE CORPORATION
By: /s/ Robert C. Stift
------------------------
Name: Robert C. Stift
Title: Director
HANSON AMERICA HOLDINGS (4) LIMITED
By: /s/ Graham Dransfield
------------------------
Name: Graham Dransfield
Title: Director
GROVE FRANCE SA
By: /s/ Robert C. Stift
------------------------
Name: Robert C. Stift
Title: Director
KIDDE INDUSTRIES, INC.
By: /s/ Robert C. Stift
------------------------
Name: Robert C. Stift
Title: Director
<PAGE>
6
HANSON FINANCE PLC
By: /s/ Graham Dransfield
------------------------
Name: Graham Dransfield
Title: Director
GROVE WORLDWIDE LLC
By: /s/ Salvatore J. Bonanno
--------------------------
Name: Salvatore J. Bonanno
Title: Chief Executive Officer
<PAGE>
April 29, 1998
ANNEX A
1. 5/19/48 Grove Manufacturing Company is incorporated in
Pennsylvania ("GMC1").
2. 9/18/67 Board of Directors of GMC1 meet and resolve that the
August 25, 1967 Agreement and Plan of Reorganization
between Walter Kidde & Company, Inc. (("WKC") and GMC1
is adopted and approved, such Agreement and Plan
providing for (a) the sale by GMC1, and the purchase by
WKC or a wholly owned subsidiary of WKC, of
substantially all of the assets of GMC1 in exchange for
the shares of Series Accumulative Preference Shares and
Common Shares of WKC, (b) the assumption by WKC or by a
subsidiary of WKC and guaranteed by WKC, of
substantially all the liabilities and obligations of
GMC1 existing at the time of closing, (c) the
disillusion of GMC1 and the distribution to its
shareholders of various WKC shares, and (d) the
amendment of the Articles of Incorporation of the GMC1
in order to change its name to GMC Liquidating
Corporation.
3. 9/29/67 August 25, 1967 Agreement and Plan of Reorganization
between WKC and GMC1 is approved by the shareholders of
GMC1 at its annual meeting.
4. 11/09/67 A second "Grove Manufacturing Company" is incorporated
in Pennsylvania ("GMC2") as a wholly owned subsidiary of
WKC.
5. 11/17/67 Assignment, Bill of Sale, Assumption and Guarantee,
dated November 17, 1967, are entered into between GMC1,
WKC, and GMC2 whereby, among other things, (a) GMC1
sells and transfers substantially all of its assets to
GMC2 and (b) GMC2 assumes substantially all of the
liabilities of GMC1.
6. 11/17/67 GMC1 changes its name to GMC Liquidating Corporation.
7. 5/26/69 Articles of Dissolution are approved and filed in the
Pennsylvania Department of State for the dissolution of
GMC Liquidating Corporation.
8. 10/01/71 Joint meeting between the Board of Directors of GMC2 and
WKC (GMC2's sole shareholder) is held at which meeting
the Board of Directors of GMC2 resolve that GMC2 should
be liquidated with its net assets distributed to Walter
Kidde & Company, Inc.
9. 10/01/71 Meeting of Executive Committee of the Board of Directors
of WKC is held at which WKC, the sole shareholder of
GMC2, is authorized to vote its GMC2 shares in favor of
the complete liquidation of GMC2. Further, it is
resolved
<PAGE>
Page 2 April 29, 1998
that WKC is authorized to assume and unconditionally pay
and discharge all the liabilities and obligations of
GMC2.
10. 10/01/71 WKC and GMC2 enter into (a) an Agreement and Plan of
Liquidation for the liquidation of GMC2 and (b) a Bill
of Sale and Assignment Transferring All Assets to Walter
Kidde & Company, Inc. transferring GMC2's assets to WKC.
11. 4/16/80 WKC changes its name to Kidde, Inc.
12. 3/31/88 Pursuant to its plan of liquidation and dissolution,
Kidde, Inc. merges with and into Bloom-1 Inc. which
assumes the liabilities of Kidde, Inc. Bloom-1 Inc. is
the surviving corporation and thereafter changes its
name to Kidde, Inc.
13. 3/31/88 Pursuant to its plan of liquidation and dissolution,
Kidde, Inc. (formerly Bloom-1 Inc.) merges with and into
HIMP-2 Inc. which assumes all the liabilities of
Kidde, Inc. HIMP-2 Inc. is the surviving corporation and
thereafter changes its name to Kidde, Inc.
14. 4/02/88 By Memorandum of Distribution and Liquidation, all of
the assets and liabilities of the Grove Manufacturing
Company division of Kidde, Inc. are distributed and
assigned to HKID-45 Inc.
15. 4/04/88 Pursuant to its plan of liquidation and dissolution,
Kidde, Inc. (formerly HIMP-2 Inc.) merges with and
into HKID-45 Inc. which assumes all the liabilities of
Kidde, Inc. HKID-45 Inc. is the surviving corporation
and thereafter changes its name to Kidde Industries,
Inc. As a result, Kidde Industries, Inc. then includes
as one of its divisions Grove Manufacturing Company.
16. 2/02/90 The divisional name of Grove Manufacturing Company is
redesignated as Grove North America, Division of Kidde
Industries, Inc.
<PAGE>
ANNEX B
ASSIGNMENT OF INTERNATIONAL
DISTRIBUTOR SALES AND SERVICE AGREEMENTS
THIS ASSIGNMENT OF INTERNATIONAL DISTRIBUTOR SALES AND SERVICE
AGREEMENTS is being made as of this 29th day of April 1998 among Grove
International Corporation, a Delaware corporation having its principal place of
business at 1565 Buchanan Trail East, Shady Grove, Pennsylvania 17256 (the
"Assignor"), and Grove North America, Division of Kidde Industries, Inc., a
Delaware corporation having its principal place of business at 1565 Buchanan
Trail East, Shady Grove, Pennsylvania 17256 (and "Assignee"), and Grove Europe
Limited, a limited company organized under the laws of England and Wales having
its principal office at Crown Works, Pallion, Sunderland SR4 6TT, United Kingdom
(an "Assignee"), with Kidde Industries, Inc. and Grove Europe Limited
collectively referred to as "Assignees").
W I T N E S S E T H
Recitals.
A. Assignor has entered into International Distributor Sales and Service
Agreements and related distributor documentation (collectively, "Distributor
Agreements") with various entities which have been or are distributors of Grove
Worldwide crane and aerial work platform products and parts.
B. The Assignees have administered and continue to administer the
Distributor Agreements with each Assignee specifically having administered and
administering those Distributor Agreements covering geographical areas within
each Assignee's geographical area of responsibility.
C. Assignor desires to assign to Assignees, and Assignees desire to accept
an assignment from Assignor of, all rights, title, and interest of the Assignor
to, and all liabilities and obligations of the Assignor under the Distributor
Agreements.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
promises, covenants, and conditions hereinafter contained, the parties hereto
agree as follows:
<PAGE>
1. Assignment. Assignor does hereby sell, and transfer unto each
respective Assignee all of Assignor's right, title and interest in, to and under
the Distributor Agreements.
2. Assumption by Assignees. The Assignees hereby jointly and severally
assume and agree to perform all of the terms, covenants, and conditions which
are to be carried out and performed by "Grove" (as that term is defined in the
Distributor Agreements) under the Distributor Agreements which are transferred
to each of the respective Assignees and to defend, hold harmless and indemnify
the Assignor (including but not limited to its employees, agents, officers,
directors, successors and assigns) from and against any and all claims, demands,
actions, losses, and costs and expenses (including, but not limited to,
attorneys' fees) arising out of or pertaining in any way to the Distributor
Agreements upon and after the date of this Assignment.
3. Indemnification. The Assignees hereby agree jointly and severally to
defend, hold harmless, indemnify and release the Assignor (including, but not
limited to, its employees, agents, officers, directors, successors, and assigns)
from and against any and all claims, demands, actions, losses, and costs and
expenses (including, but not limited to, attorneys' fees) arising out of or
pertaining in any way to the Distributor Agreements prior to the date of this
Assignment but only to the same extent Purchaser would be obligated to indemnify
Sellers for an Assumed Liability under, and as such terms are defined in, the
Stock and Asset Purchase Agreement dated as of March 10, 1998, as amended, among
Hanson Funding (G) Limited, a limited company organized under the Laws of
England and Wales, Deutsche Grove Corporation, a Delaware corporation, Hanson
America Holdings (4) Limited, a limited company organized under the laws of
England and Wales, Grove France SA, a societe anonyme organized under the laws
of France, Kidde Industries, Inc., a Delaware corporation, Hanson Finance PLC, a
public limited company organized under the laws of England and Wales, and Grove
Worldwide LLC, a Delaware limited liability company.
4. Successors. This Assignment shall be binding upon and shall inure to
the benefit of the Assignor and the Assignees and their respective successors
and assigns.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
duly executed by their duly authorized officers as of the day and year first
written above.
ASSIGNEE
Grove North America,
Division of Kidde Industries, Inc.
By: /s/ Keith R. Simmons
-----------------------------------
Name: Keith R. Simmons
---------------------------------
Title: Vice President
--------------------------------
ASSIGNEE
Grove Europe Limited
By:____________________________________
Name:__________________________________
Title:_________________________________
ASSIGNOR
Grove International Corporation
By: /s/ Keith R. Simmons
-----------------------------------
Name: Keith R. Simmons
---------------------------------
Title: Vice President
--------------------------------
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
duly executed by their duly authorized officers as of the day and year first
written above.
ASSIGNEE
Grove North America,
Division of Kidde Industries, Inc.
By:____________________________________
Name:__________________________________
Title:_________________________________
ASSIGNEE
Grove Europe Limited
By: /s/ G. Fred Heidinger
-----------------------------------
Name: G. Fred Heidinger
---------------------------------
Title: Director
--------------------------------
ASSIGNOR
Grove International Corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
3
<PAGE>
Exhibit 10.3
EXECUTION COPY
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT, dated effective as of April 29, 1998 (the
"Effective Date"), is by and between Grove Worldwide LLC, a Delaware limited
liability company (the "Company"), and George Group, Inc., a Texas corporation
(the "Consultant").
For and in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the adequacy and receipt
of which are hereby acknowledged and agreed, the parties hereby agree as
follows:
1. Engagement. The Company hereby agrees to engage the Consultant,
and the Consultant hereby agrees to serve the Company, in each case upon the
terms and subject to the conditions set forth herein.
2. Term. The term of this Agreement (the "Term") shall be the period
commencing on the Effective Date and ending on September 30, 2002 (the
"Performance Term"), subject to the earlier exercise of the termination rights
of the Company or the Consultant set forth in Section 8 below.
3. Advisory Services. During the Term, the Consultant shall provide
personnel and resources as necessary to design and implement Company-wide
business processes consistent with those practices generally considered to be
"best practices" and designed to result in improvements in the Company's
revenue, cash flow, and return on invested capital (the "Services") in
accordance with the Consulting Plan and Budget attached hereto as Exhibit "A"
(the "Plan"). It is a material term of this Agreement that, at all times during
the Term, the personnel assigned by the Consultant to perform the Services shall
be acceptable to the Chief Executive Officer of the Company. The Consultant
shall perform its duties hereunder in good faith.
4. Compensation.
4.1 Payment of Fee. As compensation for the performance of the
Services and reimbursement for estimated expenses during the Term, the
Consultant shall receive a monthly fee as specified in the Plan (each such fee,
a "Monthly Fees and Expenses") during each such one-month period in connection
with the performance of such Services, subject to Adjustment (as defined
herein). In no event shall the sum of the aggregate of Monthly Fees and Expenses
paid to the Consultant exceed $14,438,000.00, subject to Adjustment ("Total
Fee"). At the beginning of each month during the Term of this Agreement, the
Consultant shall provide the Company with a written statement (the "Consultant
Bill") including the applicable Monthly Fees and Expenses for the month in which
the Consultant Bill is rendered. The Company shall pay the Monthly Fees and
Expenses in advance (for
<PAGE>
2
the month in which the Consultant Bill is dated) on or before 30 days after
receipt of the Consultant Bill. The actual out-of-pocket expenses of the
Consultant will be calculated at the end of the Term of this Agreement and 50%
of the excess, if any, of (a) $3,822,000.00 over (b) such actual expenses of the
Consultant to such date shall be reimbursed by Consultant to the Company
promptly following the determination thereof.
"Adjustment" as used herein refers to an increase or decrease in a
Monthly Fee or the Total Fee as a result of the Company modifying the scope of
the Services performed hereunder measured on a man-month basis; provided,
however, that the actual number of man-months worked as a result of a
modification in the scope of Services requested by the Company shall not differ
from the budgeted number of man-months for the entire Term by more than 15%.
4.2 Record of Expenses. The Consultant shall maintain, during
the Term of this Agreement and continuing for a period the longer of (a) one
year after the termination of this Agreement or (b) until the final resolution
of any dispute between the Company and the Consultant which is outstanding on
such anniversary date, its internal books and records pertaining to its
expenses, in sufficient detail and condition so as to permit reasonable
convenient periodic audits of such books and records by the Company or the
Company's authorized representative, at times and places mutually agreed upon by
the Company and the Consultant, so that the Company may verify the amount of any
and all expenses included in the Consultant Bills.
5. Intellectual Property.
(a) As used herein the following definitions shall apply:
"Deliverables" shall mean software (source code, object code,
associated documentation and related data files, tools and utilities), plans,
methods, prototypes, circuitry, diagrams, drawings, designs, specifications,
proposals, technical descriptions, schematics, and other technical information
relating to the subject matter of the Services that the Consultant provides to
the Company pursuant to this Agreement.
"Intellectual Property Rights" or "IP Rights" shall mean all patent,
copyright, trade secret and other proprietary rights in Deliverables.
(b) The Consultant shall assign to the Company all IP rights
created or acquired by the Consultant during the Term of this Agreement which
(i) are specifically adapted for mobile hydraulic crane or aerial work platform
products manufacturing, or (ii) incorporate Confidential Information of the
Company. The foregoing shall not preclude the Consultant from using general
information and techniques developed during the Agreement on behalf of other
clients of the
<PAGE>
3
Consultant. The Consultant retains sole ownership of all IP Rights in existence
at the beginning of the term of this Agreement, and all IP Rights created or
acquired by the Consultant during the term of this Agreement other than those
which are to be owned by the Company as provided above. The owning party shall
have the exclusive right to file and prosecute patent and copyright applications
relating to the applicable IP Rights.
(c) The Consultant hereby grants to the Company, and those of
its subsidiaries, parents and affiliates which are engaged in the business of
mobile hydraulic crane and aerial work platform products manufacturing, a
perpetual, paid-up, non-exclusive license, without right of sublicense, under
the Consultant-owned IP Rights to use Deliverables provided by the Consultant
pursuant to this Agreement for the Company's, any such subsidiaries', parents'
and affiliates' internal business purposes only. The license granted herein
shall be non-transferable without the Consultant's prior written consent,
provided that no such consent shall be required for transfers to a successor of
the Company or to a purchaser of all or substantially all the assets of the
business in which the IP Rights will be used, provided such transferee is not a
competitor of the Consultant.
(d) The Consultant shall, at its expense, defend or settle any
claim, action, or allegation brought against the Company that the Deliverables
infringe any patent, copyright, trade secret, or other proprietary right of any
third party or that the Company's use of the Deliverables violates any
non-competition or similar agreement or otherwise violates the rights of any
third party and pay any judgments awarded or settlements entered into, provided
that the Company must give written notice of any such claim, action, or
allegation of infringement (collectively, "Infringement Claim") to the
Consultant within 30 days after the Company first receives notice thereof. The
Company will promptly grant to the Consultant, and the Consultant will have, the
exclusive right to defend any Infringement Claim and make settlements thereof at
its own discretion, and the Company may not settle or compromise any
Infringement Claim, except with prior written consent of the Consultant. The
Company shall give such assistance and information as the Consultant may
reasonably require to settle or oppose any Infringement Claim. If any such
infringement occurs or may occur, the Consultant shall, at its sole option and
expense (a) procure for the Company the right to continue use of the
Deliverables or infringing part thereof, (b) modify or amend the Deliverables or
infringing part thereof, or (c) replace the Deliverables with other Deliverables
having substantially the same or better capabilities. This paragraph sets forth
the entire liability of the Consultant to the Company with respect to
infringement of any patent, copyright, trade secret or other proprietary rights.
6. Confidentiality.
6.1 Confidential Information. The Consultant and the Company
acknowledge that they may acquire certain information and materials that
<PAGE>
4
are the confidential and proprietary information of the other (the "Confidential
Information"). The Consultant and the Company agree not to disclose or use the
Confidential Information except in the performance of this Agreement or with the
prior, express, written consent of the other. The Consultant and the Company
agree to take all actions reasonably necessary and satisfactory to the other to
protect the confidentiality of the Confidential Information (including, without
limitation, as either receiving party may deem appropriate, entering into
written agreements with each of its employees, representatives, agents and
subcontractors who perform services hereunder sufficient to carry out each
party's obligations under this Agreement).
6.2 Non-Confidential Information. The following shall not be
considered Confidential Information:
(a) Information previously known to the disclosee that
is, or subsequently becomes, rightfully and without breach of any obligation to
or agreement with the other party hereto, in the disclosee's possession without
any obligation restricting use or disclosure.
(b) Information in the public domain, through no act or
omission of the party to this Agreement required to keep such information
confidential.
(c) Information received from a third party with a legal
or contractual right to disclose such information.
(d) Information independently developed by the disclosee
without reference to the Confidential Information.
6.3 Publicity. The Consultant shall not use and shall keep its
employees from using the name of the Company and its sponsors and their
respective affiliates with any third party, without the prior express written
consent of the Company.
6.4 Other Agreements. The Consultant and the Company expressly
agree that this Agreement is intended to replace and supersede all, if any,
prior agreements between the Consultant and the Company concerning
confidentiality and non-disclosure.
6.5 Release of Obligations. Each party will be relieved of its
respective confidentiality obligations hereunder if, and only to the extent,
that any Confidential Information is disclosed pursuant to the lawful
requirement or request of a governmental agency, or disclosure is required by
operation of law, solely with respect to such Confidential Information required
to be so disclosed; provided that such party has given notice to the other party
and with sufficient time to enable the
<PAGE>
5
other party to seek a protective order limiting disclosure and use of the
Confidential Information so disclosed.
7. Restrictive Covenants of Consultant.
7.1 Non-Competition. For a period commencing on the Effective
Date and ending on the fifth anniversary of the earlier of (i) a Change in
Control (as defined herein) or (ii) the date of termination of this Agreement
pursuant to Section 8.1 or Section 8.2 (the "Restricted Period"), the Consultant
covenants and agrees that, without the prior written consent of the Company,
neither the Consultant nor its principals shall, in the Territory (as defined
below), working alone or in conjunction with one or more other persons or
entities, for compensation or not, directly or indirectly, either for itself or
himself or as a member of a partnership or other association or as a
stockholder, investor, lender, agent, associate, employee or consultant of any
person, partnership, corporation or other association (other than through
ownership for investment purposes of not more than 5% of the outstanding shares
of a corporation's capital stock which is listed on a national securities
exchange or quoted on any automated quotation system), engage in the business of
manufacturing, distribution and/or selling any of the products produced and/or
distributed by the Company at any time during the Restricted Period. As used
herein, the term "Territory" means any county in any state of the United States.
The parties intend that the covenants contained in this Section 7.1 shall be
deemed to be a series of separate covenants, one for each county in each state
of the United States and, except for geographic coverage, each such separate
covenant shall be identical in terms to the covenant contained in this Section
7.1.
7.2 No Solicitation. During the Restricted Period, the
Consultant covenants and agrees that neither it nor its principals shall,
directly or indirectly through any affiliate, employee, agent or representative,
interfere with, or take any action that would have the effect of interfering
with, the contractual and other relationships between the Company or any of its
affiliates and any of its or their employees. During the Restricted Period, the
Company covenants and agrees that neither it nor its principals shall, directly
or indirectly through any affiliate, employee, agent or representative,
interfere with, or take any action that would have the effect of interfering
with, the contractual and other relationships between the Consultant or any of
its affiliates and any of its or their employees.
7.3 Tolling. If the Consultant violates any covenant contained
in this Section, then the Restricted Period shall be tolled for the period
commencing on the commencement of such violation and ending upon the earlier of
(a) such time as such violation shall be cured by the Consultant to the
reasonable satisfaction of the Company or (b) final adjudication (including
appeals) of any action filed for injunctive relief or damages arising out of
such violation.
<PAGE>
6
7.4 Reformation. If, in any judicial proceeding, the court
shall refuse to enforce any covenant contained in this Section hereof as written
because the duration thereof is too long, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding the duration of
such covenant shall be deemed reduced to the extent necessary to permit
enforcement of such covenant. If, in any judicial proceeding, the court shall
refuse to enforce any covenant contained in this Section hereof as written
because such covenant is more extensive (whether as to geographic area, scope of
business or otherwise) than necessary to protect the business and goodwill of
the Company or any of its affiliates, it is expressly understood and agreed
between the parties hereto that for purposes of such proceeding, the geographic
area, scope of business or other aspect shall be deemed reduced to the extent
necessary to permit enforcement of such covenant.
8. Termination.
8.1 Termination by the Company. The Company may terminate this
Agreement immediately (i) upon the occurrence of a Change in Control (as defined
in Section 8.2(ii)), (ii) following the failure to perform any term, covenant or
agreement of this Agreement by the Consultant (other than the Performance
Failure) or the failure to perform any term, covenant or agreement of the LLC
Agreement (as defined below) by Michael George or GGEP-Grove, L.P., and such
failure shall continue unremedied for a period of 30 days following notice by
the non- breaching party to the Consultant, GGEP-Grove, L.P. or Michael George,
as the case may be, stating the nature of such breach, or (iii) following 90
days written notice to the Consultant of its decision to terminate this
Agreement for Performance Failure, unless the Company meets or exceeds the
Annual EBITDA Baseline performance targets set forth in Exhibit "C" to the
Amended and Restated Limited Liability Company Agreement of Grove Investors LLC
(the "LLC Agreement") on a trailing last twelve month basis during the 90 day
notice period.
As used herein, "Performance Failure" means the failure of the
Company for any reason to achieve the Annual EBITDA Baseline performance targets
as set forth in Exhibit C to the LLC Agreement, except in fiscal year 1999. In
fiscal year 1999, "Cause" means the failure of the Company to achieve an Annual
EBITDA of greater than (i) the product of (x) fiscal year 1999 Annual Revenue
and (y) 0.195%, minus (ii) 78,400,000.00.
8.2 Termination by the Consultant. The Consultant may
terminate this Agreement:
(i) in the event that the Company fails to remit payment
to the Consultant within 30 days following receipt of any Consultant Bill,
provided that the Consultant gives the Company written notice of such failure to
pay and the Company fails to cure such nonpayment within 30 days after receipt
of such notice, or
<PAGE>
7
(ii) upon the occurrence of a Change in Control (as
defined below) of the Company, provided that such termination will not be
effective until at least 90 days following the date that the Change of Control
of the Company occurs. As used herein, "Change in Control" means that more than
50% of the voting interests in the Company, or more than 50% of the assets
thereof, are sold, transferred, directly or indirectly, to an entity or person
other than Grove Investors LLC and their direct and indirect members, general
and limited partners as of the date hereof or to a person that is not controlled
by, controlling or under common control with (being greater than 50% voting
control) one or more of the foregoing.
8.3 Post-Termination Obligations.
(a) Upon the effective date of termination of this
Agreement (whether upon expiration of the Term or otherwise), (i) the Company
shall pay the Monthly Fees and Expenses in accordance with Section 4 hereof,
through the effective date of termination; and (ii) the Consultant shall deliver
to the Company all records in the possession of the Consultant relating to the
business and affairs of the Company, together with all items of property owned
by the Company and in the Consultant's possession. The actual out-of pocket
expenses of Consultant will be calculated at the effective date of the
termination of this Agreement and the excess of (a) the Monthly Expenses funded
through such date (as set forth in the Plan) over (b) such actual expense of
Consultant to such date shall be reimbursed by Consultant to the Company
promptly following the determination thereof.
(b) In addition, following the termination of this
Agreement upon the expiration of the Term pursuant to Section 1, the Consultant,
for four years after such termination. will make available to the Company at the
Company's request consultant services not to exceed eight days or $25,000 in
Consultant fees annually in order to assist the Company in its efforts to
maintain the performance goals achieved under the Plan and to continue improving
the Company's performance. If additional services are needed or additional
projects are identified, the Consultant shall provide such additional services
as are requested by the Company at a cost per consultant month to be agreed to
by the parties but in any event not to exceed $40,000.
(c) Termination of this Agreement shall not release the
Consultant or the Company from liability for failure to perform any of the
duties or obligations of either of them under this Agreement that have already
accrued, and the payment of any amounts in connection with the termination shall
not constitute a release of the Consultant or the Company, as the case may be,
from any such accrued liabilities.
(d) After the effective date of termination and except
as set forth in this Section 8.3 and except for the obligations set forth in
Sections 5, 6
<PAGE>
8
and 7, neither party shall have any further obligation to the other party hereto
under this Agreement.
9. Representations and Warranties.
9.1 Consultant Representations. The Consultant is a
corporation existing and in good standing under the laws of the State of Texas.
This Agreement has been duly authorized, executed and delivered by the
Consultant and constitutes the legal, valid and binding obligation of the
Consultant, enforceable against the Consultant in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors' rights
generally and to general equitable principles. The Consultant has all necessary
corporate power and authority to perform its obligations hereunder.
9.2 Company Representations. The Company is a limited
liability company existing and in good standing under the laws of the State of
Delaware. This Agreement has been duly authorized, executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights generally and to
general equitable principles. The Company has all necessary limited liability
company power and authority to perform its obligations hereunder.
9.3 LIMITATION OF LIABILITY. EXCEPT FOR THE EXPRESS WARRANTIES
SPECIFIED IN SECTIONS 9.1 AND 9.2, NEITHER THE CONSULTANT NOR THE COMPANY MAKES
ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
CONSULTANT WILL NOT BE RESPONSIBLE FOR ANY MODIFICATION OF THE DELIVERABLES MADE
BY COMPANY OR ITS CONSULTANTS. IN NO EVENT SHALL CONSULTANT BE LIABLE FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES RESULTING FROM USE OF A DELIVERABLE.
10. Indemnification. Each party agrees to indemnify and hold the
other harmless against any losses, claims, damages or liabilities incurred by
the other party based upon acts performed or omitted to be performed by such
party as the result of its willful misconduct, negligence, intentional breach of
this Agreement or fraud, unless such act or omission also constitutes willful
misconduct, negligence, intentional breach or fraud on the part of the
indemnitee.
11. Amendments. This Agreement may be amended only by a written
instrument duly executed by both parties hereto.
<PAGE>
9
12. Entire Agreement. This Agreement embodies the entire Agreement
between the parties hereto concerning the subject matters mentioned herein and
supersedes all previous discussions, correspondence, understandings and
agreements, whether written or oral, with respect to such matters.
13. Notices. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be deemed to
have been duly delivered three business days after mailing by certified mail,
when delivered by hand, or one day after sending by overnight delivery service,
to the respective addresses of the parties set forth on the signature page
hereto.
14. Assignment. Neither party may assign this Agreement, or any
interest in it, by operation of law or otherwise, without the prior written
consent of the other party, which consent will not be unreasonably withheld;
provided, however, that either party may assign its rights and obligations under
this Agreement to its successor without the consent of the other party in the
event that it shall effect a reorganization, consolidate with, or merge into,
any other entity or transfer all or substantially all of its properties or
assets to any other entity if the shareholders of the assigning party
immediately prior to such reorganization, consolidation, merger or transfer
constitute a majority of the shareholders of such new entity. This Agreement
shall inure to the benefit of and be binding upon the Company and the Consultant
and their respective successors and permitted assigns.
15. Severability. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
16. Waiver. No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by a duly authorized representative
of each party. The failure of either party to require the performance of any
term or obligation of this Agreement, or the waiver by either party of any
breach of this Agreement, shall not prevent any subsequent enforcement of such
term or obligation or be deemed a waiver of any subsequent breach.
17. Headings. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together
constitute one and the same instrument.
<PAGE>
10
19. Governing Law. This Agreement shall be construed and enforced
under and be governed in all respects by the substantive laws of the State of
Texas, without regard to the conflict of laws principles thereof.
20. Dispute Resolution. In the event of any dispute between the
Company and the Consultant, the Consultant and the Company agree that prior to
submitting any such dispute to the Mediators (as defined herein) in accordance
with this Section they shall attempt to resolve disputes in an informal and
timely manner. In the event, however, that a dispute cannot be resolved
informally, the Consultant and the Company hereby designate the individuals in
the positions named below as "Mediators," who shall have the responsibility for
settling formal disputes. The Mediators agree to use reasonable best efforts to
confer with one another within one week after the formal dispute has been
submitted. If the Mediators are not able to resolve the dispute within two weeks
after its submission, then the dispute will be submitted to the Management
Committee of the Company which shall resolve the dispute fully and finally.
Neither party may have recourse to the judicial system to resolve any such
dispute.
Consultant's Mediator: Frank Guidone, Senior Vice
President, Results Delivery
Company's Mediator: Salvatore J. Bonanno, Chief
Executive Officer
21. Status. The Consultant shall be deemed to be an independent
contractor. The Consultant shall not have the authority to act for or represent
the Company in any way and shall not otherwise be deemed to be an agent of the
Company. Similarly, the Company shall not have the authority to act for or
represent the Consultant in any way and neither shall be deemed to be an agent
of the Consultant. Nothing contained herein shall create or constitute the
Company and the Consultant as members of any partnership, joint venture,
association, syndicate, unincorporated business, or other separate entity, nor
shall be deemed to confer on
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11
any of them any express, implied, or apparent authority to incur any obligation
or liability on behalf of such other entity.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to
be duly executed by its duly authorized representative effective as of the
Effective Date.
ADDRESS: GROVE WORLDWIDE LLC
1565 Buchanan Trail East
P.O. Box 21
Shady Grove, PA 17256 By: /s/ Salvatore J. Bonanno
Attention: Salvatore Bonanno ------------------------
Title: President
----------------------
ADDRESS: GEORGE GROUP, INC.
One Galleria Tower
13355 Noel Road, Suite 1100
Dallas, Texas 75240 By: /s/ James Storie
Attention: James Storie ------------------------
Les Park Title:
----------------------
<PAGE>
Exhibit 10.4
EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of March 5, 1998 between Grove Worldwide
LLC, a Delaware limited liability company ("Grove"), and Salvatore J. Bonanno
("Executive").
WHEREAS, Grove Investors LLC, a Delaware limited liability company (the
"Parent"), Grove Holdings LLC, a Delaware limited liability company
("Holdings"), and Grove (collectively, the "Company") desire that Grove employ
Executive and enter into an agreement embodying the terms of such employment
(the "Agreement"); and
WHEREAS, Executive desires to accept such employment and enter into such
an Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
1. Term of Employment. Executive shall be employed by Grove for a period
commencing on the date of closing (the "Closing") of Grove's acquisition of
stock and/or assets constituting the Grove Worldwide businesses directly or
indirectly owned by Hanson PLC (the "Business") and ending at the end of the day
before the second anniversary of the date of the Closing. The term of this
Agreement (the "Employment Term") shall be extended for successive two-year
periods thereafter unless Executive's employment is earlier terminated pursuant
to Section 9
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2
or unless Executive or Grove shall have given notice of its intention not to
extend the Employment Term not later than six months prior to the end of any
such two-year period (including the initial two-year period).
2. Position.
(a) Executive shall serve as Chief Executive Officer of Grove.
Executive shall be responsible for directing and overseeing all operations of
Grove, shall at all times be the highest ranking officer of Grove, and shall
otherwise perform such duties and exercise such powers commensurate wit his
position as shall be reasonably determined from time to time by the Board of
Directors of Grove (the "Grove Board"). Executive shall report directly to the
Grove Board. Executive's principal place of employment shall be the executive
offices of Grove which are presently located in Shady Grove, Pennsylvania, and
Executive shall perform his duties hereunder principally from such executive
offices of Grove, subject to reasonable travel requirements.
(b) During the Employment Term, Executive shall devote all of his
business time and best efforts to the performance of his duties hereunder and
shall not engage in any other business, profession or occupation for
compensation or otherwise, without the prior written consent of the Grove Board,
with the sole exception that Executive may continue to serve as a member of the
Board of Directors of Foamex International Inc., provided that such service does
not interfere with Executive's ability or availability to perform his duties
hereunder. Nothing in this provision shall limit or restrict Executive from
performing uncompensated services for or serving on the board of, any
charitable, religious or non-profit organization, so
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3
long as it does not interfere with Executive's ability or availability to
perform his duties hereunder, and consent of the Grove Board shall not be
required therefor.
3. Base Salary. Subject to Section 9, during the Employment Term Grove
shall pay Executive a base salary at the initial rate of $500,000 per annum,
payable in installments in accordance with the usual payment practices of Grove.
For fiscal years of Grove beginning after the Closing, Executive shall be
entitled to such increases, if any, in his base salary as may be determined from
time to time in the sole discretion of the Grove Board. Executive's base salary,
as in effect from time to time, is hereinafter referred to as the "Base Salary."
4. Additional Payments.
(a) Additional Bonus. Grove shall pay to Executive $450,000 in cash
on each of March 31, 1999 and March 31, 2000, provided that Executive has not
voluntarily terminated his employment hereunder (other than for Good Reason) and
Executive's employment has not been terminated by Grove for Cause on or prior to
each such payment date.
(b) Payment for Stock Options. No later than 120 days following the
Closing, Grove shall pay to Executive an amount in cash equal to the positive
difference, if any, between the fair market value of shares of stock of the
company for which Executive was employed next preceding his employment by Grove
(the "Previous Employer") under option to Executive which were not exercisable
by Executive as of the announcement of Executive's termination of employment for
the Previous Employer (the "Announcement") and the exercise price for such stock
under such options. The parties agree that as of the Announcement there were
44,754 such
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4
shares under option at an exercise price of $6 7/8 per share and 50,000 such
shares under option at an exercise price of $11 1/8 per share. For purposes of
this paragraph, the fair market value of a share of stock of the Previous
Employer shall be the average closing price of a share of the Previous
Employer's stock on the stock exchange on which such shares are principally
traded for the ten trading days prior to the Announcement or, if a going-private
transaction is announced within 90 days of the Announcement, the price paid for
a share of stock of the Previous Employer in such transaction.
(c) Relocation Costs. Grove shall purchase Executive's home at the
address listed on the signature page hereto from Executive for $675,000, which
represents the cost of such home to Executive plus the cost to Executive of all
improvements to such home which could be added to Executive's cost basis in such
home Grove shall reimburse Executive for his reasonable costs of relocating to
the Shady Grove, Pennsylvania area in accordance with Grove's executive
relocation policy.
5. Cash Incentive Compensation. During the Employment Term with respect to
each fiscal year of Grove ending after the Closing (each a "Fiscal Year"),
Executive shall be entitled to earn and be paid by Grove cash incentive
compensation ("Incentive Compensation"), subject to his continued employment at
the end of such Fiscal Year and the attainment of financial objectives developed
by the Grove Board, all under the terms of a Short Term Incentive Plan to be
established by Grove (the "STIP") attached hereto as Exhibit A. The Target Bonus
for the Executive under the STIP for a Fiscal Year shall be 100% of the
Executive's Base
<PAGE>
5
Salary paid during such Fiscal Year. Under no circumstances may Executive's
Target Bonus for a year be reduced below 100% of his Base Salary for such year.
If there is any inconsistency between the terms of the STIP and the terms of
this Employment Agreement, the terms of this Employment Agreement shall control.
6. Employee Benefits, Business Expenses and Perquisites. During
Executive's employment hereunder, Executive shall be provided employee benefits
(including, without limitation, fringe benefits, vacation, retirement plan
participation, life, health, accident and disability insurance and tax
preparation) (collectively, "Employee Benefits"). Reasonable travel,
entertainment and other business expenses incurred by Executive in the
performance of his duties hereunder shall be reimbursed by Grove in accordance
with Grove's policies as in effect from time to time. During Executive's
employment hereunder, Grove shall pay for Executive's initiation and membership
fees in a country club of Executive's choice in the Shady Grove, Pennsylvania
area.
7. Securities Investment.
(a) On the Closing Date, Executive shall purchase from Holdings a
common membership interest in Holdings for a minimum aggregate purchase price of
$1,500,000 (the "Aggregate Purchase Price") at the same price per Common
Interest as paid by the Parent at the Closing. Such purchased interest is
hereinafter referred to as the "Purchased Interest."
(b) Grove shall provide a loan to Executive in an amount to be
agreed upon between Grove and Executive. The loan shall be evidenced by a full
<PAGE>
6
recourse note in the form attached as Exhibit B hereto (the "Note") and by a
Loan and Pledge Agreement in the form of Exhibit C hereto (the "Pledge
Agreement").
8. Stock Options.
(a) As of the Closing Date Grove shall grant to Executive, pursuant
to a Management Option Plan (the "Option Plan") to be adopted by Holdings, a
nonqualified option (the "Option") to purchase units of membership interest in
Holdings equal to 2.0% of the total common membership interests in Holdings
(determined as of the Closing Date, and after giving effect to the interests
represented by all purchased equity) (the "Option Interest") at a per unit
exercise price (the "Exercise Price") equal to the Parent's per unit cost to
acquire Holdings pursuant to the Purchase Agreement. The terms of the Option
shall be determined under the Option Plan, attached hereto as Exhibit E. Upon
exercise of the Option, (i) Executive's capital account in Holdings shall be
credited with the exercise price paid by Executive and (ii) Executive shall be
entitled to receive special priority allocations of income under the LLC
Agreement so as to cause Executive's capital account balance to be proportionate
(by reference to percentage interests) to the capital account balances
associated with the other equity holders of Holdings. The LLC Agreement shall
provide for such special allocations. This special priority allocation will be
subordinate to the priority allocations in favor of other investors for the
purpose of restoring losses to their capital accounts. If there is any
inconsistency between the terms of the Option Plan and the terms of this
Employment Agreement, the terms of this Employment Agreement shall control.
<PAGE>
7
(b) During Executive's employment on and after March 13, 2006,
Executive may elect to sell to Grove some or all of the Common Interests
purchased by him pursuant to the Option Plan by so notifying Grove, provided
that Grove shall not be required to purchase Common Interests pursuant to this
section with a Fair Market Value in excess of $10 million in any 12-month
period. The purchase price for such Common Interests shall be the Fair Market
Value (as defined in the Option Plan) of such Common Interests on the date of
such sale to Grove.
9. Termination.
(a) For Cause by Grove. (i) Executive's employment hereunder may be
terminated by Grove for "Cause." For purposes of this Agreement, "Cause" shall
mean (I) Executive's failure substantially to perform his duties hereunder or to
follow reasonable, lawful directions of the Grove Board, (II) willful misconduct
or willful malfeasance by Executive in connection with his employment, (III)
Executive's conviction of, or plea of nolo contendere to, any crime constituting
a felony under the laws of the United States or any State thereof, or any other
crime involving moral turpitude or (IV) Executive's material breach of any of
the provisions of this Agreement or the LLC Agreement (or any successor
Agreement). A termination described in clause (III) shall be effective
immediately, and a termination described in clause (I), (II) or (IV) shall be
subject to the following procedures: after receiving the notice, Executive shall
have 10 business days to respond to the notice by either curing the defect or
providing his version or explanation of events. If, notwithstanding Executive's
response, Grove still wishes to terminate Executive's employment for Cause, it
may do so following such 10 business
<PAGE>
8
day period. Such notice must specify why Grove continues to believe Executive is
guilty of the alleged conduct.
(ii) If Executive is terminated for Cause, he shall be
entitled to receive his Base Salary through the date of termination (together
with any Incentive Compensation earned with respect to any previously completed
Fiscal Year which remains unpaid as of such date of termination) and Executive
shall be entitled to no other salary or Incentive Compensation payments under
this Agreement. Any benefits or payments under any other agreement (including
those attached hereto) or employee benefit plan of Grove shall be determined
under the terms of such other agreement or benefit plan.
(b) Disability or Death. (i) Executive's employment hereunder shall
terminate upon his death or, upon 30 days' notice before or after the completion
of the relevant time period, if Executive becomes physically or mentally
incapacitated and is therefore unable (or will as a result thereof, be unable)
for a period of six consecutive months or for an aggregate of nine months in any
18 consecutive month period to perform the essential functions of his job, with
reasonable accommodations (such incapacity is hereinafter referred to as
"Disability"). Any question as to the existence of a Disability as to which
Executive and Grove cannot agree shall be determined in writing by a qualified
independent physician mutually acceptable to Executive and Grove. If Executive
and Grove cannot agree as to a qualified independent physician, each shall
appoint such a physician and those two physicians shall select a third who shall
make such determination in writing. The determination of Disability made in
writing to Grove and Executive shall be final and
<PAGE>
9
conclusive for all purposes of the Agreement. During the period when such
determination is being made, Executive shall remain an employee and be
compensated as such in full; provided that Executive does not unduly prolong or
delay such determination.
(ii) Upon termination of Executive's employment hereunder
during the Employment Term for Disability, Executive shall receive from Grove
(x) his Base Salary (at the rate in effect immediately prior to his termination
of employment) through the end of the month in which such termination occurs,
(y) any Incentive Compensation earned with respect to any previously completed
Fiscal Year which remains unpaid as of such date of termination, and (z) a
pro-rata amount of any Incentive Compensation that would otherwise become due in
respect of the Fiscal Year in which such termination occurs based on the number
of days in such Fiscal Year during which Executive was employed prior to the
termination of employment, calculated in a manner consistent with the STIP and
to be paid to Executive as of the date such Incentive Compensation would
otherwise have been payable. Executive shall be entitled to no other salary or
Incentive Compensation payments under this Agreement. Any benefits or payments
under any other agreement (including those attached hereto) or employee benefit
plan of Grove shall be determined under the terms of such other agreement or
benefit plan.
(iii) Upon termination of Executive's employment hereunder
during the Employment Term as a result of death, Executive's estate shall
receive from Grove (x) his Base Salary at the rate in effect at the time of
Executive's death through the end of the month in which his death occurs, (y)
any Incentive
<PAGE>
10
Compensation earned with respect to any previously completed Fiscal Year which
remains unpaid as of such date of termination, and (z) a pro-rata amount of any
Incentive Compensation that otherwise would become due in respect of the Fiscal
Year in which such termination occurs based on the number of days in such Fiscal
Year during which Executive was employed prior to the termination of employment,
calculated in a manner consistent with the STIP and to be paid to Executive as
of the date such Incentive Compensation would otherwise have been payable.
Executive's estate shall be entitled to no other salary or Incentive
Compensation payments under this Agreement. Any benefits or payments under any
other agreement (including those attached hereto) or employee benefit plan of
Grove shall be determined under the terms of such other agreement or benefit
plan.
(c) Without Cause by Grove or For Good Reason. (i) Executive's
employment may be terminated by Grove other than for Cause during the Employment
Term on 10 business days' written notice. If Executive's employment is
terminated by Grove without Cause (other than by reason of Disability or death)
or by Executive for Good Reason (as defined below), Executive shall receive (w)
continued payment of Base Salary at the rate in effect immediately prior to such
termination for 24 months following such termination, (x) any Incentive
Compensation earned with respect to any previously completed Fiscal Year which
remains unpaid as of such date of termination, (y) an amount of any Incentive
Compensation determined based on monthly EBITDA Targets (as defined in the
STIP), actual results and Base Salary, in each case paid for the completed
months of employment during the Fiscal Year in which such termination occurs
paid within 30 days following such termination and
<PAGE>
11
(z) monthly payments for 24 months equal to 1/12 of Executive's Target Bonus
amount in effect for the year of termination of employment, regardless of actual
operating results during such period. Executive shall be entitled to no other
salary or Incentive Compensation payments under this Agreement. Any benefits or
payments under any other agreement (including those attached hereto) or employee
benefit plan of Grove shall be determined under the terms of such other
agreement or benefit plan.
(ii) For purposes of this Agreement, "Good Reason" shall mean
(A) Any material breach by Grove of the provisions of
this Agreement, including but nor limited to, any reduction by Grove in
Executive's Base Salary or Incentive Compensation opportunity described in
Section 4 to which Executive does not consent;
(B) Any material diminution in Executive's job duties or
responsibilities; or
(C) The relocation of the principal executive offices of
Grove to a location more than 30 miles outside of Shady Grove, Pennsylvania;
provided that any event described above shall not be deemed to constitute Good
Reason unless Executive shall have notified Grove in writing of the occurrence
of such event(s) and Grove shall have failed to have cured or taken steps to
cure such event(s) within 10 business days of its receipt of such written
notice.
(d) Termination by Executive. If Executive terminates his employment
with Grove for any reason (other than for Good Reason) during the
<PAGE>
12
Employment Term, Executive shall be entitled to the same payments he would have
received if his employment had been terminated by Grove for Cause.
(e) Limitation on Certain Payments. In the event Grove reasonably
determines that any amount to be paid to Executive following his employment
under this Agreement or under any other plan or agreement of Grove constitutes a
"parachute payment" under Code section 280G(b)(2), then the amount payable
hereunder and/or under any other plan or agreement of Grove shall be reduced to
the extent Grove reasonably determines to be necessary to ensure that all
amounts payable to Executive are fully deductible by Grove and not subject to
the excise tax described in Code section 4999.
(f) Termination of Agreement Term. Upon the termination of the
Employment Term pursuant to Section 1, Executive's employment shall end. If the
termination of the Employment Term was initiated by Grove, it shall be treated
as Termination of Employment without Cause. If the termination of the Employment
Term was initiated by Executive, it shall be treated as Termination by Executive
Without Good Reason. Upon termination of the Employment Term, Grove shall have
no further obligations to Executive other than to make the payments described in
Section 9. Any continuation of Executive's employment beyond the end of the
Employment Term shall be employment at will which may be terminated by Grove or
Executive at any time and shall not extend any of the provisions of this
Agreement, provided, however, that the provisions of Sections 10, 11, 12 and
13(a) through (d) shall survive any termination of the Employment Term or this
Agreement.
<PAGE>
13
(g) Notice of Termination Any termination of employment or, pursuant
to Section 9(f), this Agreement by Grove or by Executive shall be communicated
by written Notice of Termination to the other party hereto in accordance with
Section 13(i) hereof. For purposes of this Agreement, a "Notice of Termination"
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of employment under
the provision so indicated.
(h) Mitigation. Following the termination of his employment under
any of the above clauses of this Section 9, Executive shall have no obligation
to seek subsequent employment. If Executive does obtain subsequent employment,
Grove shall nevertheless be required to pay Executive in full as set forth
above, and there shall be no offset for monies received by Executive from any
subsequent employment or from any other source.
10. Non-Competition. (a) Executive recognizes that the services to be
performed by him hereunder are special, unique and extraordinary and that, by
reason of his employment hereunder, Executive will acquire confidential
information and trade secrets concerning the operation of Grove. Accordingly,
for all purposes hereunder or in respect hereof, Executive agrees that during
the term of his employment hereunder and for a period of 24 months following
such termination of employment Executive will not, directly or indirectly, as an
officer, director, stockholder, partner, member, associate, employee,
consultant, owner, agent, creditor, co-venturer or otherwise, become or be
interested in or be associated with
<PAGE>
14
any other corporation, firm or business engaged, in any geographical area in
which Grove is engaged during the term of his employment or at the date of his
termination of employment, in a "Competitive Business" with that of Grove at
such time. A Competitive Business shall mean any business which derives 30% or
more of its revenue directly or indirectly from designing, manufacturing,
selling and/or providing customer support for, mobile hydraulic cranes,
self-propelled aerial work platforms and truck-mounted cranes. Executive's
ownership, directly or indirectly, of not more than five percent of the issued
and outstanding stock of any corporation, the shares of which are regularly
traded on a national securities exchange or in the over-the-counter market,
shall not in any event be deemed to be a violation of the provisions of this
Section 10 and the ownership of securities by Executive of Grove shall not be
deemed to be a violation of this Section 10. For purposes of this Section 10 the
term "Grove" shall also mean any affiliate (as such term is defined in Rule 144
promulgated under the Securities Act of 1933, as amended, or any successor rule)
of Grove.
(b) Executive agrees, during the period set forth in paragraph (a),
that be shall not, on behalf of himself or any business he is interested in or
associated with, employ or otherwise engage, or seek to employ or engage, any
senior executive (i.e., direct reports) employed by Grove at any time during the
preceding 12 months.
(c) It is expressly understood and agreed that although Executive
and Grove consider the restrictions contained in this Section 10 to be
reasonable, if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained in
this
<PAGE>
15
Agreement is an unenforceable restriction against Executive, the provisions of
this Agreement shall not be rendered void but shall be deemed amended to apply
as to such maximum time and territory and to such maximum extent as such court
may judicially determine or indicate to be enforceable. Alternatively, if any
court of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to make
it enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
11. Confidentiality. Executive will not at any time (whether during or
after his employment with Grove) disclose or use for his own benefit or purposes
or the benefit or purposes of any other person, firm, partnership, joint
venture, association, corporation or other business organization, entity or
enterprise other than Grove, any trade secrets, information, data, or other
confidential information relating to customers, development programs, costs,
marketing, trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans, or the
business and affairs of Grove generally, and shall not make disparaging
statements about Grove, its businesses, products, officers, employees or owners;
provided, that the foregoing shall not apply (i) to information which is not
unique to Grove or which is generally known to the industry or the public other
than as a result of Executive's breach of this covenant, (ii) to information,
the disclosure of which Executive did not know, and did not have reason to know,
could be damaging to the reputation or business and affairs of Grove, (iii) to
information which Executive is required to disclose to any governmental or
judicial authority, (iv) to
<PAGE>
16
information that could be lawfully obtained, compiled or recreated by a third
party unaffiliated with Grove for a reasonable cost and with reasonable effort;
or (v) information known to Executive prior to his employment with Grove.
Executive agrees that upon termination of his employment with Grove for any
reason, be will return to Grove immediately all memoranda, books, papers, plans,
information, letters and other data, and all copies thereof or therefrom, in any
way relating to the business of Grove, except that he may retain personal notes,
notebooks calendars, address books and diaries. Executive further agrees that he
will not retain or use for his account at any time any trade names, trademark or
other proprietary business designation used or owned in connection with the
business of Grove. For purposes of this Section 11, the term "Grove" shall also
mean any affiliate (as such term is defined in Rule 144 under the Securities Act
of 1933, as amended or any successor rule) of Grove; provided that the
restrictions set forth in this Section 11 shall only apply to Grove's
"affiliates" with respect to confidential information disclosed to Executive in
the performance of his duties hereunder.
12. Specific Performance. Executive acknowledges and agrees that Grove's
remedies at law for a breach or threatened breach of any of the provisions of
Section 10 or 11 would be inadequate and, in recognition of this fact, Executive
agrees that, in the event of such a breach or threatened breach, in addition to
any remedies at law, Grove shall be entitled to obtain equitable relief in the
form of specific performance. temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available;
provided however, the foregoing shall not prevent Executive from contesting the
issuance of any such
<PAGE>
17
injunction on the ground that no violation or threatened violation of Section 10
or 11 has occurred.
13. Miscellaneous.
(a) LLC Agreement. Executive hereby acknowledges that any membership
interest in Grove acquired by Executive pursuant to Section 7 or the Option
described in Section 8 shall be held by Executive subject to the terms and
conditions of the LLC Agreement or any successor agreement thereto. To the
extent the provisions of this Agreement and the Agreements described in the
Exhibits hereto are more restrictive than the provisions set forth in the LLC
Agreement, the provisions of this Agreement and the Agreements described in the
Exhibits hereto shall control.
(b) Other Obligations/Representation by Counsel. Executive
represents and warrants that neither Executive's execution of this Agreement nor
Executive's performance of Executive's obligations hereunder will conflict with,
violate or otherwise be inconsistent with any other contractual obligation,
other than pursuant to the Employment Agreement dated June 26, 1995 between
Executive and the Previous Employer, or, to the best of his knowledge, any other
obligation, that would prohibit Executive from entering into or performing any
of his obligations under this Agreement. Executive represents that he has been
fully represented by counsel in negotiating and entering into this Agreement.
The provisions of this paragraph 13(b) shall survive any termination of this
Agreement.
(c) Governing Law/Arbitration. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
<PAGE>
18
Any controversy or claim arising out of or relating to this Agreement shall be
determined by arbitration conducted in New York in accordance with the
Commercial Rules of the American Arbitration Association then obtaining, and
judgment upon any award rendered may be entered in any court having jurisdiction
thereof. The decision of the arbitrators shall be final and binding upon the
parties hereto.
(d) Indemnification. To the full extent not inconsistent with
applicable law and the Parent's, Holdings' and Grove's governing documents, in
the event that Executive is a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer,
employee or agent of Grove, or is or was serving at the request of Grove, as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, Grove, shall indemnify Executive and hold
him harmless, against all expenses (including reasonable costs and attorneys'
fees), judgments, fines and amounts paid in settlement (with Grove's consent,
not to be unreasonably withheld) actually and reasonably incurred by him, as and
when incurred, in connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of Grove and, with respect to any criminal action or proceeding
reasonably did not believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Executive did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of Grove, or
that, with respect to any
<PAGE>
19
criminal action or proceeding, Executive reasonably believed that his conduct
was unlawful. The provisions of this Section 13(d) shall not be deemed exclusive
of any other rights of indemnification to which Executive may be entitled or
which may be granted to him, and it shall be in addition to any rights of
indemnification to which he may be entitled under any policy of insurance. These
provisions shall continue in effect after Executive has ceased to be an officer
or director of Grove.
(e) Entire Agreement/Amendments. This Agreement, including exhibits,
contains the entire understanding of the parties with respect to the employment
of Executive by Grove. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement may not be amended except by written instrument signed by the parties
hereto.
(f) No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
(g) Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
(h) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the heirs and representatives of Executive and the
assigns and successors of Grove, but neither this Agreement nor any rights or
<PAGE>
20
obligations hereunder shall be assignable or otherwise subject to hypothecation
by Executive (except by will or by operation of the laws of intestate
succession) or by Grove, except that following the Closing Date, Grove may
assign this Agreement to any successor (whether by merger, purchase or
otherwise) to all or substantially all of the stock or assets of, or common
ownership interests in, the Parent, Holdings or Grove, if such successor
expressly agrees to assume, or otherwise assumes by application of law, the
obligations of Grove hereunder.
(i) Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the execution page of this Agreement and
delivered by telecopy with written confirmation of receipt thereof, provided
that all notices to Grove shall be directed to the attention of the Parent with
a copy to the Secretary of Grove, or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
(j) Withholding Taxes. Grove may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.
(k) Third Party Beneficiaries. Nothing in this Agreement shall
create third party beneficiary rights in any person.
<PAGE>
21
(l) Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
(m) Termination of Agreement. If the Closing fails to occur within
180 days of the signing of a definitive agreement to purchase the Business, or
if such signing does not occur within 180 days of the date of this Agreement,
this Agreement shall be of no effect.
<PAGE>
22
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SALVATORE J. BONANNO
837 Lindy Lane
Bala Cynwyd, PA 19004
/s/ SALVATORE J. BONANNO
---------------------------------------
GROVE WORLDWIDE, LLC
By: /s/ Brad Henske
---------------------------------------
Title: President
Grove Holdings LLC
<PAGE>
[LETTERHEAD OF GROVE WORLDWIDE]
Mr. James A. Kolinski July 24, 1997
1373 Lindsay Lane
Hagerstown, MD 21742
PERSONAL & CONFIDENTIAL
Dear Mr. Kolinski:
1. Introduction.
Grove Worldwide (the "Company") believes that the establishment and
maintenance of a sound and vital management of the Company is essential to
the protection and enhancement of the interests of the Company, the
Company's ultimate parent company, Hanson PLC ("Hanson") and Hanson's
stockholders. The Company also recognizes that the possibility of a Change
in Control (as defined in Exhibit A), with the attendant uncertainties and
risks, might result in the departure or distraction of key employees of
the Company to the detriment of the Company, Hanson and Hanson's
stockholders, the Company has determined that it is appropriate to induce
key employees to remain with the Company, and to reinforce and encourage
their continued attention and dedication. Accordingly, subject to Section
2, upon your written acceptance of the terms of this agreement (the
"Agreement") evidenced by your signing below, the Company intends to
provide you the protections set forth herein as of the Effective Date.
The arrangements set out in this Agreement are a private contractual
arrangement with you and do not reflect the severance policy of the
Company to employees generally and accordingly your acceptance of the
terms of this Agreement will constitute your agreement to maintain the
terms of this Agreement confidential.
2. Effective Date and Term.
Notwithstanding anything else herein, this Agreement became effective (the
"Effective Date") as of March 1, 1997. This Agreement shall expire on the
earliest of (i) three (3) years from the Effective Date, provided that if
a Change in Control takes place prior to three (3) years from the
Effective Date, the duration of this Agreement shall be until two (2)
years after the Change in Control; or (ii) subject as otherwise provided
in Section 3 herein the date of your death or the termination of your
employment with the Company whether as a result of Disability (as defined
herein), retirement or any other reason prior to a Change in Control.
Notwithstanding anything in this Agreement to the contrary, if the Company
becomes obligated to make any payment or provide any benefit to you
pursuant to the terms hereof at or prior to the expiration of this
Agreement, then this Agreement shall remain in effect for such purposes
until all of the Company's obligations hereunder are fulfilled.
<PAGE>
GROVE WORLDWIDE
Disability for purposes of this Agreement shall mean your inability to
perform your material duties and responsibilities due to the same or
related physical or mental illness for one hundred and eighty (180)
consecutive days. A termination for Disability shall be deemed to occur
when you are terminated by the Company by written notice while you remain
disabled.
3. Termination Following a Change in Control.
If a Change in Control occurs and your employment is terminated by the
Company without Cause (as defined in Section 5 herein) other than for
Disability or you terminate your employment with the Company for Good
Reason (as defined in Section 4 herein), during the period from the date
of the Change in Control to two (2) years after the date of such Change in
Control, then you shall be entitled to the amounts and benefits provided
in Section 6 herein upon such termination. In addition, notwithstanding
the foregoing, in the event you are either terminated by the Company
without Cause (other than for Disability) or you terminate your employment
for Good Reason, in either case within one hundred and eighty (180) days
prior to the occurrence of a Change in Control (based on an event that
occurred within such one hundred and eighty (180) day period prior to the
occurrence of a Change in Control), such termination shall, upon the
occurrence of a Change in Control, be deemed to be covered under the
Agreement and you shall be entitled to the amounts payable hereunder.
4. Termination for Good Reason.
A termination for Good Reason for purposes of this Agreement shall mean a
termination by you effected by a written notice of termination for Good
Reason given within sixty (60) days after the occurrence of the Good
Reason event. "Good Reason" shall mean the occurrence or failure to cause
the occurrence, as the case may be, without your express written consent,
of (i) any material diminution of your positions, duties or
responsibilities with the Company (except in connection with the
termination of your employment for Cause, Disability, as a result of your
death, or temporarily as a result of your illness or other absence) from
the highest position held within one hundred and eighty (180) days prior
to a Change in Control or the assignment to you of duties or
responsibilities that are inconsistent with your aforementioned highest
position; (ii) your removal from, or the non-reelection to your positions
with the Company held within one hundred and eighty (180) days prior to a
Change in Control; (iii) a relocation of the Company's principal United
States executive offices to a location more than twenty-five (25) miles
from where they are at the time of the Change in Control, or a relocation
by the Company of your principal office away from such principal United
States executive offices; (iv) a reduction by the Company of your rate of
annual base salary to a level below your highest rate of base salary
within one hundred and eighty (180) days prior to the Change in Control;
(v) a failure by Hanson or the Company (A) to continue any bonus plan,
program or arrangement in which you were entitled to participate during
the one hundred and eighty (180) days prior to the
2
<PAGE>
GROVE WORLDWIDE
Change in Control (the "Bonus Plans"), provided that any such Bonus Plans
may be modified at Hanson's or the Company's discretion from time to time
but shall be deemed terminated if plans providing you with substantially
similar benefits are not substituted therefor ("Substitute Plans") or (B)
to consider you a participant in the Bonus Plans or Substitute Plans on
not less than the same target level of award and not more than the same
level of difficulty for achievability of such award as was applicable to
you immediately prior to any change in such plans, in accordance with the
Bonus Plans or Substitute Plans; or (vi) any breach by the Company of any
material provision of this Agreement, unless the applicable circumstances
under (i) through (vi) are fully corrected prior to the date of
termination specified in the notice of termination for Good Reason. The
notice of termination for Good Reason shall provide for a date of
termination not less than fifteen (15) nor more than sixty (60) days after
the date such notice of termination for Good Reason is given.
5. Termination for Cause.
A termination for Cause means a termination by the Company effected by a
written notice of termination for Cause. The term "Cause" shall be limited
to your: (i) willful misconduct with regard to the Company or its
business, assets or employees; (ii) refusal to follow the proper written
direction of the Board of Directors of the Company (the "Board") or a more
senior officer of the Company, provided that the foregoing refusal shall
not be "Cause" if in good faith you believe that such direction is
illegal, unethical or immoral and you promptly so notify the Board or the
more senior officer (whichever is applicable); (iii) conviction of (or
pleading of nolo contendere to) a felony (other than a traffic violation);
(iv) breach of any fiduciary duty owed to the Company or any affiliate; or
(vi) dishonesty, misappropriation or fraud with regard to the Company
(other than good faith expense account disputes). The date of termination
for a termination for Cause shall be the date indicated in the notice of
termination.
6. Compensation on Termination.
If pursuant to Section 3 you are entitled to amounts and benefits under
this Section 6, subject to Section 10, the Company shall pay and provide
to you: (A) in a lump sum within five (5) days after such termination (or,
if such termination occurred within one hundred and eighty (180) days
prior to a Change in Control, within five (5) days after the Change in
Control) (i) two (2) times your highest annual base salary in effect
within one hundred and eighty (180) days prior to the Change in Control,
(ii) two (2) times the highest annual bonus paid or payable (excluding any
top hat payments, if applicable) to you for any of the last two (2)
completed years by the Company or its predecessors, (iii) any
un-reimbursed business expenses for the period prior to termination
payable in accordance with the Company's policies, and (iv) any base
salary, bonus, vacation pay or other deferred compensation accrued or
earned under law or in accordance with the Company's policies applicable
to you but not yet paid; (B) any other amounts or benefits due under the
then applicable employee benefit, incentive or equity plans of Hanson or
the Company applicable to you as shall be
3
<PAGE>
GROVE WORLDWIDE
determined and paid in accordance with such plans, except to the extent
paid pursuant to (A) above; (C) two (2) years of additional service and
compensation credit (at your highest compensation level in the one hundred
and eighty (180) day period prior to the Change in Control) for pension
purposes under any defined benefit type qualified or non-qualified pension
plan or arrangement of the Company and its affiliates applicable to you,
measured from the date of termination of employment and not credited to
the extent that you are otherwise entitled to such credit during such two
(2) year period, which payments shall be made through and in accordance
with the terms of the non-qualified defined benefit pension plan or
arrangement if any then exists, or, if not, in an actuarially equivalent
lump sum (using the actuarial factors then applying in the Company's or
its affiliates' defined benefit plan covering you); (D) an amount equal to
two (2) years of the maximum Company contribution (assuming you deferred
the maximum amount and continued to earn your then current salary)
measured from the date of termination of your employment under any type of
qualified or non-qualified 401(k) plan (payable at the end of each such
year and not payable to the extent otherwise contributed to such plan);
and (E) payment by the Company of the premiums for you (except in the
case of death) and your dependents' health coverage for two (2) years from
the date of termination of your employment under the Company's health
plans which cover the senior executives of the Company or materially
similar benefits (to the extent not otherwise provided), provided that in
the case of termination within one hundred and eighty (180) days prior to
a Change in Control, the obligations under this subpart (E) shall only
exist to the extent that you or your dependents, as the case may be, had
timely elected or timely elect COBRA coverage which continued at the time
of the Change in Control and the obligation with regard to the period
prior to the Change in Control shall be limited to reimbursement of the
COBRA premiums previously paid or due for such period. Any amendment or
termination of benefits, equity or incentive plans within one hundred and
eighty (180) days prior to, or after, a Change in Control that is
detrimental to you shall be ignored with respect to (C), (D) and (E)
above. Payments under (E) above may, at the discretion of the Company, be
made by continuing your participation in the plan as a terminee, by paying
the applicable COBRA premium for you and your dependents, or by covering
you and your dependents under substitute arrangements, provided that, to
the extent you incur tax that you would not have incurred as an active
employee as a result of the aforementioned coverage or the benefits
provided thereunder, you shall receive from the Company an additional
payment in the amount necessary so that you will have no additional cost
for receiving such items or any additional payment.
7. Arbitration.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration conducted in the
City of New York in the State of New York under the Commercial Arbitration
Rules then prevailing of the American Arbitration Association and such
submission shall request the American Arbitration Association to: (i)
appoint an arbitrator experienced and knowledgeable concerning the matter
then in dispute; (ii) require the testimony to be transcribed; (iii)
require the
4
<PAGE>
GROVE WORLDWIDE
award to be accompanied by findings of fact and the statement of reasons
for the decision; and (iv) request the matter to be handled by and in
accordance with the expedited procedures provided for in the Commercial
Arbitration Rules. The determination of the arbitrators, which shall be
based upon a de novo interpretation of this Agreement, shall be final and
binding and judgment may be entered on the arbitrators' award in any court
having jurisdiction. All costs of the American Arbitration Association and
the arbitrator shall be borne as determined by the arbitrator.
8. Legal Fees.
In the event the Company does not make the payments due hereunder on a
timely basis and you collect any part or all of the payments provided for
hereunder or otherwise successfully enforce the terms of this Agreement by
or through a lawyer or lawyers, the Company shall pay all costs of such
collection or enforcement, including reasonable legal fees and other
reasonable fees and expenses which you may incur. The Company shall pay to
you interest at the prime lending rate as announced from time to time by
Citibank, N.A. on all or any part of any amount to be paid to you
hereunder that is not paid when due. The prime rate for each calendar
quarter shall be the prime rate in effect on the first day of the calendar
quarter.
9. No Duty to Mitigate/Set-off.
The Company agrees that if your employment with the Company is terminated
pursuant to this Agreement during the term of this Agreement, you shall
not be required to seek other employment or to attempt in any way to
reduce any amounts payable to you by the Company pursuant to this
Agreement. Further, the amount of any payment or benefit provided for in
this Agreement shall not be reduced by any compensation earned by you or
benefit provided to you as the result of employment by another employer or
otherwise. Except as otherwise provided herein and apart from any
disagreement between you and the Company concerning interpretation of this
Agreement or any term or provision hereof, the Company's obligations to
make the payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any circumstances,
including without limitation, any set-off, counterclaim, recoupment,
defense or other right which the Company may have against you. The amounts
due under Section 6 are inclusive, and in lieu of, any amounts payable
under any other salary continuation or cash severance arrangement of the
Company on termination of employment that is or may become applicable to
you and to the extent paid or provided under any other such arrangement
shall be offset against the amount due hereunder.
10. Successors; Binding Agreement.
In addition to any obligations imposed by law upon any successor to the
Company, the Company will require any successor (whether direct or
indirect, by purchase, merger,
5
<PAGE>
GROVE WORLDWIDE
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree in writing to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place and this Agreement shall inure to the benefit of such successor. Any
such assignment shall not relieve the Company from liability hereunder.
This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees. If you die while any amount
would still be payable to you hereunder if you had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of the Agreement to the executors, personal
representatives, estate trustees, or administrators of your estate. This
Agreement is personal to you and neither this Agreement nor any rights
hereunder may be assigned by you.
11. Notices.
Any notice or other communication required or permitted hereunder shall be
in writing and shall be delivered personally, or sent by registered mail,
postage prepaid as follows:
(i) If to the Company, at: Grove Worldwide, P 0 Box 21, Shady
Grove, PA 17256-0021, USA
Attention: Chief Executive Officer
(ii) If to you, to the last shown address on the books of the
Company.
Any such notice shall be deemed given when so delivered personally, or, if
mailed, five (5) days after the date of deposit (in the form of registered
or certified mail, return receipt requested, postage prepaid) in the
United States postal system. Any party may by notice designate another
address or person for receipt of notices hereunder.
12. Not an Agreement of Employment.
This is not an agreement assuring employment and the Company reserves the
right to terminate your employment at any time with or without Cause,
subject to the payment provisions hereof if such termination is after, or
within one hundred and eighty (180) days prior to, a Change in Control.
You acknowledge that you are aware that you shall have no claim against
the Company hereunder or for deprivation of the right to receive the
amounts hereunder as a result of any termination that does not
specifically satisfy the requirements hereof. The foregoing shall not
affect your rights under any other agreement with the Company.
6
<PAGE>
GROVE WORLDWIDE
13. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision
shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. This Agreement constitutes
the entire Agreement between the parties hereto pertaining to the subject
matter hereof and supersedes any prior agreements between the Company and
you. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. All
references to any law shall be deemed also to refer to any successor
provisions to such laws.
14. Acknowledgment.
You acknowledge that you: (a) have read this Agreement, understand its
terms and that it has been entered into by you voluntarily; (b) that the
payments to be made hereunder constitute additional compensation to you;
(c) have had sufficient opportunity to consider this Agreement and discuss
it with advisors of your choice, including your attorney and accountants;
(d) have been informed that you have the right to consider this Agreement
for a period of at least 21 days prior to entering into it; (e) have taken
sufficient time to consider this Agreement before signing it; and (f) have
the right to revoke this Agreement for a period of 7 days following the
Agreement's execution by giving written notice to the Company.
15. Release.
As a material inducement to the Company to enter into this Agreement, you
agree for yourself and your heirs, successors, and assigns that upon
receipt of the amounts payable under this Agreement you hereby release and
forever discharge the Company and any parent or affiliate thereof, its or
their respective directors, officers, employees, agents, representatives,
successors and assigns, from any and all claims, demands, actions,
liability, damages, back pay, attorney fees, or rights of any and every
kind or nature, accrued or unaccrued, known or unknown, arising out of or
in any manner relating to your employment and termination of employment
with the Company or its parents or affiliates including without limitation
any alleged violation of Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act of 1967, the Employee Retirement
Income Security Act of 1974, as the same may have been or be amended from
time to time or any other federal, state or local law, regulation or
ordinance (except for your existing accrued rights under the Company's (or
any affiliate of the Company) pension plan, saving plan, health and
welfare benefit plans, and the rights already granted to you under the
Stock Option Scheme of Hanson PLC and/or any long term incentive plan of
the Company, and except as expressly set forth
7
<PAGE>
GROVE WORLDWIDE
herein). If requested by the Company you agree to execute a further formal
waiver and release at the time of termination of your employment and the
payment by the Company of the amounts payable under this Agreement in the
terms set out or substantially in the terms set out in this Section 16.
16. Withholding Taxes.
The Company may withhold from any and all amounts payable under this
Agreement such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
17. Governing Law.
This Agreement shall be construed, interpreted, and governed in accordance
with the laws of the State of Delaware without reference to rules relating
to conflicts of law.
Very truly yours,
By: /s/ Robert C. Stift
------------------------------------
Robert C. Stift
Chairman and Chief Executive Officer
Agreed and Accepted this
24th day of July 1997
/s/ James A. Kolinski
---------------------------------------
James A. Kolinski
8
<PAGE>
GROVE WORLDWIDE
EXHIBIT A
Change in Control
For purposes of this Agreement, the term "Change in Control" shall mean the sale
or transfer, directly or indirectly, of substantially all of the Company's
business and assets to an entity not affiliated with Hanson PLC, or the
purchase, directly or indirectly, by an entity not affiliated with Hanson PLC of
more than 50% of the outstanding shares of the common stock of the Company. For
purposes of this definition, an affiliate of Hanson PLC refers to any person or
business entity, directly or indirectly, controlling, controlled by, or under
the common control with Hanson PLC, with the term "control" referring to any
person or business entity owning, directly or indirectly, more than a 50% equity
interest in the controlled entity or possessing the power to direct or cause the
direction of the management or policies of the controlled entity.
Only one (1) Change in Control may take place under this Agreement.
9
<PAGE>
[LETTERHEAD OF GROVE WORLDWIDE]
Mr. Joseph A. Shull July 24, 1997
11495 Pine Hill Drive
Waynesboro, PA 17268
PERSONAL & CONFIDENTIAL
Dear Mr. Shull:
1. Introduction.
Grove Worldwide (the "Company") believes that the establishment and
maintenance of a sound and vital management of the Company is essential to
the protection and enhancement of the interests of the Company, the
Company's ultimate parent company, Hanson PLC ("Hanson") and Hanson's
stockholders. The Company also recognizes that the possibility of a Change
in Control (as defined in Exhibit A), with the attendant uncertainties and
risks, might result in the departure or distraction of key employees of
the Company to the detriment of the Company, Hanson and Hanson's
stockholders, the Company has determined that it is appropriate to induce
key employees to remain with the Company, and to reinforce and encourage
their continued attention and dedication. Accordingly, subject to Section
2, upon your written acceptance of the terms of this agreement (the
"Agreement") evidenced by your signing below, the Company intends to
provide you the protections set forth herein as of the Effective Date.
The arrangements set out in this Agreement are a private contractual
arrangement with you and do not reflect the severance policy of the
Company to employees generally and accordingly your acceptance of the
terms of this Agreement will constitute your agreement to maintain the
terms of this Agreement confidential.
2. Effective Date and Term.
Notwithstanding anything else herein, this Agreement became effective (the
"Effective Date") as of March 1, 1997. This Agreement shall expire on the
earliest of (i) three (3) years from the Effective Date, provided that if
a Change in Control takes place prior to three (3) years from the
Effective Date, the duration of this Agreement shall be until two (2)
years after the Change in Control; or (ii) subject as otherwise provided
in Section 3 herein the date of your death or the termination of your
employment with the Company whether as a result of Disability (as defined
herein), retirement or any other reason prior to a Change in Control.
Notwithstanding anything in this Agreement to the contrary, if the Company
becomes obligated to make any payment or provide any benefit to you
pursuant to the terms hereof at or prior to the expiration of this
Agreement, then this Agreement shall remain in effect for such purposes
until all of the Company's obligations hereunder are fulfilled.
<PAGE>
GROVE WORLDWIDE
Disability for purposes of this Agreement shall mean your inability to
perform your material duties and responsibilities due to the same or
related physical or mental illness for one hundred and eighty (180)
consecutive days. A termination for Disability shall be deemed to occur
when you are terminated by the Company by written notice while you remain
disabled.
3. Termination Following a Change in Control.
If a Change in Control occurs and your employment is terminated by the
Company without Cause (as defined in Section 5 herein) other than for
Disability or you terminate your employment with the Company for Good
Reason (as defined in Section 4 herein), during the period from the date
of the Change in Control to two (2) years after the date of such Change in
Control, then you shall be entitled to the amounts and benefits provided
in Section 6 herein upon such termination. In addition, notwithstanding
the foregoing, in the event you are either terminated by the Company
without Cause (other than for Disability) or you terminate your employment
for Good Reason, in either case within one hundred and eighty (180) days
prior to the occurrence of a Change in Control (based on an event that
occurred within such one hundred and eighty (180) day period prior to the
occurrence of a Change in Control), such termination shall, upon the
occurrence of a Change in Control, be deemed to be covered under the
Agreement and you shall be entitled to the amounts payable hereunder.
4. Termination for Good Reason.
A termination for Good Reason for purposes of this Agreement shall mean a
termination by you effected by a written notice of termination for Good
Reason given within sixty (60) days after the occurrence of the Good
Reason event. "Good Reason" shall mean the occurrence or failure to cause
the occurrence, as the case may be, without your express written consent,
of (i) any material diminution of your positions, duties or
responsibilities with the Company (except in connection with the
termination of your employment for Cause, Disability, as a result of your
death, or temporarily as a result of your illness or other absence) from
the highest position held within one hundred and eighty (180) days prior
to a Change in Control or the assignment to you of duties or
responsibilities that are inconsistent with your aforementioned highest
position; (ii) your removal from, or the non-reelection to your positions
with the Company held within one hundred and eighty (180) days prior to a
Change in Control; (iii) a relocation of the Company's principal United
States executive offices to a location more than twenty-five (25) miles
from where they are at the time of the Change in Control, or a relocation
by the Company of your principal office away from such principal United
States executive offices; (iv) a reduction by the Company of your rate of
annual base salary to a level below your highest rate of base salary
within one hundred and eighty (180) days prior to the Change in Control;
(v) a failure by Hanson or the Company (A) to continue any bonus plan,
program or arrangement in which you were entitled to participate during
the one hundred and eighty (180) days prior to the
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Change in Control (the "Bonus Plans"), provided that any such Bonus Plans
may be modified at Hanson's or the Company's discretion from time to time
but shall be deemed terminated if plans providing you with substantially
similar benefits are not substituted therefor ("Substitute Plans") or (B)
to consider you a participant in the Bonus Plans or Substitute Plans on
not less than the same target level of award and not more than the same
level of difficulty for achievability of such award as was applicable to
you immediately prior to any change in such plans, in accordance with the
Bonus Plans or Substitute Plans; or (vi) any breach by the Company of any
material provision of this Agreement, unless the applicable circumstances
under (i) through (vi) are fully corrected prior to the date of
termination specified in the notice of termination for Good Reason. The
notice of termination for Good Reason shall provide for a date of
termination not less than fifteen (15) nor more than sixty (60) days after
the date such notice of termination for Good Reason is given.
5. Termination for Cause.
A termination for Cause means a termination by the Company effected by a
written notice of termination for Cause. The term "Cause" shall be limited
to your: (i) willful misconduct with regard to the Company or its
business, assets or employees; (ii) refusal to follow the proper written
direction of the Board of Directors of the Company (the "Board") or a more
senior officer of the Company, provided that the foregoing refusal shall
not be "Cause" if in good faith you believe that such direction is
illegal, unethical or immoral and you promptly so notify the Board or the
more senior officer (whichever is applicable); (iii) conviction of (or
pleading of nolo contendere to) a felony (other than a traffic violation);
(iv) breach of any fiduciary duty owed to the Company or any affiliate; or
(vi) dishonesty, misappropriation or fraud with regard to the Company
(other than good faith expense account disputes). The date of termination
for a termination for Cause shall be the date indicated in the notice of
termination.
6. Compensation on Termination.
If pursuant to Section 3 you are entitled to amounts and benefits under
this Section 6, subject to Section 10, the Company shall pay and provide
to you: (A) in a lump sum within five (5) days after such termination (or,
if such termination occurred within one hundred and eighty (180) days
prior to a Change in Control, within five (5) days after the Change in
Control) (i) two (2) times your highest annual base salary in effect
within one hundred and eighty (180) days prior to the Change in Control,
(ii) two (2) times the highest annual bonus paid or payable (excluding any
top hat payments, if applicable) to you for any of the last two (2)
completed years by the Company or its predecessors, (iii) any
un-reimbursed business expenses for the period prior to termination
payable in accordance with the Company's policies, and (iv) any base
salary, bonus, vacation pay or other deferred compensation accrued or
earned under law or in accordance with the Company's policies applicable
to you but not yet paid; (B) any other amounts or benefits due under the
then applicable employee benefit, incentive or equity plans of Hanson or
the Company applicable to you as shall be
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determined and paid in accordance with such plans, except to the extent
paid pursuant to (A) above; (C) two (2) years of additional service and
compensation credit (at your highest compensation level in the one hundred
and eighty (180) day period prior to the Change in Control) for pension
purposes under any defined benefit type qualified or non-qualified pension
plan or arrangement of the Company and its affiliates applicable to you,
measured from the date of termination of employment and not credited to
the extent that you are otherwise entitled to such credit during such two
(2) year period, which payments shall be made through and in accordance
with the terms of the non-qualified defined benefit pension plan or
arrangement if any then exists, or, if not, in an actuarially equivalent
lump sum (using the actuarial factors then applying in the Company's or
its affiliates' defined benefit plan covering you); (D) an amount equal to
two (2) years of the maximum Company contribution (assuming you deferred
the maximum amount and continued to earn your then current salary)
measured from the date of termination of your employment under any type of
qualified or non-qualified 401(k) plan (payable at the end of each such
year and not payable to the extent otherwise contributed to such plan);
and (E) payment by the Company of the premiums for you (except in the case
of death) and your dependents' health coverage for two (2) years from the
date of termination of your employment under the Company's health plans
which cover the senior executives of the Company or materially similar
benefits (to the extent not otherwise provided), provided that in the case
of termination within one hundred and eighty (180) days prior to a Change
in Control, the obligations under this subpart (E) shall only exist to the
extent that you or your dependents, as the case may be, had timely elected
or timely elect COBRA coverage which continued at the time of the Change
in Control and the obligation with regard to the period prior to the
Change in Control shall be limited to reimbursement of the COBRA premiums
previously paid or due for such period. Any amendment or termination of
benefits, equity or incentive plans within one hundred and eighty (180)
days prior to, or after, a Change in Control that is detrimental to you
shall be ignored with respect to (C), (D) and (E) above. Payments under
(E) above may, at the discretion of the Company, be made by continuing
your participation in the plan as a terminee, by paying the applicable
COBRA premium for you and your dependents, or by covering you and your
dependents under substitute arrangements, provided that, to the extent you
incur tax that you would not have incurred as an active employee as a
result of the aforementioned coverage or the benefits provided thereunder,
you shall receive from the Company an additional payment in the amount
necessary so that you will have no additional cost for receiving such
items or any additional payment.
7. Arbitration.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration conducted in the
City of New York in the State of New York under the Commercial Arbitration
Rules then prevailing of the American Arbitration Association and such
submission shall request the American Arbitration Association to: (i)
appoint an arbitrator experienced and knowledgeable concerning the matter
then in dispute; (ii) require the testimony to be transcribed; (iii)
require the
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award to be accompanied by findings of fact and the statement of reasons
for the decision; and (iv) request the matter to be handled by and in
accordance with the expedited procedures provided for in the Commercial
Arbitration Rules. The determination of the arbitrators, which shall be
based upon a de novo interpretation of this Agreement, shall be final and
binding and judgment may be entered on the arbitrators' award in any court
having jurisdiction. All costs of the American Arbitration Association and
the arbitrator shall be borne as determined by the arbitrator.
8. Legal Fees.
In the event the Company does not make the payments due hereunder on a
timely basis and you collect any part or all of the payments provided for
hereunder or otherwise successfully enforce the terms of this Agreement by
or through a lawyer or lawyers, the Company shall pay all costs of such
collection or enforcement, including reasonable legal fees and other
reasonable fees and expenses which you may incur. The Company shall pay to
you interest at the prime lending rate as announced from time to time by
Citibank, N.A. on all or any part of any amount to be paid to you
hereunder that is not paid when due. The prime rate for each calendar
quarter shall be the prime rate in effect on the first day of the calendar
quarter.
9. No Duty to Mitigate/Set-off.
The Company agrees that if your employment with the Company is terminated
pursuant to this Agreement during the term of this Agreement, you shall
not be required to seek other employment or to attempt in any way to
reduce any amounts payable to you by the Company pursuant to this
Agreement. Further, the amount of any payment or benefit provided for in
this Agreement shall not be reduced by any compensation earned by you or
benefit provided to you as the result of employment by another employer or
otherwise. Except as otherwise provided herein and apart from any
disagreement between you and the Company concerning interpretation of this
Agreement or any term or provision hereof, the Company's obligations to
make the payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any circumstances,
including without limitation, any set-off, counterclaim, recoupment,
defense or other right which the Company may have against you. The amounts
due under Section 6 are inclusive, and in lieu of, any amounts payable
under any other salary continuation or cash severance arrangement of the
Company on termination of employment that is or may become applicable to
you and to the extent paid or provided under any other such arrangement
shall be offset against the amount due hereunder.
10. Successors; Binding Agreement.
In addition to any obligations imposed by law upon any successor to the
Company, the Company will require any successor (whether direct or
indirect, by purchase, merger,
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consolidation or otherwise) to all or substantially all of the business
amid/or assets of the Company to expressly assume and agree in writing to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place and this Agreement shall inure to the benefit of such successor. Any
such assignment shall not relieve the Company from liability hereunder.
This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees. If you die while any amount
would still be payable to you hereunder if you had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of the Agreement to the executors, personal
representatives, estate trustees, or administrators of your estate. This
Agreement is personal to you and neither this Agreement nor any rights
hereunder may be assigned by you.
11. Notices.
Any notice or other communication required or permitted hereunder shall be
in writing and shall be delivered personally, or sent by registered mail,
postage prepaid as follows:
(i) If to the Company, at: Grove Worldwide, P 0 Box 21, Shady
Grove, PA 17256-0021, USA
Attention: Chief Executive Officer
(ii) If to you, to the last shown address on the books of the
Company.
Any such notice shall be deemed given when so delivered personally, or, if
mailed, five (5) days after the date of deposit (in the form of registered
or certified mail, return receipt requested, postage prepaid) in the
United States postal system. Any party may by notice designate another
address or person for receipt of notices hereunder.
12. Not an Agreement of Employment.
This is not an agreement assuring employment and the Company reserves the
right to terminate your employment at any time with or without Cause,
subject to the payment provisions hereof if such termination is after, or
within one hundred and eighty (180) days prior to, a Change in Control.
You acknowledge that you are aware that you shall have no claim against
the Company hereunder or for deprivation of the right to receive the
amounts hereunder as a result of any termination that does not
specifically satisfy the requirements hereof. The foregoing shall not
affect your rights under any other agreement with the Company.
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13. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision
shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. This Agreement constitutes
the entire Agreement between the parties hereto pertaining to the subject
matter hereof and supersedes any prior agreements between the Company and
you. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. All
references to any law shall be deemed also to refer to any successor
provisions to such laws.
14. Acknowledgment.
You acknowledge that you: (a) have read this Agreement, understand its
terms and that it has been entered into by you voluntarily; (b) that the
payments to be made hereunder constitute additional compensation to you;
(c) have had sufficient opportunity to consider this Agreement and discuss
it with advisors of your choice, including your attorney and accountants;
(d) have been informed that you have the right to consider this Agreement
for a period of at least 21 days prior to entering into it; (e) have taken
sufficient time to consider this Agreement before signing it; and (f) have
the right to revoke this Agreement for a period of 7 days following the
Agreement's execution by giving written notice to the Company.
15. Release.
As a material inducement to the Company to enter into this Agreement, you
agree for yourself and your heirs, successors, and assigns that upon
receipt of the amounts payable under this Agreement you hereby release and
forever discharge the Company and any parent or affiliate thereof, its or
their respective directors, officers, employees, agents, representatives,
successors and assigns, from any and all claims, demands, actions,
liability, damages, back pay, attorney fees, or rights of any and every
kind or nature, accrued or unaccrued, known or unknown, arising out of or
in any manner relating to your employment and termination of employment
with the Company or its parents or affiliates including without limitation
any alleged violation of Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act of 1967, the Employee Retirement
Income Security Act of 1974, as the same may have been or be amended from
time to time or any other federal, state or local law, regulation or
ordinance (except for your existing accrued rights under the Company's (or
any affiliate of the Company) pension plan, saving plan, health and
welfare benefit plans, and the rights already granted to you under the
Stock Option Scheme of Hanson PLC and/or any long term incentive plan of
the Company, and except as expressly set forth
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herein). If requested by the Company you agree to execute a further formal
waiver and release at the time of termination of your employment and the
payment by the Company of the amounts payable under this Agreement in the
terms set out or substantially in the terms set out in this Section 16.
16. Withholding Taxes.
The Company may withhold from any and all amounts payable under this
Agreement such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
17. Governing Law.
This Agreement shall be construed, interpreted, and governed in accordance
with the laws of the State of Delaware without reference to rules relating
to conflicts of law.
Very truly yours,
By: /s/ Robert C. Stift
-----------------------------
Robert C. Stift
Chairman and Chief Executive Officer
Agreed and Accepted this
24th day of July 1997
/s/ Joseph A. Shull
--------------------------------
Joseph A. Shull
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EXHIBIT A
Change in Control
For purposes of this Agreement, the term "Change in Control" shall mean the sale
or transfer, directly or indirectly, of substantially all of the Company's
business and assets to an entity not affiliated with Hanson PLC, or the
purchase, directly or indirectly, by an entity not affiliated with Hanson PLC of
more than 50% of the outstanding shares of the common stock of the Company. For
purposes of this definition, an affiliate of Hanson PLC refers to any person or
business entity, directly or indirectly, controlling, controlled by, or under
the common control with Hanson PLC, with the term "control" referring to any
person or business entity owning, directly or indirectly, more than a 50% equity
interest in the controlled entity or possessing the power to direct or cause the
direction of the management or policies of the controlled entity.
Only one (1) Change in Control may take place under this Agreement.
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[Logo] GROVE(R) [Logo]
worldwide
Ref: ChgCtl/letter 1.GD.ll0
July 25, 1997
Personal
Robert C Stift Esq
Chairman & CEO
Grove Worldwide
1565 Buchanan Trail East (Rt. 16)
Shady Grove
PA 17256-0021
Dear Bob
1. Introduction.
The Company recognises that the possibility of a Change in Control (as
defined in Part II of Exhibit A) of Kidde Industries Inc. (the "Company")
or a Change in Control of Hanson, with the attendant uncertainties and
risks, might result in the departure or distraction of key employees of
the Company to the detriment of the Company, Hanson and its stockholders.
In light of the possibility of a Change in Control of the Company or
Hanson, the Company has determined that it is appropriate to induce key
employees to remain with the Company, and to reinforce and encourage their
continued attention and dedication. Accordingly, upon your written
acceptance of the terms and conditions of this agreement (the "Agreement")
evidenced by signing below, the Company intends to provide you the
protections set forth herein as of the Effective Date set forth in Section
8. Capitalized terms not defined in the body of this Agreement shall have
the
- --------------------------------------------------------------------------------
P.O. Box 21 Shady Grove, Pennsylvania 17256 717-597-8121 Fax: 717-593-5001
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meanings set forth in Exhibit A hereto, which is incorporated herein and
made a part of this Agreement.
2. Termination Following a Change in Control.
(a) If a Change in Control of the Company occurs on or after the Effective
Date and your employment is terminated during the Post Change in Control
Period (i) by the Company without Cause (ii) by you for Good Reason or
without Good Reason, (iii) due to your death, (iv) due to your Disability,
or (v) due to your Retirement, then you shall be entitled to the amounts
and benefits provided in Section 3 herein. Furthermore, if a Change in
Control occurs on or after the Effective Date and your employment was
terminated within the Pre Change in Control Period (i) by the Company
without Cause, (ii) by you for Good Reason (based on an event that
occurred within the Pre Change in Control Period), or (iii) due to your
death, you shall be entitled to the amounts and benefits provided in
Section 3 herein.
(b) If a Change in Control of Hanson occurs on or after the Effective Date and
your employment was terminated within the Pre Change in Control Period or
is terminated during the Post-Change in Control Period (i) by the Company
without Cause or (ii) by you for Good Reason then you shall be entitled to
the amounts and benefits provided in Section 3 herein.
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3. Compensation on Change in Control Termination
If pursuant to Section 2 you are entitled to amounts and benefits under
this Section 3, the Company shall, subject to Section 6, pay and provide
to you: (A) in a lump sum within five (5) days after such termination (or,
if such termination occurred during the Pre Change in Control Period,
within five (5) days after the Change in Control) (i) three (3) times your
highest annual base salary in effect within one-hundred and eighty (180)
days prior to the Change in Control, (ii) three (3) times the highest
annual bonus paid or payable to you for any of the last three (3)
completed years by the Company (which shall in no event include amounts
contributed or allocated by the Company on your behalf or paid to you
under any supplemental executive bonus plans applicable to you,
(including, without limitation, the 1993 or 1996 HI Long Term Incentive
Plans, any other plan commonly referred to by the Company as a "top-hat"
plan or any equity related plan)), (iii) any unreimbursed business
expenses for the period prior to termination payable in accordance with
the Company's policies, and (iv) any base salary, bonus, vacation pay or
other deferred compensation accrued or earned under law or in accordance
with the Company's policies applicable to you but not yet paid; (B) any
other amounts or benefits due under the then employee benefit, equity or
incentive plans applicable to you as shall be determined and paid in
accordance with such plans; (C) three (3) years of additional service and
compensation credit (at your highest compensation level in the one-hundred
and eighty (180) day period prior to the Change in Control) for pension
purposes under any defined benefit type qualified or nonqualified pension
plan or arrangement of the Company and its affiliates applicable to
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you, measured from the date of termination of employment and not credited
to the extent that you are otherwise entitled to such credit during such
three (3) year period, which payments shall be made through and in
accordance with the terms of the nonqualified defined benefit pension plan
or arrangement if any then exists, or, if not, in an actuarially
equivalent lump sum (using the actuarial factors then applying in the
Company's defined or its affiliates' benefit plan covering you); (D) an
amount equal to three (3) years of the maximum Company contribution
(assuming you deferred the maximum amount and continued to earn your then
current salary), measured from the date of termination of employment under
any type of qualified or nonqualified 401(k) plan (payable at the end of
each such year and not payable to the extent otherwise contributed to such
plan); and (E) payment by the Company of the premiums for you (except in
the case of your death) and your dependents' health coverage for three (3)
years from the date of termination of your employment under the Company's
health plans which cover the senior executives of the Company or
materially similar benefits (to the extent not otherwise provided),
provided that in the case of termination within one hundred eighty (180)
days prior to a Change in Control, the obligations under this subpart (E)
shall only exist to the extent that you or your dependents, as the case
may be, had timely elected or timely elect COBRA coverage which continued
at the time of the Change in Control and the obligation with regard to the
period prior to the Change in Control shall be limited to reimbursement of
the COBRA premiums previously paid or due for such period. Payments under
(E) above may, at the discretion of the Company, be made by continuing
your participation in the plan as a terminee, by paying
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the applicable COBRA premium for you and your dependents, or by covering
you and your dependents under substitute arrangements, provided that, to
the extent you incur tax tat you would not have incurred as an active
employee as a result of the aforementioned coverage or the benefits
provided thereunder, you shall receive from the Company an additional
payment in the amount necessary so that you will have no additional cost
for receiving such items or any additional payment. Section 4 hereof shall
also continue to apply in all instances.
4. Indemnification
(a) The Company and Hanson, jointly and severally, agree that if you are
made a party to or threatened to be made a party to any action, suit
or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that you are
or were a director or officer of the Company or Hanson, and/or any
other affiliate of any of such companies, or are or were serving at
the request of any of such companies as a director, officer, member,
employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including,
without limitation, service with respect to employee benefit plans,
whether or not the basis of such Proceeding is alleged action in an
official capacity as a director, officer, member, employee,
fiduciary or agent while serving at a director, officer, member,
employee, fiduciary or agent, you shall be indemnified and held
harmless by the Company and Hanson to the fullest extent authorized
by the law applicable to
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the relevant company, as the same exists or may hereafter be
amended, against all Expenses (as defined below) incurred or
suffered by you in connection therewith, and such indemnification
shall continue as to you even if you have ceased to be an officer,
director, member, fiduciary or agent, or are no longer employed by
the Company, and shall inure to the benefit of your heirs, executors
and administrators. With respect to the obligations set forth in
this Section 4, the Company and Hanson shall become liable hereunder
with respect to any Proceeding which arises out of or relates to
events occurring on or after the Effective Date except to the extent
that the liability relates to service with or for another assignee
under Section 8 hereof (in which case such assignee shall be
liable).
(b) As used in this Agreement, the term "Expenses" shall include,
without limitation, damages, losses, judgements, liabilities, fines,
penalties, excise taxes, settlements and reasonable costs,
reasonable attorneys' fees, reasonable accountants' fees, and
reasonable disbursements and costs of attachment or similar bonds,
investigations, and any reasonable expenses of establishing a right
to indemnification under this Agreement.
(c) Expenses incurred by you in connection with any Proceeding shall be
paid by the Company and Hanson in advance upon your request and the
giving by you of any undertakings required by applicable law.
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(d) You shall give the Company and Hanson prompt notice of any claim
made against you for which indemnity will or could be sought under
this Agreement. In addition, you shall give the Company and Hanson
such information and cooperation as it may reasonably require and as
shall be within your power and at such times and places as are
reasonably convenient for you.
(e) With respect to any Proceeding as to which you notify the Company
and Hanson of the commencement thereof: (i) the company will be
entitled to participate therein at its own expense; and (ii) except
as otherwise provided below, to the extent that it may wish, the
company jointly with any other indemnifying party similarly notified
will be entitled to assume the defense thereof.
(f) The Company and Hanson shall not be liable to indemnify you under
this Agreement for any amounts paid in settlement of any Proceeding
effected without its written consent. Neither the Company nor Hanson
shall settle any Proceeding in any manner which would impose any
penalty or limitation on you without your written consent. Neither
the Company, Hanson nor you will unreasonably withhold or delay
their consent to any proposed settlement.
(g) The right to indemnification and the payment of expenses incurred in
defending a Proceeding in advance of its final disposition conferred
in this Section 4 shall not be exclusive of any other right which
you may have or hereafter may acquire under any statute, provision
of the certificate of incorporation or by-
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laws of the company, agreement, vote of stockholders or
disinterested directors or otherwise.
5. Legal Fees
In the event that a claim for payment or benefits under this Agreement is
disputed as a result of events which occurred after a Change in Control,
the Company shall pay all reasonable attorney, accountant and other
professional fees and reasonable expenses incurred by you in pursuing such
claim, unless the claim by you is found to be frivolous by any court or
arbitrator.
6. No Duty to Mitigate/Set-off
The Company agrees that if your employment with the Company is terminated
pursuant to this Agreement during the term of this Agreement, you shall
not be required to seek other employment or to attempt in any way to
reduce any amounts payable to you by the Company pursuant to this
Agreement. Further, the amount of any payment or benefit provided for in
this Agreement shall not be reduced by any compensation earned by you or
benefit provided to you as the result of employment by another employer or
otherwise. Except as otherwise provided herein and apart from any
disagreement between you and the Company concerning interpretation of this
Agreement or any term or provision hereof, the Company's obligations to
make the payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any circumstances,
including without limitation, any set-off, counterclaim, recoupment,
defense or other right which the Company may have
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against you. The amounts due under Section 3 are inclusive, and in lieu
of, any amounts payable under any other salary continuation or cash
severance arrangement of the Company on termination of employment that is
or may become applicable to you and to the extent paid or provided under
any other such arrangement shall be offset against the amount due
hereunder.
7. Effective Date and Term
(a) Notwithstanding anything else herein, this Agreement shall become
effective (the "Effective Date") as of February 24, 1997.
(b) This Agreement shall be for a term (the "Term") commencing on the
Effective Date and terminating at the end of six (6) years from the
Effective Date, provided that if a Change in Control has taken place
prior to termination of this Agreement, this Agreement shall
continue in full force and effect during the Change in Control
Protection Period and further provided that the payment and other
obligations hereunder shall survive such termination to the extent a
Change in Control has occurred during the Term, and in any event,
the obligations under Section 4 hereof shall survive the end of the
Term with regard to matters occurring during the Term (even if a
claim is made after the Term).
8. Successors; Binding Agreements
In addition to any obligations imposed by law upon any successor to the
Company, the Company will require any successor (whether direct or
indirect, by purchase, merger,
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consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree in writing to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it and this Agreement shall inure to
the benefit of such successor. Any such assignment shall not relieve the
Company from liability hereunder. This Agreement shall inure to the
benefit of and be enforceable by your personal or legal representatives,
executors, administrators, successors, heirs, distributees, devises and
legatees. If you die while any amount would still be payable to you
hereunder if you had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of the
Agreement to the executors, personal representatives, estate trustees, or
administrators of your estate. This Agreement is personal to you and
neither this Agreement nor any rights hereunder may be assigned by you.
9. Communications
Any notice or other communication required or permitted hereunder shall be
in writing and shall be delivered personally, or sent by registered mail,
postage prepaid as follows:
(i) If to the Company at:
1565 Buchanan Trail East (Rt. 16)
Shady Grove
PA 17256-0021
Attention: General Counsel
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with a copy to Hanson at:
1 Grosvenor Place
London Telephone: 0171 245 1245
SW1X 7JH Fax: 0171 235 3455
Attention: Legal Director
(ii) If to you, to the last shown address on the books of the Company or
Hanson.
Any such notice shall be deemed given when so delivered personally, or, if
mailed, five (5) days after the date of deposit (in the form of registered
or certified mail, return receipt requested, postage prepaid) in the
United States postal system. Any party may by notice designate another
address or person for receipt of notices hereunder.
10. Not an Agreement of Employment
This is not an agreement assuring employment and the Company reserves the
right to terminate your employment at any time with or without Cause,
subject to the payment provisions hereof if such termination is during the
Change in Control Protection Period. You acknowledge that you are aware
that you shall have no claim against the Company hereunder or for
deprivation of the right to receive the amounts hereunder as a result of
any termination that does not specifically satisfy the requirements
hereof. The foregoing shall not affect your rights under any other
agreement with the Company.
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11. Miscellaneous
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by you and such officer as may be specifically designated by the
Company Board (as defined in Part III of Exhibit A). No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time. This Agreement constitutes the entire Agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes any prior agreements between the Company and you. No agreements
or representations, oral or otherwise, express or implied, with respect to
the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. All references to any law shall be
deemed also to refer to any successor provisions to such laws.
12. Acknowledgement
You acknowledge that you: (a) have read this Agreement, understand its
terms and that it has been entered into by you voluntarily; (b) that the
payments to be made hereunder constitute additional compensation to you;
(c) have had sufficient opportunity to consider this Agreement and discuss
it with advisors of your choice, including your attorney and accountants;
(d) have been informed that you have the right to consider this Agreement
for a period of at least 21 days prior to entering into it; (e) have taken
sufficient time to consider this Agreement before signing it; and (f) have
the right to
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revoke this Agreement for a period of 7 days following the Agreement's
execution by giving written notice to the Company.
13. Release
As a material inducement to the Company to enter into this Agreement, you
agree for yourself and your heirs, successors, and assigns that upon
receipt of the amounts payable under this Agreement you hereby release and
forever discharge the Company and any parent or affiliate thereof, its or
their respective directors, officers, employees, agents, representatives,
successors and assigns, from any and all claims, demands, actions,
liability, damages, back pay, attorney fees, or rights of any and every
kind or nature, accrued or unaccrued, known or unknown, arising out of or
in any manner relating to your employment and termination of employment
with the Company or its parents or affiliates including without limitation
any alleged violation of Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act of 1967, the Employee Retirement
Income Security Act of 1974 as the same may have been or be amended from
time to time or any other federal, state or local law, regulation or
ordinance (except for your existing accrued rights under the Company's (or
any affiliate of the Company) pension plan, SERP, saving plan, health and
welfare benefit plans, and the rights already granted to you under any
Stock Option Scheme of Hanson PLC and/or any long term incentive plan of
the Company, and except as expressly set forth herein). If requested by
the Company you agree to execute a further formal waiver and release at
the time of termination of your employment and payment by the
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Company of the amounts payable under this Agreement in the terms or
substantially in the terms set out in this Section 13.
14. Withholding
The Company may withhold from any and all amounts payable under this
Agreement such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
15. Governing Law
This Agreement shall be construed, interpreted, and governed in accordance
with the laws of the State of Delaware without reference to rules relating
to conflicts of law.
Very truly yours,
By: /s/ Keith R. Simmons
-----------------------------
Name: Keith R. Simmons
Title: Sr. VP & General Counsel
& VP of Kidde Industries Inc.
/s/ Robert C. Stift
-------------------------------
Robert C. Stift
Agreed and accepted this
29th day of July 1997
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EXHIBIT A
Part I - Cause
1. Subject to compliance with the notification provisions in this Exhibit A,
this Agreement shall not prevent the termination of your employment by the
Company for Cause. A termination for Cause means a termination by the
Company effected by a written notice of termination for Cause if you have
committed any serious breach or (after warning in writing) any repeated or
continued material breach of your obligations as Chief Executive of the
Company or shall have been guilty of any act of dishonesty or serious
misconduct or any conduct which in the reasonable opinion of the Company
Board tends to bring you, the Company or Hanson into disrepute. Any delay
by the Company in exercising such right to terminate shall not constitute
a waiver thereof.
2. A notice of termination for Cause shall mean a notice that shall set forth
in reasonable detail the specific basis, facts and circumstances which
provide for a basis for termination for Cause.
3. Notwithstanding anything to the contrary contained in this Agreement, if
any purported termination for Cause within the Change in Control
Protection Period that occurs on or after the Effective Date is held by a
court not to have been based on the grounds set forth in this Agreement
such purported termination for Cause shall be deemed a termination by the
Company without Cause and you shall be entitled to the amounts and
benefits provided in Section 3 to the extent, if any, applicable.
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Part II - Change in Control
1. For purposes of this Agreement, a "Change in Control" shall mean either a
Change in Control of Hanson or a Change in Control of the Company. Only
one (1) Change in Control may occur under this Agreement.
2. Change in Control of Hanson. For purposes of this Agreement, the term
"Change in Control of Hanson shall mean (i) any "person" as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934
("Act") (other than Hanson, any trustee or other fiduciary holding
securities under any employee benefit plan of Hanson or any company owned,
directly or indirectly, by the stockholders of Hanson in substantially the
same proportions as their ownership of ordinary shares of Hanson),
becoming the "beneficial owner" (as defined in Rule l3d-3 under the Act),
directly or indirectly, of securities of Hanson representing twenty-five
per cent (25%) or more of the combined voting power of Hanson's then
outstanding securities; (ii) during any period of two (2) consecutive
years individuals who at the beginning of such period constitute the Board
of Directors of Hanson and any new director (other than a director
designated by a person who has entered into an agreement with Hanson to
effect a transaction described in clause (i), (iii) or (iv) of this
paragraph or a director whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board of Directors of Hanson whose
election by
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the Board of Directors of Hanson or nomination for election by Hanson's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning
of the two (2) year period or whose election or nomination for election
was previously so approved, cease for any reason to constitute at least a
majority of the Board of Directors of Hanson (iii) the merger or
consolidation of Hanson with any other corporation, other than a merger or
consolidation which would result in the voting securities of Hanson
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty per cent (50%) of the combined voting
power of the voting securities of Hanson or such surviving entity
outstanding immediately after such merger or consolidation; provided,
however, that a merger or consolidation effected to implement a
recapitalisation of Hanson (or similar transaction) in which no person
(other than those covered by the exceptions in (i) above) acquired more
than twenty-five per cent (25%) of the combined voting power of Hanson's
then outstanding securities shall not constitute a Change in Control of
Hanson; or (iv) approval by the stockholders of Hanson of a plan of
complete liquidation of Hanson or the closing of the sale or disposition
by Hanson of all or substantially all of the assets of Hanson other than
the sale or disposition of all or substantially all of the assets of
Hanson to a person or persons who beneficially own, directly or
indirectly, at least fifty per cent (50%) or more of the combined voting
power of the outstanding voting securities of Hanson at the time of the
sale.
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3. Change in Control of the Company. For purposes of this Agreement, the term
"Change in Control of the Company" shall mean (i) any "person" as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934 (other than Hanson or a Subsidiary (as defined below) of Hanson)
becoming the "beneficial owner" (as defined in Rule l3d-3 under the Act),
directly or indirectly, of securities of the Company representing more
than fifty per cent (50%) of the combined voting power of the Company's
then outstanding securities entitled to vote in a general election of
directors; or (ii) all or substantially all of the Company's assets are
sold other than to Hanson or a Subsidiary of Hanson. "Subsidiary" shall
have the meaning set forth in Section 424 of the Internal Revenue Code of
1986.
4. Change in Control Protection Period
For the purposes of this Agreement, the term "Change in Control Protection
Period" shall mean the Pre Change in Control Period and the Post Change in
Control Period, as each is defined below.
5. Pre Change in Control Period
For purposes of this Agreement, Pre Change in Control Period shall mean
the one hundred and eighty (180) day period prior to the date of a Change
in Control that occurs on or after the Effective Date.
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6. Post Change in Control Period
For purposes of this Agreement, Post Change in Control Period shall mean
the period commencing on the date of a Change in Control that occurs on or
after the Effective Date and ending the day immediately prior to the
second anniversary of the Change in Control.
Part III - Company Board
For purposes of this Agreement, the term "Company Board" shall be deemed to
refer to the Board of Directors of the Company and Hanson.
Part IV - Disability
For purposes of this Agreement, the term "Disability" shall mean your inability
to perform your material duties and responsibilities hereunder due to the same
or related physical or mental reasons for more than one hundred eighty (180)
consecutive days in any twelve (12) consecutive month period. A termination for
Disability shall be deemed to occur when you are terminated by the Company by
written notice after you incur a Disability and while you remain disabled.
Part V - Retirement
For purposes of this Agreement, the term "Retirement" shall mean your retirement
by the Company at or after your sixty-fifth (65th) birthday to the extent such
termination is
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specifically permitted as a stated exception from applicable federal and state
age discrimination laws based on position and retirement benefits.
Part VI - Good Reason
1. For purposes of this Agreement, a termination for "Good Reason" shall mean
a termination by you effected by a written notice of termination for Good
Reason given within ninety (90) days after the occurrence of the Good
Reason event. Subject to subsection 2 below, "Good Reason" shall mean the
occurrence or failure to cause the occurrence, as the case may be, without
your express written consent, of (i) any material diminution of your
positions, duties or responsibilities with the Company from the highest
position held within (as defined above) the Pre Change in Control Period
(except in each case in connection with the termination of your employment
for Cause, Disability or as a result of your death, or in the case of a
material diminution of duties or responsibilities, temporarily as a result
of your illness or other absence) or the assignment to you of duties or
responsibilities that are inconsistent with your aforementioned highest
position; (ii) your removal from, or the nonreelection to, your positions
as an officer with the Company held during the Pre Change in Control
Period; (iii) a relocation of the Company's principal United States
executive offices to a location more than twenty-five (25) miles from
where they are at the time of the Change in Control, or a relocation by
the Company of your principal office away from such principal United
States executive offices; (iv) a failure by the Company or Hanson (A) to
continue any bonus plan, program or arrangement in which you were entitled
to
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participate during the Pre Change in Control Period (the "Bonus Plans"),
provided that any such Bonus Plans may be modified at the Company's or
Hanson's discretion from time to time but shall be deemed terminated if
(x) any such plan does not remain substantially in the form in effect
prior to such modification or (y) if plans providing you with
substantially similar benefits are not substituted therefor ("Substitute
Plans"), or (B) to continue you as a participant in the Bonus Plans or
Substitute Plans on not less than the same maximum level of award and not
more than the same level of difficulty for achievability thereof as was
applicable to you immediately prior to any change in such plans, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company or Hanson of any provision of this Agreement; (vi)
if on the Board of Directors of the Company during the Pre Change in
Control Period, your removal from or failure to be reelected to the board;
(vii) a reduction by the Company of your rate of annual base salary to a
level below your highest rate of base salary within one-hundred and eighty
(180) days prior to the Change in Control; or (viii) failure of any
successor of the Company to assume in a writing delivered to you upon the
assignee becoming such, the obligations of the Company hereunder.
2. A notice of termination for Good Reason shall indicate the specific basis
for termination relied upon and set forth in reasonable detail the facts
and circumstances claimed to provide a basis for a termination for Good
Reason. The failure by you to set forth in the notice of termination for
Good Reason any facts or circumstances which contribute to the showing of
Good Reason shall not waive any of your rights hereunder
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or preclude you from asserting such fact or circumstance in enforcing your
rights hereunder. The notice of termination for Good Reason shall provide
for a date of termination not less than ten (10) nor more than sixty (60)
days after the date such notice of termination for Good Reason is given.
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[LETTERHEAD OF GROVE WORLDWIDE]
Mr. Keith R. Simmons July 24, 1997
11251 Eastwood Drive
Hagerstown, MD 21742
PERSONAL & CONFIDENTIAL
Dear Mr. Simmons:
1. Introduction.
Grove Worldwide (the "Company") believes that the establishment and
maintenance of a sound and vital management of the Company is essential to
the protection and enhancement of the interests of the Company, the
Company's ultimate parent company, Hanson PLC ("Hanson") and Hanson's
stockholders. The Company also recognizes that the possibility of a Change
in Control (as defined in Exhibit A), with the attendant uncertainties and
risks, might result in the departure or distraction of key employees of
the Company to the detriment of the Company, Hanson and Hanson's
stockholders, the Company has determined that it is appropriate to induce
key employees to remain with the Company, and to reinforce and encourage
their continued attention and dedication. Accordingly, subject to Section
2, upon your written acceptance of the terms of this agreement (the
"Agreement") evidenced by your signing below, the Company intends to
provide you the protections set forth herein as of the Effective Date.
The arrangements set out in this Agreement are a private contractual
arrangement with you and do not reflect the severance policy of the
Company to employees generally and accordingly your acceptance of the
terms of this Agreement will constitute your agreement to maintain the
terms of this Agreement confidential.
2. Effective Date and Term.
Notwithstanding anything else herein, this Agreement became effective (the
"Effective Date") as of March 1, 1997. This Agreement shall expire on the
earliest of (i) three (3) years from the Effective Date, provided that if
a Change in Control takes place prior to three (3) years from the
Effective Date, the duration of this Agreement shall be until two (2)
years after the Change in Control; or (ii) subject as otherwise provided
in Section 3 herein the date of your death or the termination of your
employment with the Company whether as a result of Disability (as defined
herein), retirement or any other reason prior to a Change in Control.
Notwithstanding anything in this Agreement to the contrary, if the Company
becomes obligated to make any payment or provide any benefit to you
pursuant to the terms hereof at or prior to the expiration of this
Agreement, then this Agreement shall remain in effect for such purposes
until all of the Company's obligations hereunder are fulfilled.
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Disability for purposes of this Agreement shall mean your inability to
perform your material duties and responsibilities due to the same or
related physical or mental illness for one hundred and eighty (180)
consecutive days. A termination for Disability shall be deemed to occur
when you are terminated by the Company by written notice while you remain
disabled.
3. Termination Following a Change in Control.
If a Change in Control occurs and your employment is terminated by the
Company without Cause (as defined in Section 5 herein) other than for
Disability or you terminate your employment with the Company for Good
Reason (as defined in Section 4 herein), during the period from the date
of the Change in Control to two (2) years after the date of such Change in
Control, then you shall be entitled to the amounts and benefits provided
in Section 6 herein upon such termination. In addition, notwithstanding
the foregoing, in the event you are either terminated by the Company
without Cause (other than for Disability) or you terminate your employment
for Good Reason, in either case within one hundred and eighty (180) days
prior to the occurrence of a Change in Control (based on an event that
occurred within such one hundred and eighty (180) day period prior to the
occurrence of a Change in Control), such termination shall, upon the
occurrence of a Change in Control, be deemed to be covered under the
Agreement and you shall be entitled to the amounts payable hereunder.
4. Termination for Good Reason.
A termination for Good Reason for purposes of this Agreement shall mean a
termination by you effected by a written notice of termination for Good
Reason given within sixty (60) days after the occurrence of the Good
Reason event. "Good Reason" shall mean the occurrence or failure to cause
the occurrence, as the case may be, without your express written consent,
of (i) any material diminution of your positions, duties or
responsibilities with the Company (except in connection with the
termination of your employment for Cause, Disability, as a result of your
death, or temporarily as a result of your illness or other absence) from
the highest position held within one hundred and eighty (180) days prior
to a Change in Control or the assignment to you of duties or
responsibilities that are inconsistent with your aforementioned highest
position; (ii) your removal from, or the non-reelection to your positions
with the Company held within one hundred and eighty (180) days prior to a
Change in Control; (iii) a relocation of the Company's principal United
States executive offices to a location more than twenty-five (25) miles
from where they are at the time of the Change in Control, or a relocation
by the Company of your principal office away from such principal United
States executive offices; (iv) a reduction by the Company of your rate of
annual base salary to a level below your highest rate of base salary
within one hundred and eighty (180) days prior to the Change in Control;
(v) a failure by Hanson or the Company (A) to continue any bonus plan,
program or arrangement in which you were entitled to participate during
the one hundred and eighty (180) days prior to the
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Change in Control (the "Bonus Plans"), provided that any such Bonus Plans
may be modified at Hanson's or the Company's discretion from time to time
but shall be deemed terminated if plans providing you with substantially
similar benefits are not substituted therefor ("Substitute Plans") or (B)
to consider you a participant in the Bonus Plans or Substitute Plans on
not less than the same target level of award and not more than the same
level of difficulty for achievability of such award as was applicable to
you immediately prior to any change in such plans, in accordance with the
Bonus Plans or Substitute Plans; or (vi) any breach by the Company of any
material provision of this Agreement, unless the applicable circumstances
under (i) through (vi) are fully corrected prior to the date of
termination specified in the notice of termination for Good Reason. The
notice of termination for Good Reason shall provide for a date of
termination not less than fifteen (15) nor more than sixty (60) days after
the date such notice of termination for Good Reason is given.
5. Termination for Cause.
A termination for Cause means a termination by the Company effected by a
written notice of termination for Cause. The term "Cause" shall be limited
to your: (i) willful misconduct with regard to the Company or its
business, assets or employees; (ii) refusal to follow the proper written
direction of the Board of Directors of the Company (the "Board") or a more
senior officer of the Company, provided that the foregoing refusal shall
not be "Cause" if in good faith you believe that such direction is
illegal, unethical or immoral and you promptly so notify the Board or the
more senior officer (whichever is applicable); (iii) conviction of (or
pleading of nolo contendere to) a felony (other than a traffic violation);
(iv) breach of any fiduciary duty owed to the Company or any affiliate; or
(vi) dishonesty, misappropriation or fraud with regard to the Company
(other than good faith expense account disputes). The date of termination
for a termination for Cause shall be the date indicated in the notice of
termination.
6. Compensation on Termination.
If pursuant to Section 3 you are entitled to amounts and benefits under
this Section 6, subject to Section 10, the Company shall pay and provide
to you: (A) in a lump sum within five (5) days after such termination (or,
if such termination occurred within one hundred and eighty (180) days
prior to a Change in Control, within five (5) days after the Change in
Control) (i) two (2) times your highest annual base salary in effect
within one hundred and eighty (180) days prior to the Change in Control,
(ii) two (2) times the highest annual bonus paid or payable (excluding any
top hat payments, if applicable) to you for any of the last two (2)
completed years by the Company or its predecessors, (iii) any
un-reimbursed business expenses for the period prior to termination
payable in accordance with the Company's policies, and (iv) any base
salary, bonus, vacation pay or other deferred compensation accrued or
earned under law or in accordance with the Company's policies applicable
to you but not yet paid; (B) any other amounts or benefits due under the
then applicable employee benefit, incentive or equity plans of Hanson or
the Company applicable to you as shall be
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determined and paid in accordance with such plans, except to the extent
paid pursuant to (A) above; (C) two (2) years of additional service and
compensation credit (at your highest compensation level in the one hundred
and eighty (180) day period prior to the Change in Control) for pension
purposes under any defined benefit type qualified or non-qualified pension
plan or arrangement of the Company and its affiliates applicable to you,
measured from the date of termination of employment and not credited to
the extent that you are otherwise entitled to such credit during such two
(2) year period, which payments shall be made through and in accordance
with the terms of the non-qualified defined benefit pension plan or
arrangement if any then exists, or, if not, in an actuarially equivalent
lump sum (using the actuarial factors then applying in the Company's or
its affiliates' defined benefit plan covering you); (D) an amount equal to
two (2) years of the maximum Company contribution (assuming you deferred
the maximum amount and continued to earn your then current salary)
measured from the date of termination of your employment under any type of
qualified or non-qualified 401(k) plan (payable at the end of each such
year and not payable to the extent otherwise contributed to such plan);
and (E) payment by the Company of the premiums for you (except in the case
of death) and your dependents' health coverage for two (2) years from the
date of termination of your employment under the Company's health plans
which cover the senior executives of the Company or materially similar
benefits (to the extent not otherwise provided), provided that in the case
of termination within one hundred and eighty (180) days prior to a Change
in Control, the obligations under this subpart (E) shall only exist to the
extent that you or your dependents, as the case may be, had timely elected
or timely elect COBRA coverage which continued at the time of the Change
in Control and the obligation with regard to the period prior to the
Change in Control shall be limited to reimbursement of the COBRA premiums
previously paid or due for such period. Any amendment or termination of
benefits, equity or incentive plans within one hundred and eighty (180)
days prior to, or after, a Change in Control that is detrimental to you
shall be ignored with respect to (C), (D) and (E) above. Payments under
(E) above may, at the discretion of the Company, be made by continuing
your participation in the plan as a terminee, by paying the applicable
COBRA premium for you and your dependents, or by covering you and your
dependents under substitute arrangements, provided that, to the extent you
incur tax that you would not have incurred as an active employee as a
result of the aforementioned coverage or the benefits provided thereunder,
you shall receive from the Company an additional payment in the amount
necessary so that you will have no additional cost for receiving such
items or any additional payment.
7. Arbitration.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration conducted in the
City of New York in the State of New York under the Commercial Arbitration
Rules then prevailing of the American Arbitration Association and such
submission shall request the American Arbitration Association to: (i)
appoint an arbitrator experienced and knowledgeable concerning the matter
then in dispute; (ii) require the testimony to be transcribed; (iii)
require the
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award to be accompanied by findings of fact and the statement of reasons
for the decision; and (iv) request the matter to be handled by and in
accordance with the expedited procedures provided for in the Commercial
Arbitration Rules. The determination of the arbitrators, which shall be
based upon a de novo interpretation of this Agreement, shall be final and
binding and judgment may be entered on the arbitrators' award in any court
having jurisdiction. All costs of the American Arbitration Association and
the arbitrator shall be borne as determined by the arbitrator.
8. Legal Fees.
In the event the Company does not make the payments due hereunder on a
timely basis and you collect any part or all of the payments provided for
hereunder or otherwise successfully enforce the terms of this Agreement by
or through a lawyer or lawyers, the Company shall pay all costs of such
collection or enforcement, including reasonable legal fees and other
reasonable fees and expenses which you may incur. The Company shall pay to
you interest at the prime lending rate as announced from time to time by
Citibank, N.A. on all or any part of any amount to be paid to you
hereunder that is not paid when due. The prime rate for each calendar
quarter shall be the prime rate in effect on the first day of the calendar
quarter.
9. No Duty to Mitigate/Set-off.
The Company agrees that if your employment with the Company is terminated
pursuant to this Agreement during the term of this Agreement, you shall
not be required to seek other employment or to attempt in any way to
reduce any amounts payable to you by the Company pursuant to this
Agreement. Further, the amount of any payment or benefit provided for in
this Agreement shall not be reduced by any compensation earned by you or
benefit provided to you as the result of employment by another employer or
otherwise. Except as otherwise provided herein and apart from any
disagreement between you and the Company concerning interpretation of this
Agreement or any term or provision hereof, the Company's obligations to
make the payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any circumstances,
including without limitation, any set-off, counterclaim, recoupment,
defense or other right which the Company may have against you. The amounts
due under Section 6 are inclusive, and in lieu of, any amounts payable
under any other salary continuation or cash severance arrangement of the
Company on termination of employment that is or may become applicable to
you and to the extent paid or provided under any other such arrangement
shall be offset against the amount due hereunder.
10. Successors; Binding Agreement.
In addition to any obligations imposed by law upon any successor to the
Company, the Company will require any successor (whether direct or
indirect, by purchase, merger,
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consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree in writing to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place and this Agreement shall inure to the benefit of such successor. Any
such assignment shall not relieve the Company from liability hereunder.
This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees. If you die while any amount
would still be payable to you hereunder if you had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of the Agreement to the executors, personal
representatives, estate trustees, or administrators of your estate. This
Agreement is personal to you and neither this Agreement nor any rights
hereunder may be assigned by you.
11. Notices.
Any notice or other communication required or permitted hereunder shall be
in writing and shall be delivered personally, or sent by registered mail,
postage prepaid as follows:
(i) If to the Company, at: Grove Worldwide, P 0 Box 21, Shady
Grove, PA 17256-0021, USA
Attention: Chief Executive Officer
(ii) If to you, to the last shown address on the books of the
Company.
Any such notice shall be deemed given when so delivered personally, or, if
mailed, five (5) days after the date of deposit (in the form of registered
or certified mail, return receipt requested, postage prepaid) in the
United States postal system. Any party may by notice designate another
address or person for receipt of notices hereunder.
12. Not an Agreement of Employment.
This is not an agreement assuring employment and the Company reserves the
right to terminate your employment at any time with or without Cause,
subject to the payment provisions hereof if such termination is after, or
within one hundred and eighty (180) days prior to, a Change in Control.
You acknowledge that you are aware that you shall have no claim against
the Company hereunder or for deprivation of the right to receive the
amounts hereunder as a result of any termination that does not
specifically satisfy the requirements hereof. The foregoing shall not
affect your rights under any other agreement with the Company.
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13. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision
shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. This Agreement constitutes
the entire Agreement between the parties hereto pertaining to the subject
matter hereof and supersedes any prior agreements between the Company and
you. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. All
references to any law shall be deemed also to refer to any successor
provisions to such laws.
14. Acknowledgment.
You acknowledge that you: (a) have read this Agreement, understand its
terms and that it has been entered into by you voluntarily; (b) that the
payments to be made hereunder constitute additional compensation to you;
(c) have had sufficient opportunity to consider this Agreement and discuss
it with advisors of your choice, including your attorney and accountants;
(d) have been informed that you have the right to consider this Agreement
for a period of at least 21 days prior to entering into it; (e) have taken
sufficient time to consider this Agreement before signing it; and (f) have
the right to revoke this Agreement for a period of 7 days following the
Agreement's execution by giving written notice to the Company.
15. Release.
As a material inducement to the Company to enter into this Agreement, you
agree for yourself and your heirs, successors, and assigns that upon
receipt of the amounts payable under this Agreement you hereby release and
forever discharge the Company and any parent or affiliate thereof, its or
their respective directors, officers, employees, agents, representatives,
successors and assigns, from any and all claims, demands, actions,
liability, damages, back pay, attorney fees, or rights of any and every
kind or nature, accrued or unaccrued, known or unknown, arising out of or
in any manner relating to your employment and termination of employment
with the Company or its parents or affiliates including without limitation
any alleged violation of Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act of 1967, the Employee Retirement
Income Security Act of 1974, as the same may have been or be amended from
time to time or any other federal, state or local law, regulation or
ordinance (except for your existing accrued rights under the Company's (or
any affiliate of the Company) pension plan, saving plan, health and
welfare benefit plans, and the rights already granted to you under the
Stock Option Scheme of Hanson PLC and/or any long term incentive plan of
the Company, and except as expressly set forth
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herein). If requested by the Company you agree to execute a further formal
waiver and release at the time of termination of your employment and the
payment by the Company of the amounts payable under this Agreement in the
terms set out or substantially in the terms set out in this Section 16.
16. Withholding Taxes.
The Company may withhold from any and all amounts payable under this
Agreement such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
17. Governing Law.
This Agreement shall be construed, interpreted, and governed in accordance
with the laws of the State of Delaware without reference to rules relating
to conflicts of law.
Very truly yours,
By: /s/ Robert C. Stift
--------------------------------
Robert C. Stift
Chairman and Chief Executive Officer
Agreed and Accepted this
24th day of July 1997
/s/ Keith R. Simmons
------------------------------------
Keith R. Simmons
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EXHIBIT A
Change in Control
For purposes of this Agreement, the term "Change in Control" shall mean the sale
or transfer, directly or indirectly, of substantially all of the Company's
business and assets to an entity not affiliated with Hanson PLC, or the
purchase, directly or indirectly, by an entity not affiliated with Hanson PLC of
more than 50% of the outstanding shares of the common stock of the Company. For
purposes of this definition, an affiliate of Hanson PLC refers to any person or
business entity, directly or indirectly, controlling, controlled by, or under
the common control with Hanson PLC, with the term "control" referring to any
person or business entity owning, directly or indirectly, more than a 50% equity
interest in the controlled entity or possessing the power to direct or cause the
direction of the management or policies of the controlled entity.
Only one (1) Change in Control may take place under this Agreement.
9
<PAGE>
[LETTERHEAD OF GROVE WORLDWIDE]
Mr. Ted J. Urbanek
21405 Ash Circle July 24, 1997
Gretna, NE 68028
PERSONAL & CONFIDENTIAL
Dear Mr. Urbanek:
1. Introduction.
Grove Worldwide (the "Company") believes that the establishment and
maintenance of a sound and vital management of the Company is essential to
the protection and enhancement of the interests of the Company, the
Company's ultimate parent company, Hanson PLC ("Hanson") and Hanson's
stockholders. The Company also recognizes that the possibility of a Change
in Control (as defined in Exhibit A), with the attendant uncertainties and
risks, might result in the departure or distraction of key employees of
the Company to the detriment of the Company, Hanson and Hanson's
stockholders, the Company has determined that it is appropriate to induce
key employees to remain with the Company, and to reinforce and encourage
their continued attention and dedication. Accordingly, subject to Section
2, upon your written acceptance of the terms of this agreement (the
"Agreement") evidenced by your signing below, the Company intends to
provide you the protections set forth herein as of the Effective Date.
The arrangements set out in this Agreement are a private contractual
arrangement with you and do not reflect the severance policy of the
Company to employees generally and accordingly your acceptance of the
terms of this Agreement will constitute your agreement to maintain the
terms of this Agreement confidential.
2. Effective Date and Term.
Notwithstanding anything else herein, this Agreement became effective (the
"Effective Date") as of March 1, 1997. This Agreement shall expire on the
earliest of (i) three (3) years from the Effective Date, provided that if
a Change in Control takes place prior to three (3) years from the
Effective Date, the duration of this Agreement shall be until two (2)
years after the Change in Control; or (ii) subject as otherwise provided
in Section 3 herein the date of your death or the termination of your
employment with the Company whether as a result of Disability (as defined
herein), retirement or any other reason prior to a Change in Control.
Notwithstanding anything in this Agreement to the contrary, if the Company
becomes obligated to make any payment or provide any benefit to you
pursuant to the terms hereof at or prior to the expiration of this
Agreement, then this Agreement shall remain in effect for such purposes
until all of the Company's obligations hereunder are fulfilled.
<PAGE>
GROVE WORLDWIDE
Disability for purposes of this Agreement shall mean your inability to
perform your material duties and responsibilities due to the same or
related physical or mental illness for one hundred and eighty (180)
consecutive days. A termination for Disability shall be deemed to occur
when you are terminated by the Company by written notice while you remain
disabled.
3. Termination Following a Change in Control.
If a Change in Control occurs and your employment is terminated by the
Company without Cause (as defined in Section 5 herein) other than for
Disability or you terminate your employment with the Company for Good
Reason (as defined in Section 4 herein), during the period from the date
of the Change in Control to two (2) years after the date of such Change in
Control, then you shall be entitled to the amounts and benefits provided
in Section 6 herein upon such termination. In addition, notwithstanding
the foregoing, in the event you are either terminated by the Company
without Cause (other than for Disability) or you terminate your employment
for Good Reason, in either case within one hundred and eighty (180) days
prior to the occurrence of a Change in Control (based on an event that
occurred within such one hundred and eighty (180) day period prior to the
occurrence of a Change in Control), such termination shall, upon the
occurrence of a Change in Control, be deemed to be covered under the
Agreement and you shall be entitled to the amounts payable hereunder.
4. Termination for Good Reason.
A termination for Good Reason for purposes of this Agreement shall mean a
termination by you effected by a written notice of termination for Good
Reason given within sixty (60) days after the occurrence of the Good
Reason event. "Good Reason" shall mean the occurrence or failure to cause
the occurrence, as the case may be, without your express written consent,
of (i) any material diminution of your positions, duties or
responsibilities with the Company (except in connection with the
termination of your employment for Cause, Disability, as a result of your
death, or temporarily as a result of your illness or other absence) from
the highest position held within one hundred and eighty (180) days prior
to a Change in Control or the assignment to you of duties or
responsibilities that are inconsistent with your aforementioned highest
position; (ii) your removal from, or the non-reelection to your positions
with the Company held within one hundred and eighty (180) days prior to a
Change in Control; (iii) a relocation of the Company's principal United
States executive offices to a location more than twenty-five (25) miles
from where they are at the time of the Change in Control, or a relocation
by the Company of your principal office away from such principal United
States executive offices; (iv) a reduction by the Company of your rate of
annual base salary to a level below your highest rate of base salary
within one hundred and eighty (180) days prior to the Change in Control;
(v) a failure by Hanson or the Company (A) to continue any bonus plan,
program or arrangement in which you were entitled to participate during
the one hundred and eighty (180) days prior to the
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Change in Control (the "Bonus Plans"), provided that any such Bonus Plans
may be modified at Hanson's or the Company's discretion from time to time
but shall be deemed terminated if plans providing you with substantially
similar benefits are not substituted therefor ("Substitute Plans") or (B)
to consider you a participant in the Bonus Plans or Substitute Plans on
not less than the same target level of award and not more than the same
level of difficulty for achievability of such award as was applicable to
you immediately prior to any change in such plans, in accordance with the
Bonus Plans or Substitute Plans; or (vi) any breach by the Company of any
material provision of this Agreement, unless the applicable circumstances
under (i) through (vi) are fully corrected prior to the date of
termination specified in the notice of termination for Good Reason. The
notice of termination for Good Reason shall provide for a date of
termination not less than fifteen (15) nor more than sixty (60) days after
the date such notice of termination for Good Reason is given.
5. Termination for Cause.
A termination for Cause means a termination by the Company effected by a
written notice of termination for Cause. The term "Cause" shall be limited
to your: (i) willful misconduct with regard to the Company or its
business, assets or employees; (ii) refusal to follow the proper written
direction of the Board of Directors of the Company (the "Board") or a more
senior officer of the Company, provided that the foregoing refusal shall
not be "Cause" if in good faith you believe that such direction is
illegal, unethical or immoral and you promptly so notify the Board or the
more senior officer (whichever is applicable); (iii) conviction of (or
pleading of nolo contendere to) a felony (other than a traffic violation);
(iv) breach of any fiduciary duty owed to the Company or any affiliate; or
(vi) dishonesty, misappropriation or fraud with regard to the Company
(other than good faith expense account disputes). The date of termination
for a termination for Cause shall be the date indicated in the notice of
termination.
6. Compensation on Termination.
If pursuant to Section 3 you are entitled to amounts and benefits under
this Section 6, subject to Section 10, the Company shall pay and provide
to you: (A) in a lump sum within five (5) days after such termination (or,
if such termination occurred within one hundred and eighty (180) days
prior to a Change in Control, within five (5) days after the Change in
Control) (i) two (2) times your highest annual base salary in effect
within one hundred and eighty (180) days prior to the Change in Control,
(ii) two (2) times the highest annual bonus paid or payable (excluding any
top hat payments, if applicable) to you for any of the last two (2)
completed years by the Company or its predecessors, (iii) any
un-reimbursed business expenses for the period prior to termination
payable in accordance with the Company's policies, and (iv) any base
salary, bonus, vacation pay or other deferred compensation accrued or
earned under law or in accordance with the Company's policies applicable
to you but not yet paid; (B) any other amounts or benefits due under the
then applicable employee benefit, incentive or equity plans of Hanson or
the Company applicable to you as shall be
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GROVE WORLDWIDE
determined and paid in accordance with such plans, except to the extent
paid pursuant to (A) above; (C) two (2) years of additional service and
compensation credit (at your highest compensation level in the one hundred
and eighty (180) day period prior to the Change in Control) for pension
purposes under any defined benefit type qualified or non-qualified pension
plan or arrangement of the Company and its affiliates applicable to you,
measured from the date of termination of employment and not credited to
the extent that you are otherwise entitled to such credit during such two
(2) year period, which payments shall be made through and in accordance
with the terms of the non-qualified defined benefit pension plan or
arrangement if any then exists, or, if not, in an actuarially equivalent
lump sum (using the actuarial factors then applying in the Company's or
its affiliates' defined benefit plan covering you); (D) an amount equal to
two (2) years of the maximum Company contribution (assuming you deferred
the maximum amount and continued to earn your then current salary)
measured from the date of termination of your employment under any type of
qualified or non-qualified 401(k) plan (payable at the end of each such
year and not payable to the extent otherwise contributed to such plan);
and (E) payment by the Company of the premiums for you (except in the case
of death) and your dependents' health coverage for two (2) years from the
date of termination of your employment under the Company's health plans
which cover the senior executives of the Company or materially similar
benefits (to the extent not otherwise provided), provided that in the case
of termination within one hundred and eighty (180) days prior to a Change
in Control, the obligations under this subpart (E) shall only exist to the
extent that you or your dependents, as the case may be, had timely elected
or timely elect COBRA coverage which continued at the time of the Change
in Control and the obligation with regard to the period prior to the
Change in Control shall be limited to reimbursement of the COBRA premiums
previously paid or due for such period. Any amendment or termination of
benefits, equity or incentive plans within one hundred and eighty (180)
days prior to, or after, a Change in Control that is detrimental to you
shall be ignored with respect to (C), (D) and (E) above. Payments under
(E) above may, at the discretion of the Company, be made by continuing
your participation in the plan as a terminee, by paying the applicable
COBRA premium for you and your dependents, or by covering you and your
dependents under substitute arrangements, provided that, to the extent you
incur tax that you would not have incurred as an active employee as a
result of the aforementioned coverage or the benefits provided thereunder,
you shall receive from the Company an additional payment in the amount
necessary so that you will have no additional cost for receiving such
items or any additional payment.
7. Arbitration.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration conducted in the
City of New York in the State of New York under the Commercial Arbitration
Rules then prevailing of the American Arbitration Association and such
submission shall request the American Arbitration Association to: (i)
appoint an arbitrator experienced and knowledgeable concerning the matter
then in dispute; (ii) require the testimony to be transcribed; (iii)
require the
4
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GROVE WORLDWIDE
award to be accompanied by findings of fact and the statement of reasons
for the decision; and (iv) request the matter to be handled by and in
accordance with the expedited procedures provided for in the Commercial
Arbitration Rules. The determination of the arbitrators, which shall be
based upon a de novo interpretation of this Agreement, shall be final and
binding and judgment may be entered on the arbitrators' award in any court
having jurisdiction. All costs of the American Arbitration Association and
the arbitrator shall be borne as determined by the arbitrator.
8. Legal Fees.
In the event the Company does not make the payments due hereunder on a
timely basis and you collect any part or all of the payments provided for
hereunder or otherwise successfully enforce the terms of this Agreement by
or through a lawyer or lawyers, the Company shall pay all costs of such
collection or enforcement, including reasonable legal fees and other
reasonable fees and expenses which you may incur. The Company shall pay to
you interest at the prime lending rate as announced from time to time by
Citibank, N.A. on all or any part of any amount to be paid to you
hereunder that is not paid when due. The prime rate for each calendar
quarter shall be the prime rate in effect on the first day of the calendar
quarter.
9. No Duty to Mitigate/Set-off.
The Company agrees that if your employment with the Company is terminated
pursuant to this Agreement during the term of this Agreement, you shall
not be required to seek other employment or to attempt in any way to
reduce any amounts payable to you by the Company pursuant to this
Agreement. Further, the amount of any payment or benefit provided for in
this Agreement shall not be reduced by any compensation earned by you or
benefit provided to you as the result of employment by another employer or
otherwise. Except as otherwise provided herein and apart from any
disagreement between you and the Company concerning interpretation of this
Agreement or any term or provision hereof, the Company's obligations to
make the payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any circumstances,
including without limitation, any set-off, counterclaim, recoupment,
defense or other right which the Company may have against you. The amounts
due under Section 6 are inclusive, and in lieu of, any amounts payable
under any other salary continuation or cash severance arrangement of the
Company on termination of employment that is or may become applicable to
you and to the extent paid or provided under any other such arrangement
shall be offset against the amount due hereunder.
10. Successors; Binding Agreement.
In addition to any obligations imposed by law upon any successor to the
Company, the Company will require any successor (whether direct or
indirect, by purchase, merger,
5
<PAGE>
GROVE WORLDWIDE
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree in writing to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place and this Agreement shall inure to the benefit of such successor. Any
such assignment shall not relieve the Company from liability hereunder.
This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees. If you die while any amount
would still be payable to you hereunder if you had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of the Agreement to the executors, personal
representatives, estate trustees, or administrators of your estate. This
Agreement is personal to you and neither this Agreement nor any rights
hereunder may be assigned by you.
11. Notices.
Any notice or other communication required or permitted hereunder shall be
in writing and shall be delivered personally, or sent by registered mail,
postage prepaid as follows:
(i) If to the Company, at: Grove Worldwide, P 0 Box 21, Shady
Grove, PA 17256-0021, USA
Attention: Chief Executive Officer
(ii) If to you, to the last shown address on the books of the
Company.
Any such notice shall be deemed given when so delivered personally, or, if
mailed, five (5) days after the date of deposit (in the form of registered
or certified mail, return receipt requested, postage prepaid) in the
United States postal system. Any party may by notice designate another
address or person for receipt of notices hereunder.
12. Not an Agreement of Employment.
This is not an agreement assuring employment and the Company reserves the
right to terminate your employment at any time with or without Cause,
subject to the payment provisions hereof if such termination is after, or
within one hundred and eighty (180) days prior to, a Change in Control.
You acknowledge that you are aware that you shall have no claim against
the Company hereunder or for deprivation of the right to receive the
amounts hereunder as a result of any termination that does not
specifically satisfy the requirements hereof. The foregoing shall not
affect your rights under any other agreement with the Company.
6
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GROVE WORLDWIDE
13. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision
shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. This Agreement constitutes
the entire Agreement between the parties hereto pertaining to the subject
matter hereof and supersedes any prior agreements between the Company and
you. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. All
references to any law shall be deemed also to refer to any successor
provisions to such laws.
14. Acknowledgment.
You acknowledge that you: (a) have read this Agreement, understand its
terms and that it has been entered into by you voluntarily; (b) that the
payments to be made hereunder constitute additional compensation to you;
(c) have had sufficient opportunity to consider this Agreement and discuss
it with advisors of your choice, including your attorney and accountants;
(d) have been informed that you have the right to consider this Agreement
for a period of at least 21 days prior to entering into it; (e) have taken
sufficient time to consider this Agreement before signing it; and (f) have
the right to revoke this Agreement for a period of 7 days following the
Agreement's execution by giving written notice to the Company.
15. Release.
As a material inducement to the Company to enter into this Agreement, you
agree for yourself and your heirs, successors, and assigns that upon
receipt of the amounts payable under this Agreement you hereby release and
forever discharge the Company and any parent or affiliate thereof, its or
their respective directors, officers, employees, agents, representatives,
successors and assigns, from any and all claims, demands, actions,
liability, damages, back pay, attorney fees, or rights of any and every
kind or nature, accrued or unaccrued, known or unknown, arising out of or
in any manner relating to your employment and termination of employment
with the Company or its parents or affiliates including without limitation
any alleged violation of Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act of 1967, the Employee Retirement
Income Security Act of 1974, as the same may have been or be amended from
time to time or any other federal, state or local law, regulation or
ordinance (except for your existing accrued rights under the Company's (or
any affiliate of the Company) pension plan, saving plan, health and
welfare benefit plans, and the rights already granted to you under the
Stock Option Scheme of Hanson PLC and/or any long term incentive plan of
the Company, and except as expressly set forth
7
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GROVE WORLDWIDE
herein). If requested by the Company you agree to execute a further formal
waiver and release at the time of termination of your employment and the
payment by the Company of the amounts payable under this Agreement in the
terms set out or substantially in the terms set out in this Section 16.
16. Withholding Taxes.
The Company may withhold from any and all amounts payable under this
Agreement such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
17. Governing Law.
This Agreement shall be construed, interpreted, and governed in accordance
with the laws of the State of Delaware without reference to rules relating
to conflicts of law.
Very truly yours,
By: /s/ Robert C. Stift
------------------------------------
Robert C. Stift
Chairman and Chief Executive Officer
Agreed and Accepted this
28th day of July 1997
/s/ Ted J. Urbanek
---------------------------------------
Ted J. Urbanek
8
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GROVE WORLDWIDE
EXHIBIT A
Change in Control
For purposes of this Agreement, the term "Change in Control" shall mean the sale
or transfer, directly or indirectly, of substantially all of the Company's
business and assets to an entity not affiliated with Hanson PLC, or the
purchase, directly or indirectly, by an entity not affiliated with Hanson PLC of
more than 50% of the outstanding shares of the common stock of the Company. For
purposes of this definition, an affiliate of Hanson PLC refers to any person or
business entity, directly or indirectly, controlling, controlled by, or under
the common control with Hanson PLC, with the term "control" referring to any
person or business entity owning, directly or indirectly, more than a 50% equity
interest in the controlled entity or possessing the power to direct or cause the
direction of the management or policies of the controlled entity.
Only one (1) Change in Control may take place under this Agreement.
9
<PAGE>
[LETTERHEAD OF GROVE WORLDWIDE]
Mr. G. F. Heidinger
2019 Springdale Drive July 24, 1997
Martinsburg, WV 25401
PERSONAL & CONFIDENTIAL
Dear Mr. Heidinger:
1. Introduction.
Grove Worldwide (the "Company") believes that the establishment and
maintenance of a sound and vital management of the Company is essential to
the protection and enhancement of the interests of the Company, the
Company's ultimate parent company, Hanson PLC ("Hanson") and Hanson's
stockholders. The Company also recognizes that the possibility of a Change
in Control (as defined in Exhibit A), with the attendant uncertainties and
risks, might result in the departure or distraction of key employees of
the Company to the detriment of the Company, Hanson and Hanson's
stockholders, the Company has determined that it is appropriate to induce
key employees to remain with the Company, and to reinforce and encourage
their continued attention and dedication. Accordingly, subject to Section
2, upon your written acceptance of the terms of this agreement (the
"Agreement") evidenced by your signing below, the Company intends to
provide you the protections set forth herein as of the Effective Date.
The arrangements set out in this Agreement are a private contractual
arrangement with you and do not reflect the severance policy of the
Company to employees generally and accordingly your acceptance of the
terms of this Agreement will constitute your agreement to maintain the
terms of this Agreement confidential.
2. Effective Date and Term.
Notwithstanding anything else herein, this Agreement became effective (the
"Effective Date") as of March 1, 1997. This Agreement shall expire on the
earliest of (i) three (3) years from the Effective Date, provided that if
a Change in Control takes place prior to three (3) years from the
Effective Date, the duration of this Agreement shall be until two (2)
years after the Change in Control; or (ii) subject as otherwise provided
in Section 3 herein the date of your death or the termination of your
employment with the Company whether as a result of Disability (as defined
herein), retirement or any other reason prior to a Change in Control.
Notwithstanding anything in this Agreement to the contrary, if the Company
becomes obligated to make any payment or provide any benefit to you
pursuant to the terms hereof at or prior to the expiration of this
Agreement, then this Agreement shall remain in effect for such purposes
until all of the Company's obligations hereunder are fulfilled.
<PAGE>
GROVE WORLDWIDE
Disability for purposes of this Agreement shall mean your inability to
perform your material duties and responsibilities due to the same or
related physical or mental illness for one hundred and eighty (180)
consecutive days. A termination for Disability shall be deemed to occur
when you are terminated by the Company by written notice while you remain
disabled.
3. Termination Following a Change in Control.
If a Change in Control occurs and your employment is terminated by the
Company without Cause (as defined in Section 5 herein) other than for
Disability or you terminate your employment with the Company for Good
Reason (as defined in Section 4 herein), during the period from the date
of the Change in Control to two (2) years after the date of such Change in
Control, then you shall be entitled to the amounts and benefits provided
in Section 6 herein upon such termination. In addition, notwithstanding
the foregoing, in the event you are either terminated by the Company
without Cause (other than for Disability) or you terminate your employment
for Good Reason, in either case within one hundred and eighty (180) days
prior to the occurrence of a Change in Control (based on an event that
occurred within such one hundred and eighty (180) day period prior to the
occurrence of a Change in Control), such termination shall, upon the
occurrence of a Change in Control, be deemed to be covered under the
Agreement and you shall be entitled to the amounts payable hereunder.
4. Termination for Good Reason.
A termination for Good Reason for purposes of this Agreement shall mean a
termination by you effected by a written notice of termination for Good
Reason given within sixty (60) days after the occurrence of the Good
Reason event. "Good Reason" shall mean the occurrence or failure to cause
the occurrence, as the case may be, without your express written consent,
of (i) any material diminution of your positions, duties or
responsibilities with the Company (except in connection with the
termination of your employment for Cause, Disability, as a result of your
death, or temporarily as a result of your illness or other absence) from
the highest position held within one hundred and eighty (180) days prior
to a Change in Control or the assignment to you of duties or
responsibilities that are inconsistent with your aforementioned highest
position; (ii) your removal from, or the non-reelection to your positions
with the Company held within one hundred and eighty (180) days prior to a
Change in Control; (iii) a relocation of the Company's principal United
States executive offices to a location more than twenty-five (25) miles
from where they are at the time of the Change in Control, or a relocation
by the Company of your principal office away from such principal United
States executive offices; (iv) a reduction by the Company of your rate of
annual base salary to a level below your highest rate of base salary
within one hundred and eighty (180) days prior to the Change in Control;
(v) a failure by Hanson or the Company (A) to continue any bonus plan,
program or arrangement in which you were entitled to participate during
the one hundred and eighty (180) days prior to the
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Change in Control (the "Bonus Plans"), provided that any such Bonus Plans
may be modified at Hanson's or the Company's discretion from time to time
but shall be deemed terminated if plans providing you with substantially
similar benefits are not substituted therefor ("Substitute Plans") or (B)
to consider you a participant in the Bonus Plans or Substitute Plans on
not less than the same target level of award and not more than the same
level of difficulty for achievability of such award as was applicable to
you immediately prior to any change in such plans, in accordance with the
Bonus Plans or Substitute Plans; or (vi) any breach by the Company of any
material provision of this Agreement, unless the applicable circumstances
under (i) through (vi) are fully corrected prior to the date of
termination specified in the notice of termination for Good Reason. The
notice of termination for Good Reason shall provide for a date of
termination not less than fifteen (15) nor more than sixty (60) days after
the date such notice of termination for Good Reason is given.
5. Termination for Cause.
A termination for Cause means a termination by the Company effected by a
written notice of termination for Cause. The term "Cause" shall be limited
to your: (i) willful misconduct with regard to the Company or its
business, assets or employees; (ii) refusal to follow the proper written
direction of the Board of Directors of the Company (the "Board") or a more
senior officer of the Company, provided that the foregoing refusal shall
not be "Cause" if in good faith you believe that such direction is
illegal, unethical or immoral and you promptly so notify the Board or the
more senior officer (whichever is applicable); (iii) conviction of (or
pleading of nolo contendere to) a felony (other than a traffic violation);
(iv) breach of any fiduciary duty owed to the Company or any affiliate; or
(vi) dishonesty, misappropriation or fraud with regard to the Company
(other than good faith expense account disputes). The date of termination
for a termination for Cause shall be the date indicated in the notice of
termination.
6. Compensation on Termination.
If pursuant to Section 3 you are entitled to amounts and benefits under
this Section 6, subject to Section 10, the Company shall pay and provide
to you: (A) in a lump sum within five (5) days after such termination (or,
if such termination occurred within one hundred and eighty (180) days
prior to a Change in Control, within five (5) days after the Change in
Control) (i) two (2) times your highest annual base salary in effect
within one hundred and eighty (180) days prior to the Change in Control,
(ii) two (2) times the highest annual bonus paid or payable (excluding any
top hat payments, if applicable) to you for any of the last two (2)
completed years by the Company or its predecessors, (iii) any
un-reimbursed business expenses for the period prior to termination
payable in accordance with the Company's policies, and (iv) any base
salary, bonus, vacation pay or other deferred compensation accrued or
earned under law or in accordance with the Company's policies applicable
to you but not yet paid; (B) any other amounts or benefits due under the
then applicable employee benefit, incentive or equity plans of Hanson or
the Company applicable to you as shall be
3
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GROVE WORLDWIDE
determined and paid in accordance with such plans, except to the extent
paid pursuant to (A) above; (C) two (2) years of additional service and
compensation credit (at your highest compensation level in the one hundred
and eighty (180) day period prior to the Change in Control) for pension
purposes under any defined benefit type qualified or non-qualified pension
plan or arrangement of the Company and its affiliates applicable to you,
measured from the date of termination of employment and not credited to
the extent that you are otherwise entitled to such credit during such two
(2) year period, which payments shall be made through and in accordance
with the terms of the non-qualified defined benefit pension plan or
arrangement if any then exists, or, if not, in an actuarially equivalent
lump sum (using the actuarial factors then applying in the Company's or
its affiliates' defined benefit plan covering you); (D) an amount equal to
two (2) years of the maximum Company contribution (assuming you deferred
the maximum amount and continued to earn your then current salary)
measured from the date of termination of your employment under any type of
qualified or non-qualified 401(k) plan (payable at the end of each such
year and not payable to the extent otherwise contributed to such plan);
and (E) payment by the Company of the premiums for you (except in the case
of death) and your dependents' health coverage for two (2) years from the
date of termination of your employment under the Company's health plans
which cover the senior executives of the Company or materially similar
benefits (to the extent not otherwise provided), provided that in the case
of termination within one hundred and eighty (180) days prior to a Change
in Control, the obligations under this subpart (E) shall only exist to the
extent that you or your dependents, as the case may be, had timely elected
or timely elect COBRA coverage which continued at the time of the Change
in Control and the obligation with regard to the period prior to the
Change in Control shall be limited to reimbursement of the COBRA premiums
previously paid or due for such period. Any amendment or termination of
benefits, equity or incentive plans within one hundred and eighty (180)
days prior to, or after, a Change in Control that is detrimental to you
shall be ignored with respect to (C), (D) and (E) above. Payments under
(E) above may, at the discretion of the Company, be made by continuing
your participation in the plan as a terminee, by paying the applicable
COBRA premium for you and your dependents, or by covering you and your
dependents under substitute arrangements, provided that, to the extent you
incur tax that you would not have incurred as an active employee as a
result of the aforementioned coverage or the benefits provided thereunder,
you shall receive from the Company an additional payment in the amount
necessary so that you will have no additional cost for receiving such
items or any additional payment.
7. Arbitration.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration conducted in the
City of New York in the State of New York under the Commercial Arbitration
Rules then prevailing of the American Arbitration Association and such
submission shall request the American Arbitration Association to: (i)
appoint an arbitrator experienced and knowledgeable concerning the matter
then in dispute; (ii) require the testimony to be transcribed; (iii)
require the
4
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GROVE WORLDWIDE
award to be accompanied by findings of fact and the statement of reasons
for the decision; and (iv) request the matter to be handled by and in
accordance with the expedited procedures provided for in the Commercial
Arbitration Rules. The determination of the arbitrators, which shall be
based upon a de novo interpretation of this Agreement, shall be final and
binding and judgment may be entered on the arbitrators' award in any court
having jurisdiction. All costs of the American Arbitration Association and
the arbitrator shall be borne as determined by the arbitrator.
8. Legal Fees.
In the event the Company does not make the payments due hereunder on a
timely basis and you collect any part or all of the payments provided for
hereunder or otherwise successfully enforce the terms of this Agreement by
or through a lawyer or lawyers, the Company shall pay all costs of such
collection or enforcement, including reasonable legal fees and other
reasonable fees and expenses which you may incur. The Company shall pay to
you interest at the prime lending rate as announced from time to time by
Citibank, N.A. on all or any part of any amount to be paid to you
hereunder that is not paid when due. The prime rate for each calendar
quarter shall be the prime rate in effect on the first day of the calendar
quarter.
9. No Duty to Mitigate/Set-off.
The Company agrees that if your employment with the Company is terminated
pursuant to this Agreement during the term of this Agreement, you shall
not be required to seek other employment or to attempt in any way to
reduce any amounts payable to you by the Company pursuant to this
Agreement. Further, the amount of any payment or benefit provided for in
this Agreement shall not be reduced by any compensation earned by you or
benefit provided to you as the result of employment by another employer or
otherwise. Except as otherwise provided herein and apart from any
disagreement between you and the Company concerning interpretation of this
Agreement or any term or provision hereof, the Company's obligations to
make the payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any circumstances,
including without limitation, any set-off, counterclaim, recoupment,
defense or other right which the Company may have against you. The amounts
due under Section 6 are inclusive, and in lieu of, any amounts payable
under any other salary continuation or cash severance arrangement of the
Company on termination of employment that is or may become applicable to
you and to the extent paid or provided under any other such arrangement
shall be offset against the amount due hereunder.
10. Successors; Binding Agreement.
In addition to any obligations imposed by law upon any successor to the
Company, the Company will require any successor (whether direct or
indirect, by purchase, merger,
5
<PAGE>
GROVE WORLDWIDE
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree in writing to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken
place and this Agreement shall inure to the benefit of such successor. Any
such assignment shall not relieve the Company from liability hereunder.
This Agreement shall inure to the benefit of and be enforceable by your
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devises and legatees. If you die while any amount
would still be payable to you hereunder if you had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of the Agreement to the executors, personal
representatives, estate trustees, or administrators of your estate. This
Agreement is personal to you and neither this Agreement nor any rights
hereunder may be assigned by you.
11. Notices.
Any notice or other communication required or permitted hereunder shall be
in writing and shall be delivered personally, or sent by registered mail,
postage prepaid as follows:
(i) If to the Company, at: Grove Worldwide, P 0 Box 21, Shady
Grove, PA 17256-0021, USA
Attention: Chief Executive Officer
(ii) If to you, to the last shown address on the books of the
Company.
Any such notice shall be deemed given when so delivered personally, or, if
mailed, five (5) days after the date of deposit (in the form of registered
or certified mail, return receipt requested, postage prepaid) in the
United States postal system. Any party may by notice designate another
address or person for receipt of notices hereunder.
12. Not an Agreement of Employment.
This is not an agreement assuring employment and the Company reserves the
right to terminate your employment at any time with or without Cause,
subject to the payment provisions hereof if such termination is after, or
within one hundred and eighty (180) days prior to, a Change in Control.
You acknowledge that you are aware that you shall have no claim against
the Company hereunder or for deprivation of the right to receive the
amounts hereunder as a result of any termination that does not
specifically satisfy the requirements hereof. The foregoing shall not
affect your rights under any other agreement with the Company.
6
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GROVE WORLDWIDE
13. Miscellaneous.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by you and such officer as may be specifically designated by the
Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision
shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. This Agreement constitutes
the entire Agreement between the parties hereto pertaining to the subject
matter hereof and supersedes any prior agreements between the Company and
you. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement. All
references to any law shall be deemed also to refer to any successor
provisions to such laws.
14. Acknowledgment.
You acknowledge that you: (a) have read this Agreement, understand its
terms and that it has been entered into by you voluntarily; (b) that the
payments to be made hereunder constitute additional compensation to you;
(c) have had sufficient opportunity to consider this Agreement and discuss
it with advisors of your choice, including your attorney and accountants;
(d) have been informed that you have the right to consider this Agreement
for a period of at least 21 days prior to entering into it; (e) have taken
sufficient time to consider this Agreement before signing it; and (f) have
the right to revoke this Agreement for a period of 7 days following the
Agreement's execution by giving written notice to the Company.
15. Release.
As a material inducement to the Company to enter into this Agreement, you
agree for yourself and your heirs, successors, and assigns that upon
receipt of the amounts payable under this Agreement you hereby release and
forever discharge the Company and any parent or affiliate thereof, its or
their respective directors, officers, employees, agents, representatives,
successors and assigns, from any and all claims, demands, actions,
liability, damages, back pay, attorney fees, or rights of any and every
kind or nature, accrued or unaccrued, known or unknown, arising out of or
in any manner relating to your employment and termination of employment
with the Company or its parents or affiliates including without limitation
any alleged violation of Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act of 1967, the Employee Retirement
Income Security Act of 1974, as the same may have been or be amended from
time to time or any other federal, state or local law, regulation or
ordinance (except for your existing accrued rights under the Company's (or
any affiliate of the Company) pension plan, saving plan, health and
welfare benefit plans, and the rights already granted to you under the
Stock Option Scheme of Hanson PLC and/or any long term incentive plan of
the Company, and except as expressly set forth
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GROVE WORLDWIDE
herein). If requested by the Company you agree to execute a further formal
waiver and release at the time of termination of your employment and the
payment by the Company of the amounts payable under this Agreement in the
terms set out or substantially in the terms set out in this Section 16.
16. Withholding Taxes.
The Company may withhold from any and all amounts payable under this
Agreement such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
17. Governing Law.
This Agreement shall be construed, interpreted, and governed in accordance
with the laws of the State of Delaware without reference to rules relating
to conflicts of law.
Very truly yours,
By: /s/ Robert C. Stift
------------------------------------
Robert C. Stift
Chairman and Chief Executive Officer
Agreed and Accepted this
25th day of July 1997
/s/ G. F. Heidinger
---------------------------------------
G. F. Heidinger
8
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GROVE WORLDWIDE
EXHIBIT A
Change in Control
For purposes of this Agreement, the term "Change in Control" shall mean the sale
or transfer, directly or indirectly, of substantially all of the Company's
business and assets to an entity not affiliated with Hanson PLC, or the
purchase, directly or indirectly, by an entity not affiliated with Hanson PLC of
more than 50% of the outstanding shares of the common stock of the Company. For
purposes of this definition, an affiliate of Hanson PLC refers to any person or
business entity, directly or indirectly, controlling, controlled by, or under
the common control with Hanson PLC, with the term "control" referring to any
person or business entity owning, directly or indirectly, more than a 50% equity
interest in the controlled entity or possessing the power to direct or cause the
direction of the management or policies of the controlled entity.
Only one (1) Change in Control may take place under this Agreement.
9
<PAGE>
Exhibit 10.11
1
Grove Investors LLC
Management Option Plan
SECTION 1. Purpose. The purposes of this Grove Investors LLC
Management Option Plan (the "Plan") are to promote the interests of Grove
Investors LLC (the "Company") and its members by (i) attracting and retaining
exceptional officers and other key employees of the Company and its Affiliates,
specifically including the Company's indirect subsidiary, Grove Worldwide LLC
and (ii) enabling such individuals to acquire an equity interest in and
participate in the long-term growth and financial success of the Company.
SECTION 2. Definitions. As used in the Plan, the following terms
shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or indirectly,
controls or is controlled by or under common control with the Company and (ii)
any entity in which the Company has a significant equity interest, in either
case as determined by the Committee.
"Board" shall mean the Management Committee of the Company, as
established pursuant to the LLC Agreement.
"Cause" shall mean (i) willful misconduct or willful malfeasance by
the Participant in connection with his or her employment, (ii) the Participant's
conviction of, or plea of guilty or nolo contendere to, any crime constituting a
felony under the laws of the United States or any state thereof or any crime
involving moral turpitude or (iii) the Participant's material breach of any of
the provisions of any employment agreement or the LLC Agreement which is not
cured by the Participant within 10 business days following written notice from
his employer of such breach.
"Change in Control" shall mean the closing of any transaction
whereby any Person other than FW Grove Coinvestors, L.P., Keystone, Inc.
(including funds sponsored by Keystone, Inc.), FW Strategic Partners, L.P.,
Michael L. George or the George Group, Inc. or any of their respective
Affiliates shall have become the beneficial owner of more than 50% of the Equity
Securities (as defined in the LLC Agreement) of the Company or a reorganization,
merger, consolidation, acquisition or other similar transaction, after which all
or substantially all of the assets of the Company are controlled by an entity
other than FW Grove Coinvestors, L.P., Keystone, Inc. (including investment
funds sponsored by Keystone, Inc.), Michael L. George, the George Group Inc.
and/or FW Strategic Partners, L.P. or their respective Affiliates.
<PAGE>
2
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" shall mean Compensation Committee of the Board or any
person or persons designated by the Board or the Compensation Committee to
administer the Plan.
"Class A Unit" shall mean a unit of interest in the Company based
upon a notional amount of 75,000 units outstanding as of the Effective Date,
with each Class A Unit representing a .001333% interest in the Company as of the
Effective Date, subject to adjustment as provided in Section 6(d) and in the LLC
Agreement.
"Company" shall mean Grove Investors LLC, a Delaware limited
liability company, together with any successor thereto.
"Disability" shall mean a Participant's becoming physically or
mentally incapacitated so that he is therefore reasonably expected to be unable
with reasonable accommodation, for a period of six consecutive months or for an
aggregate of nine months in any 18 consecutive month period to perform the
essential functions of his job for the Company and its Affiliates.
"EBITDA" shall mean the net profit of the Company and its
subsidiaries, after all expenses but before any (A) interest, (B) income taxes
or other taxes based on profits, (C) amortization of goodwill, (D) depreciation,
(E) cash expenses directly associated with the implementation of the operations
improvement program, including consulting fees under the Consulting Agreement
referred to in the LLC Agreement, and (F) to the extent determined by the
Committee, any nonrecurring or unbudgeted extraordinary items of income or loss.
The determination of EBITDA for purposes of the Plan shall be made by the
Committee in good faith, which determination shall be conclusive and binding on
the Company and the Participants, including any beneficiaries thereof.
"EBITDA Target" shall mean the target EBITDA for the Company and its
subsidiaries determined for a fiscal year based on management's proposal and as
approved by the Committee.
"Employment" and "termination of employment" and similar references
shall include employment with and termination of employment from the Company and
its Affiliates, including Grove.
"Effective Date" shall mean April 28, 1998.
<PAGE>
3
"Fair Market Value" of Interests shall mean the fair market value of
such Interests as determined in good faith by the Board. In the event of a
Change in Control involving the sale of Interests or Interests of Grove
Worldwide, the Fair Market Value of an Interest shall be based upon the price
per Interest paid by the acquiror in connection with such Change in Control.
"Grove" shall mean Grove Worldwide LLC, a Delaware limited liability
company, together with any successor thereto.
"Interest" shall mean an Interest as defined in the LLC Agreement.
"LLC Agreement" shall mean the Second Amended and Restated Limited
Liability Company Agreement of Grove Investors LLC dated as of June __, 1998.
"Option" shall mean an option granted hereunder to acquire Class A
Units, as set forth in Section 6.
"Option Agreement" shall mean any written agreement, contract, or
other instrument or document (which may include provisions of an employment
agreement to which the Company is a party) evidencing any Option granted
hereunder, which may, but need not, be executed or acknowledged by a
Participant.
"Participant" shall mean any officer or other key employee of the
Company or its Affiliates eligible for an Option under Section 5 and selected by
the Committee to receive an Option under the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.
"Plan" shall mean this Grove Investors LLC Management Option Plan.
SECTION 3. Administration.
(a) The Plan shall be administered by the Committee. Subject to the
terms of the Plan and applicable law, and in addition to other express powers
and authorizations conferred on the Committee by the Plan, the Committee shall
have full power and authority to: (i) designate Participants; (ii) determine the
number of Class A Units (and underlying Interests) or fractions thereof to be
covered by, or with respect to which payments, rights or other matters are to be
calculated in connection with, the Options; (iii) determine the terms and
conditions of any Option; (iv) determine whether, to what extent, and under what
circumstances Options may be settled or exercised in cash, Interests, other
securities or other property, or canceled, forfeited or suspended and the method
or methods by which the Options may be settled, exercised, canceled, forfeited
or
<PAGE>
4
suspended; (v) interpret, administer, reconcile any inconsistency, correct any
defect and/or supply any omission in the Plan and any instrument or agreement
relating to, or Option made under, the Plan; (vi) establish, amend, suspend or
waive such rules and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and (vii) make any other
determination and take any other action that the Committee deems necessary or
desirable for the administration of the Plan.
(b) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Option shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Option and any member of the Company.
(c) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option
hereunder.
SECTION 4. Class A Units and Interests.
(a) Class A Units Available. Subject to adjustment as set forth in
Section 4(b), the aggregate number of Class A Units with respect to which
Options may be granted under the Plan shall be 4,500. If, after the effective
date of the Plan, any Class A Units covered by an Option granted under the Plan,
are forfeited, or if an Option has expired, terminated or been canceled for any
reason whatsoever (other than by reason of exercise) and in either such case a
Participant has received no benefits of ownership with respect to the forfeited
Class A Units or the Interests to which such expired, terminated or canceled
Option relates, then the Class A Units covered by such Option shall again be
available to be granted under Options hereunder.
(b) Adjustments. In addition to the adjustment in the Interests as
described in Section 6(d), in the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Interests,
securities or other property), recapitalization, reorganization, merger,
consolidation, issuance or exchange of Interests, other ownership interests or
other securities of the Company, issuance of warrants or other rights to
purchase Interests, other ownership interests or other securities of the Company
or other similar corporate transaction or event affects the Interests such that
an adjustment is determined by the Committee in its discretion to be appropriate
in order to prevent inappropriate dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee may, in such manner as it may deem equitable, adjust any or all of (i)
the number of Class A Units, other ownership interests or other securities of
the Company (or number
<PAGE>
5
and kind of other securities or property) with respect to which Options may be
granted, (ii) the number of Class A Units, other ownership interests or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding Options or the percentage of Interests, other ownership
interests or other securities of the Company subject to Class A Units and (iii)
the exercise price with respect to any Option or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Option in
consideration for the cancellation of such Option. No adjustment shall be made
on account of the issuance of Interests with respect to Options.
SECTION 5. Eligibility. Any officer or other key employee of the
Company or any of its Affiliates (including any prospective officer or key
employee) shall be eligible to be designated as a Participant in the Plan by the
Committee.
SECTION 6. Options.
(a) Grant. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Participants to whom
Options shall be granted, the number of Class A Units to be covered by each
Option, the exercise price therefor and the conditions and limitations
applicable to the exercise of the Option.
(b) Exercise Price. The exercise price per Class A Unit for Options
granted as of the Effective Date shall be the Company's cost of its investment
in Grove for the Interests relating to such Class A Unit. The exercise price per
Class A Unit for Options granted as of a date after the Effective Date shall be
the Fair Market Value of the Interests relating to such Class A Unit, as
determined by the Committee.
(c) Exercise.
(i) Each Option shall be exercisable at such times and subject
to such terms and conditions (including vesting provisions) as the Committee
may, in its sole discretion, specify in the applicable Option Agreement or
thereafter and/or to the extent not so specified, as specified in paragraph (g)
below. The Committee may impose such conditions with respect to the exercise of
Options, including without limitation, any relating to the application of
federal or state securities laws, as it may deem necessary or advisable.
(ii) Upon proper exercise in whole or in part of the vested
portion of an Option, (I) the number of Class A Units with respect to which the
Option is exercised shall be issued to the Participant, (II) the Participant's
capital account in the Company shall have an initial balance equal to the
exercise price paid by such Participant and (III) the Participant shall be
entitled to receive special priority allocations of income under the LLC
Agreement as provided in Article IV thereof.
<PAGE>
6
(iii) In the event that a Participant exercises an Option at a
time when it is not yet determined whether he is vested as of such exercise
date, the Participant shall not be entitled to receive Interests on account of
such exercise, and shall not be required to tender payment on account of such
exercise, until the Company determines that the Participant was vested as of the
date of such purported exercise.
(d) Adjustment of Percentage of Interests Subject to Class A Units.
Upon the issuance or redemption of Interests in the Company, the number of Class
A Units available under the Plan and the number of Class A Units subject to
outstanding Options shall be equitably adjusted as determined by the Committee
in its sole discretion to prevent inappropriate dilution or enlargement of the
economic interest represented by such Class A Units.
(e) Payment. No Interests shall be delivered pursuant to any
exercise of an Option until payment in full of the aggregate exercise price
therefor is received by the Company. Such payment may be made in cash or its
equivalent, as determined by the Committee.
(f) Subject to LLC Agreement. As a condition to the exercise of an
Option, the Participant will be required to become a party to the LLC Agreement
and the Interests acquired upon exercise of the Option will be held subject to
the terms and conditions of the LLC Agreement.
(g) Vesting.
(i) Options Granted as of Effective Date. Subject to the
Participant's continued employment with the Company and its Affiliates, the
Options granted as of the Effective Date shall vest over a five year period with
the first year of such five year period being the Company's first fiscal year
that begins after the Effective Date, as follows:
(A) For each of the first five fiscal years beginning
after the Effective Date, the Option shall vest and become cumulatively
exercisable with respect to 20% of the Interests initially relating
thereto on the last day of such fiscal year if the Company and its
subsidiaries meet the EBITDA Target established for that fiscal year.
(B) If the EBITDA actually achieved for a year is at
least 80% but less than 100% of the Target for that year, then the vesting
opportunity of the Option for that year shall be reduced by 5% for each 1%
of difference between the EBITDA Target and the EBITDA actually achieved;
or
(C) If the EBITDA results for a year exceed 100% of the
EBITDA Target for that year, a participant's vesting opportunity (that is,
<PAGE>
7
20%) for that year will be fully achieved. In addition, the Participant
shall be credited with a vesting excess either to make up for some or all
of a vesting opportunity not achieved in prior years or may apply such
excess against a vesting deficiency of a future year, on the following
basis: the vesting opportunity shall be increased by 2.5% for each 1% of
difference between the EBITDA actually achieved and the EBITDA Target for
that year. The maximum aggregate excess percentage that may be carried
forward to future years or backward from any given year cannot provide
vesting with respect to more than 10% of all Options granted to a
participant.
(D) No more than 100% of Options granted may vest.
(ii) Options Granted After Effective Date. Unless otherwise
provided in the applicable Option agreement, and subject to the Participant's
continued employment with the Company and its Affiliates, the Options granted
after the Effective Date shall vest over a five year period, as follows:
(A) For each of the first five fiscal years beginning
after the Grant Date, the Option shall vest and become cumulatively
exercisable with respect to 20% of the Interests initially relating
thereto on the last day of such fiscal year if the Company and its
subsidiaries meet the EBITDA Target established for that fiscal year.
(B) If the EBITDA actually achieved for a year is at
least 80% but less than 100% of the Target for that year, then the vesting
opportunity of the Option for that year shall be reduced by 5% for each 1%
of difference between the EBITDA Target and the EBITDA actually achieved;
or
(C) If the EBITDA results for a year exceed 100% of the
EBITDA Target for that year, a participant's vesting opportunity (that is,
20%) for that year will be fully achieved. In addition, the participant
shall be credited with a vesting excess either to make up for some or all
of a vesting opportunity not achieved in prior years or may apply such
excess against a vesting deficiency of a future year, on the following
basis: The vesting opportunity shall be increased by 2.5% for each 1% of
difference between the EBITDA actually achieved and the EBITDA Target for
that year. The maximum aggregate excess percentage that may be carried
forward to future years or backward from any given year cannot provide
vesting with respect to more than 10% of all Options granted to a
participant as of the Effective Date.
(D) No more than 100% of Options granted may vest.
(iii) Change in Control. To the extent not previously
canceled, any unvested portion of an Option shall, as of the date of a Change in
<PAGE>
8
Control, be deemed vested and exercisable immediately prior to such Change in
Control.
(h) Exercise. A Participant may exercise all or any part of the
vested portion of an Option upon ten days' advance written notice to the Company
at any time prior to the earliest to occur of the following dates:
(i) the tenth anniversary of the date of grant of such
Option;
(ii) the expiration of 30 days following the effective date
of the Participant's termination of employment by the
Company and its Affiliates without Cause (regardless of
whether the ten-day notice period for the exercise of
the Option ends after the end of such 30 days following
termination);
(iii) the expiration of one year following the date of the
Participant's termination of employment with the Company
and its Affiliates due to the Participant's death or
Disability;
(iv) the effective date of a Participant's termination of
employment by the Company and its Affiliates for Cause;
or
(v) the effective date of a Participant's voluntary
termination of employment for any reason (regardless of
whether the ten-day notice period for the exercise of
the Option ends after the effective date of such
termination of employment).
(i) Section 83(b) Election. Unless the Committee determines
otherwise, an individual exercising an Option will be required to make a timely,
valid election under section 83(b) of the Internal Revenue Code of 1986, as
amended.
(j) Effect of Termination of Employment. Upon a Participant's
termination of employment with the Company and its Affiliates for any reason:
(i) , the unvested portion of the Option, if any, shall be automatically
canceled without consideration; (ii) the portion of the Option which was vested
immediately before termination of employment shall remain exercisable as set
forth in Section 6(h) above, but if not exercised within the applicable period,
it shall be automatically cancelled without consideration.
<PAGE>
9
SECTION 7. Call Rights.
(a) Exercise of Call Right. Any Interest acquired from the exercise
of an Option shall be subject to a Call Right described in Section 11.1 of the
LLC Agreement. Any exercise by the Company of a Call Right shall be made in
accordance with the procedures described in the LLC Agreement.
SECTION 8. Amendment and Termination.
(a) Amendments to the Plan. The Board, or if none, the Committee,
may amend, alter, suspend, discontinue, or terminate the Plan or any portion
thereof at any time; provided that any such amendment, alteration, suspension,
discontinuance or termination that would materially adversely affect the rights
of any Participant or other holder of an Option theretofore granted shall not to
that extent be effective without the written consent of the affected Participant
or holder.
(b) Amendments to Options. The Committee may waive any conditions or
rights under, amend any terms of or alter, suspend, discontinue, cancel or
terminate any Option theretofore granted, prospectively or retroactively;
provided, that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination not expressly contemplated by the
Plan that would materially adversely affect the rights of any Participant or
other holder of an Option theretofore granted shall not to that extent be
effective without the written consent of the affected Participant or holder.
(c) Cancellation. Any provision of this Plan or any Option Agreement
to the contrary notwithstanding, in connection with a Change in Control, the
Company shall be entitled to elect to cancel the unexercised portion of any
Option (the "Unexercised Portion") in exchange for a cash payment to the
Participant equal to the excess of (i) the Fair Market Value of the Interests
underlying the Class A Units covered by the Unexercised Portion over (ii) the
aggregate exercise price of the Unexercised Portion.
(d) Initial Public Offering. Upon the occurrence of an Initial
Public Offering of stock by the Company or a successor, the Committee shall take
all such action as it deems appropriate, in its sole discretion, to cause the
public corporation to assume this Management Option Plan and any outstanding
Options in such manner as the Committee shall determine to be equitable and
consistent with the purposes of this Plan.
<PAGE>
10
SECTION 9. General Provisions.
(a) Nontransferability.
(i) Each Option, and each right under any Option, shall be
exercisable during the Participant's lifetime only by the Participant, or, if
permissible under applicable law, by the Participant's legal guardian or
representative.
(ii) No Option may be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Participant otherwise than by
will or by the laws of descent and distribution, and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or any Affiliate: provided, that
the designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.
(b) No Rights to Options. No Person shall have any claim to be
granted any Option, and there is no obligation for uniformity of treatment of
Participants or holders or beneficiaries of Options. The terms and conditions of
Options and the Committee's determinations and interpretations with respect
thereto need not be the same with respect to each Participant (whether or not
such Participants are similarly situated).
(c) Certificates. All certificates, if any, evidencing Interests or
other interests in or securities of the Company or any Affiliate delivered under
the Plan pursuant to any Option or the exercise thereof shall be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which such
securities are then listed and any applicable Federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(d) Delegation. Subject to the terms of the Plan, the provisions of
any Option Agreement and applicable law, the Committee may delegate to one or
more officers or managers of the Company or any Affiliate, or to a committee of
such officers or managers, the authority, subject to such terms and limitations
as the Committee shall determine, to grant Options to, or to cancel, modify or
waive rights with respect to, or to alter, discontinue, suspend or terminate
Options held by Participants.
(e) Withholding. A Participant may be required to pay to the Company
and the Company and its Affiliates shall have the right and is hereby authorized
to withhold from any payment due or transfer made under any Option, under the
Plan or from any compensation or other amount owing to a Participant the
<PAGE>
11
amount (in cash, securities or other property) of any applicable withholding
taxes in respect of an Option, its exercise or any payment or transfer under an
Option or the Plan and to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such taxes.
(f) Option Agreements. Each Option hereunder shall be evidenced by
an Option Agreement which shall be delivered to the Participant and shall
specify the terms and conditions of the Option and any rules applicable thereto.
(g) No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other compensation arrangements, which may, but need not,
provide for the grant of options, securities and other types of awards, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(h) No Right to Employment. The grant of an Option shall not be
construed as giving a Participant the right to be retained in the employ of, or
in any other continuing relationship with, the Company or any Affiliate.
(i) No Rights as a Member. Subject to the provisions of the
applicable Option Agreement, no Participant or holder or beneficiary of any
Option shall have any rights as a member of the Company with respect to any
Interests to be distributed under the Plan until he or she has become the holder
of such Interests.
(j) Governing Law. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan and any Option Agreement
shall be determined in accordance with the laws of the State of New York.
(k) Severability. If any provision of the Plan or any Option is,
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or as to any Person or Option, or would disqualify the Plan or any Option under
any law deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Option, such provision shall be stricken
as to such jurisdiction, Person or Option and the remainder of the Plan and any
such Option shall remain in full force and effect.
(1) Other Laws. The Committee may refuse to issue or transfer any
Interests or other consideration under an Option if, acting in its sole
discretion, it determines that the issuance or transfer of such Interests or
such other consideration would violate any applicable law or regulation and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Option shall be promptly refunded. Without
limiting the generality of the
<PAGE>
12
foregoing, no Option granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and
until the Committee in its sole discretion has determined that any such offer,
if made, would be in compliance with all applicable securities laws.
(m) No Trust or Fund Created. Neither the Plan nor any Option shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Option such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(n) Headings. Headings are used herein solely as a convenience to
facilitate reference and shall not be deemed in any way material or relevant to
the construction or interpretation of the Plan or any provision thereof.
(o) Arbitration. The parties hereto will endeavor to resolve in good
faith any controversy, disagreement or claim arising between them, whether as to
the interpretation, performance or operation of this Agreement or any rights or
obligations hereunder. Except as otherwise provided herein, if they are unable
to do so, any such controversy, disagreement or claim will be submitted to
binding arbitration, for final resolution without appeal, by either party giving
written notice to the other of the existence of a dispute which it desires to
have arbitrated. The arbitration will be conducted in ______________ by a panel
of three (3) arbitrators and will be held in accordance with the rules of the
American Arbitration Association. Of the three arbitrators, one will be selected
by the Company, one will be selected by the Employee and the third will be
selected by the two arbitrators so selected. Each party will notify the other
party of the arbitrator selected by him or it within fifteen (15) days after the
giving of written notice. The decision and award of the arbitrators must be in
writing and will be final and binding upon the parties hereto. Judgment upon the
award may be entered in any court having jurisdiction thereof, or application
may be made to such court for a judicial acceptance of the award and an order of
enforcement, as the case may be. The expenses of arbitration will be borne in
accordance with the determination of the arbitrators with respect thereto.
Pending a decision by the arbitrators with respect to the dispute or difference
undergoing arbitration, all other obligations of the parties will continue as
stipulated herein, and all monies not directly involved in such dispute or
difference will be paid when due.
SECTION 10. Term of the Plan.
(a) Effective Date. The Plan shall be effective as of April 28, 1998
(the "Effective Date").
<PAGE>
13
(b) Expiration Date. No Option shall be granted under the Plan after
the tenth anniversary of the Effective Date. Unless otherwise expressly provided
in the Plan or in an applicable Option Agreement, any Option granted hereunder
may, and the authority of the Committee to amend, alter, adjust, suspend,
discontinue or terminate any conditions or rights under any such Option shall,
continue after the tenth anniversary of the Effective Date.
<PAGE>
Exhibit 10.12
GROVE WORLDWIDE LLC
Short Term Incentive Plan
SECTION 1. Purpose. The purposes of this Grove Worldwide LLC Short
Term Incentive Plan (the "Plan") are to promote the interests of Grove Worldwide
LLC (the "Company") and its members by attracting and retaining exceptional
officers and other key employees of the Company and its Affiliates by means of
performance-related incentives to achieve annual performance goals of the
Company and to enable such officers and key employees to participate in the
growth and financial success of the Company.
SECTION 2. Definitions. As used in the Plan, the following terms
shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or indirectly,
controls or is controlled by or under common control with the Company and (ii)
any entity in which the Company has a significant equity interest, in either
case as determined by the Committee.
"Award" shall mean a right to receive a Bonus under the terms, and
subject to the conditions, of the Plan.
"Board" shall mean the Management Committee of the Company, as
established pursuant to the LLC Agreement.
"Bonus" shall mean an amount payable to a Participant on achievement
of specified levels of EBITDA during a Year.
"Committee" shall mean the Compensation Committee of the Board or
any person or persons designated by the Board or the Compensation Committee to
administer the Plan.
"Company" shall mean Grove Worldwide LLC, a Delaware limited
liability company, together with any successor thereto.
"Disability" shall mean a Participant's becoming physically or
mentally incapacitated so that he is therefore reasonably expected to be unable,
with reasonable accommodation, for a period of six consecutive months or for an
aggregate of nine months in any 18 consecutive month period to perform the
essential functions of his job.
<PAGE>
2
"EBITDA" shall mean the net profit of the Company and its
subsidiaries, after all expenses but before any (A) interest, (B) income taxes
or other taxes based on profits, (C) amortization of goodwill, (D) depreciation,
(E) cash expenses directly associated with the implementation of the operations
improvement program, including consulting fees under the Consulting Agreement
referred to in the LLC Agreement and (F) to the extent determined by the
Committee, any nonrecurring or unbudgeted extraordinary items of income or loss.
The Committee may also determine EBITDA with respect to a designated business
unit. The determination of EBITDA for purposes of the Plan shall be made by the
Committee in good faith, which determination shall be conclusive and binding on
the Company and the Participants, including any beneficiaries thereof.
"EBITDA Target" shall mean a target EBITDA for the Company and its
subsidiaries, and/or for a designated business unit determined for a Year based
on management's proposal and as approved by the Committee.
"Effective Date" shall mean April 28, 1998.
"LLC Agreement" shall mean the Second Amended and Restated
Limited Liability Company Agreement of Grove Investors LLC.
"Participant" shall mean any officer or other key employee of the
Company or its Affiliates eligible to receive an award under Section 4 and
selected by the Committee to receive an award under the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.
"Plan" shall mean this Grove Worldwide LLC Short Term Incentive
Plan.
"Year" shall mean a fiscal year of the Company.
SECTION 3. Administration.
(a) The Plan shall be administered by the Committee. Subject to the
terms of the Plan and applicable law, and in addition to other express powers
and authorizations conferred on the Committee by the Plan, the Committee shall
have full power and authority to: (i) designate Participants; (ii) determine
business units and the EBITDA Targets for the Company and such business units;
(iii) determine the terms and conditions of Awards under the Plan; (iv)
determine EBITDA for the Company and each designated business unit for each
Year; (v) interpret, administer, reconcile
<PAGE>
3
any inconsistency, correct any default and/or supply any omission in the Plan
and any instrument or agreement relating to, or Award made under, the Plan; (vi)
establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (vii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
(b) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon all Persons, including the Company, any Affiliate, any Participant or his
beneficiaries and any member of the Company.
(c) No member of the Committee shall be personally liable for any
action or determination made in good faith with respect to the Plan or any Award
hereunder.
SECTION 4. Eligibility. Any officer or other key employee of the
Company or any of its Affiliates (including any prospective officer or key
employee) as designated by the Committee shall be eligible to be designated as a
Participant in, and receive an Award under, the Plan.
SECTION 5. Grant of Award; Establishment of Target Bonus. With
respect to each Year, each Participant selected by the Committee shall be
entitled to receive an Award under the Plan. The amount of the Bonus payable
under an Award to the Participant on attainment on 100% of the EBITDA Targets
established for him for the Year is referred to as his "Target Bonus" for the
Year and shall generally be expressed as a percentage of the Participant's base
salary. The Target Bonus for each Participant will be established by the
Committee taking into consideration such factors as the Committee deems
appropriate including, without limitation, the Participant's position, level of
responsibilities and remuneration. The Target Bonus will be established with
respect to an EBITDA Target relating to the Company and its subsidiaries as a
whole or to a combination of EBITDA Targets relating to the Company and its
subsidiaries as a whole and the business unit in which the Participant is
employed, as determined by the Committee in its discretion.
SECTION 6. Establishment of EBITDA Targets. The EBITDA Targets
established for a Year shall relate to the Company and its subsidiaries as a
whole and such business units thereof as may be determined by the Committee.
Prior to the beginning of each Year the Committee shall determine the business
units for which EBITDA Targets shall be established and shall establish the
EBITDA Targets for such
<PAGE>
4
Year. The Committee may in its sole discretion adjust the EBITDA Targets for a
fiscal year for nonrecurring or unbudgeted extraordinary events.
SECTION 7. Amount of Bonus. A Participant's Bonus will be
determined relative to the achievement of the EBITDA Targets as follows:
---------------------------------------------------------
Percentage of EBITDA Percentage of Target
Target Achieved Bonus Payable
--------------------- ---------------------
Below 100% of EBITDA Bonus is reduced by 5% of
Target Target Bonus for each 1%
below EBITDA Target
100% of EBITDA Target 100% of Target Bonus
Above 100% of EBITDA Bonus is increased by 2-1/2%
Target of Target Bonus for each 1%
above EBITDA Target
---------------------------------------------------------
As described in the foregoing chart, there is no limit on the amount
of Bonus a Participant may earn under the Plan. No Bonus shall be in an amount
less than $0.
With respect to EBITDA which falls in between whole percentages, a
Participant's Bonus shall be determined by interpolation (on a linear basis).
SECTION 8. Bonus Payments. Any Bonus that is earned by a Participant
under the Plan will be paid to the Participant in cash no later than 30 days
after the Company's audited financial results for such Year become available.
SECTION 9. Effect Of Termination Of Employment.
No Bonus shall be paid to any Participant in respect of a Year
unless he (i) is employed by the Company or an Affiliate on the last day of the
Year or (ii) terminated employment during the Year on account of his death or
Disability during the Year. If a Participant's employment terminates during the
Year on account of his death or Disability during the Year, such Participant (or
his estate, in the case of his death) shall be entitled to receive a pro-rata
portion of the Bonus otherwise payable under the Plan on account of such Year
(if any) based upon the actual results for the Year and the number of his
completed months of employment during the Year and payable at the same time as
other Bonuses are or would be paid under the Plan for such Year.
<PAGE>
5
SECTION 10. Amendment and Termination. The Board, or if none, the
Committee may amend, alter, suspend, discontinue or terminate the Plan or any
portion thereof at any time; provided that any such amendment, alteration,
suspension, discontinuance or termination that would materially adversely affect
the rights of any Participant to a Bonus theretofore earned shall not to that
extent be effective without the consent of the affected Participant.
SECTION 11. General Provisions.
(a) Nontransferability. The Participant's rights under this Plan
shall not be transferable during the Participant's lifetime. No rights under
this Plan may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant otherwise than by will or by the laws
of descent and distribution, and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate; provided, that the
designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.
(b) No Rights to Participate. No Person shall have any claim to be
selected as a Participant hereunder or to be granted any award hereunder. There
is no obligation for uniformity of treatment of Participants. The terms and
conditions of awards and the Committee's determinations and interpretations with
respect thereto need not be the same with respect to each Participant (whether
or not such Participants are similarly situated).
(c) Delegation. Subject to the terms of the Plan and applicable law,
the Committee may delegate to one or more officers or managers of the Company or
any Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to take
any action which the Committee has authority to take under this Plan.
(d) Withholding. The Company shall have the right and is hereby
authorized to withhold from any payment due under the Plan or from any
compensation or other amount owing to a Participant the amount of any applicable
withholding taxes in respect of any Bonus and to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes.
(e) Award Letter. Each award made hereunder shall be evidenced by an
Award Letter which shall be delivered to the Participant and shall specify the
terms and conditions under which he may earn and be paid a Bonus and any rules
applicable thereto.
<PAGE>
(f) No Limit on Other Compensation Arrangements. Nothing contained
in the Plan shall prevent the Company from adopting or continuing in effect
other compensation arrangements, which may, but need not, provide for the grant
of options, securities and other types of awards, and such arrangements may be
either generally applicable or applicable only in specific cases.
(g) No Right to Employment. Participation in the Plan shall not be
construed as giving a Participant the right to be retained in the employ of, or
in any other continuing relationship with, the Company or any Affiliate.
(h) Governing Law. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of New York.
(i) Severability. If any provision of the Plan is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any
person, or would disqualify the Plan under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform the
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan, such
provision shall be stricken as to such jurisdiction or person and the remainder
of the Plan and shall remain in full force and effect.
(j) No Trust or Fund Created. Neither the Plan nor any award
hereunder shall create or be construed to create a trust or separate fund of any
kind or a fiduciary relationship between the Company or any affiliate and a
Participant or any other person. To the extent that any person acquires a right
to receive payments from the Company or any Affiliate pursuant to the Plan such
right shall be no greater than the right of any unsecured general creditor of
the Company or any affiliate.
(k) Headings. Headings are used herein solely as a convenience to
facilitate reference and shall not be deemed in any way material or relevant to
the construction or interpretation of the Plan or any provision thereof.
<PAGE>
Exhibit 10.13
EXECUTION COPY
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
made by
GROVE HOLDINGS LLC
GROVE WORLDWIDE LLC
GROVE CAPITAL, INC.
and certain of their Subsidiaries
in favor of
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Administrative Agent
Dated as of April 29, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS .......................................... 2
1.1 Definitions ............................................... 2
1.2 Other Definitional Provisions ............................. 5
SECTION 2. GUARANTEE .............................................. 5
2.1 Guarantee ................................................. 5
2.2 Right of Contribution ..................................... 6
2.3 No Subrogation ............................................ 6
2.4 Amendments, etc. with respect to the
Borrower Obligations .................................... 7
2.5 Guarantee Absolute and Unconditional ...................... 7
2.6 Reinstatement ............................................. 8
2.7 Payments .................................................. 8
SECTION 3. GRANT OF SECURITY INTEREST ............................. 8
SECTION 4. REPRESENTATIONS AND WARRANTIES ......................... 9
4.1 Representations in Credit Agreement;
Holdings Representations ................................ 9
4.2 Title; No Other Liens ..................................... 11
4.3 Perfected First Priority Liens ............................ 11
4.4 Chief Executive Office .................................... 11
4.5 Inventory and Equipment ................................... 11
4.6 Farm Products ............................................. 11
4.7 Pledged Securities ........................................ 11
4.8 Receivables ............................................... 12
4.9 Intellectual Property ..................................... 12
4.10 Vehicles .................................................. 13
SECTION 5. COVENANTS .............................................. 13
5.1 Covenants in Credit Agreement ............................. 13
5.2 Delivery of Instruments and Chattel Paper ................. 13
5.3 Maintenance of Insurance .................................. 14
5.4 Payment of Obligations .................................... 14
5.5 Maintenance of Perfected Security Interest;
Further Documentation ................................... 14
5.6 Changes in Locations, Name, etc ........................... 15
5.7 Notices ................................................... 15
5.8 Pledged Securities ........................................ 16
5.9 Receivables ............................................... 17
5.10 Intellectual Property ..................................... 17
5.11 Vehicles .................................................. 18
SECTION 6. REMEDIAL PROVISIONS .................................... 19
i
<PAGE>
6.1 Certain Matters Relating to Receivables .................. 19
6.2 Communications with Obligors;
Grantors Remain Liable .................................. 19
6.3 Pledged Stock ............................................ 20
6.4 Proceeds to be Turned Over To
Administrative Agent ................................... 21
6.5 Application of Proceeds .................................. 21
6.6 Code and Other Remedies .................................. 22
6.7 Registration Rights ...................................... 23
6.8 Waiver; Deficiency ....................................... 24
SECTION 7. THE ADMINISTRATIVE AGENT ............................. 24
7.1 Administrative Agent's Appointment as
Attorney-in-Fact, etc .................................. 24
7.2 Duty of Administrative Agent ............................. 26
7.3 Execution of Financing Statements ........................ 26
7.4 Authority of Administrative Agent ........................ 26
SECTION 8. MISCELLANEOUS ........................................ 27
8.1 Amendments in Writing .................................... 27
8.2 Notices .................................................. 27
8.3 No Waiver by Course of Conduct; Cumulative Remedies ...... 27
8.4 Enforcement Expenses; Indemnification .................... 27
8.5 Successors and Assigns ................................... 28
8.6 Set-Off .................................................. 28
8.7 Counterparts ............................................. 28
8.8 Severability ............................................. 28
8.9 Section Headings ......................................... 29
8.10 Integration .............................................. 29
8.11 GOVERNING LAW ............................................ 29
8.12 Submission To Jurisdiction; Waivers ...................... 29
8.13 Acknowledgements ......................................... 30
8.14 Additional Grantors ...................................... 30
8.15 Releases ................................................. 30
8.16 WAIVER OF JURY TRIAL ..................................... 31
8.17 Dealer Receivables Financing ............................. 31
ii
<PAGE>
GUARANTEE AND COLLATERAL AGREEMENT
GUARANTEE AND COLLATERAL AGREEMENT, dated as of April 29, 1998, made
by each of the signatories hereto (together with any other entity that may
become a party hereto as provided herein, the "Grantors"), in favor of Chase
Bank of Texas, National Association, as Administrative Agent (in such capacity,
the "Administrative Agent") for the banks and other financial institutions (the
"Lenders") from time to time parties to the Credit Agreement, dated as of April
29, 1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Grove Worldwide LLC and Grove Capital, Inc.
(collectively, the "Borrowers"; individually, a "Borrower"), the Lenders,
BankBoston, N.A., as Syndication Agent, Donaldson, Lufkin & Jenrette Securities
Corporation, as Documentation Agent, and the Administrative Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrowers upon the terms
and subject to the conditions set forth therein;
WHEREAS, the Borrowers are members of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrowers to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;
WHEREAS, the Borrowers and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrowers under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the
Borrowers thereunder, each Grantor hereby agrees with the Administrative Agent,
for the ratable benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the
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2
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as so defined:
Accounts, Chattel Paper, Documents, Equipment, Farm Products, Instruments,
Inventory and Investment Property.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": "Obligations" as defined in the Credit
Agreement.
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) all copyrights owned by a Grantor arising under
the laws of the United States or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished
(including those listed in Schedule 6), all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright
Office, and (ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
licensor or licensee (including those listed in Schedule 6), granting any
right under any Copyright, including the grant of rights to manufacture,
distribute, exploit and sell materials derived from any Copyright.
"Excluded Assets": (i) any Document, Receivable, Instrument, Chattel
Paper, General Intangible or similar asset sold in connection with, or
securing, the Dealer Receivables Financing or the Existing Factoring
Arrangements, all deposits accounts and other bank accounts related
thereto, all books and records pertaining to the foregoing, all proceeds
and products of the foregoing, and all collateral security and guarantees
with respect to the foregoing and (ii) short-term promissory notes and
letters of credit, drafts and other Instruments issued in favor of a
Grantor in the ordinary course of business in connection with foreign
sales; provided that if there is a Default or Event of Default the assets
described in the preceding clause (ii) shall no longer be deemed to be
Excluded Assets.
"General Intangibles": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, including, without
limitation, with respect to any Grantor, any interest in a partnership or
limited liability company that does not constitute Investment Property (as
such term is defined in Section 9-115 of the Uniform Commercial Code in
effect in the State of New York on the date hereof) owned by such Grantor
and all contracts, agreements, instruments and indentures in any form, and
portions thereof, to which such Grantor is a
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3
party or under which such Grantor has any right, title or interest or to
which such Grantor or any property of such Grantor is subject, as the same
may from time to time be amended, supplemented or otherwise modified,
including (i) all rights of such Grantor to receive moneys due and to
become due to it thereunder or in connection therewith, (ii) all rights of
such Grantor to damages arising thereunder and (iii) all rights of such
Grantor to perform and to exercise all remedies thereunder, in each case
to the extent the grant by such Grantor of a security interest pursuant to
this Agreement in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any other party
thereto, would not give any other party to such contract, agreement,
instrument or indenture the right to terminate its obligations thereunder,
or is permitted with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties thereto (it
being understood that the foregoing shall not be deemed to obligate such
Grantor to obtain such consents); provided, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any Receivable or any
money or other amounts due or to become due under any such contract,
agreement, instrument or indenture.
"Guarantor Obligations": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including Section 2) or any other Loan
Document to which such Guarantor is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including all fees and
disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by such Guarantor pursuant to the terms of
this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other than
the Borrowers.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, arising under
United States laws, including the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and
damages therefrom.
"Intercompany Note": (i) any promissory note evidencing loans made
by any Grantor to Holdings or any of its Subsidiaries and (ii) any
"Intercompany Note" as such term is defined in the Credit Agreement.
"Issuers": the collective reference to each issuer of a Pledged
Security.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of each Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
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4
"Patents": (i) all letters patent owned by a Grantor of the United
States or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including any of the
foregoing referred to in Schedule 6, (ii) all applications for letters
patent of the United States and all divisions, continuations and
continuations-in-part thereof, including any of the foregoing referred to
in Schedule 6, and (iii) all rights to obtain any reissues or extensions
of the foregoing.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or
sell any invention covered in whole or in part by a Patent, including any
of the foregoing referred to in Schedule 6.
"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (other than promissory
notes and similar instruments issued in connection with extensions of
trade credit by any Grantor in the ordinary course of business).
"Pledged Securities": the collective reference to the Pledged Notes
and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with, subject to the following sentence, any other shares, stock
certificates, options or rights of any nature whatsoever in respect of the
Capital Stock of any Person that may be issued or granted to, or held by,
any Grantor while this Agreement is in effect. Such Pledged Stock shall at
all times during the effectiveness of this Agreement consist of (i) 100%
of the Capital Stock of each Borrower and each Subsidiary Guarantor and
(ii) 65% of the Capital Stock of each First-Tier Foreign Subsidiary or, if
such First-Tier Foreign Subsidiary is also a Check-the-Box Subsidiary,
100% of the Capital Stock of each Check-the-Box Subsidiary (provided that
the pledge of 100% of the Capital Stock of a Check-the-Box Subsidiary
shall be reduced to 65% if either (x) such Check-the-Box Subsidiary elects
to no longer be treated as a partnership or to no longer be disregarded as
an entity separate from its owner for United States Federal income tax
purposes or (y) the pledge of more than 65% of the Capital Stock of such
Check-the-Box Subsidiary results in material adverse tax consequences to
such Check-the-Box Subsidiary as notified by the Company to the
Administrative Agent).
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of New York
on the date hereof and, in any event, shall include all dividends or other
income from the Pledged Securities, collections thereon or distributions
or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including any Account).
"Securities Act": the Securities Act of 1933, as amended.
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5
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing and owned by a Grantor or
hereafter adopted or acquired by a Grantor, all registrations and
recordings thereof, and all applications in connection therewith, whether
in the United States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof, or any political
subdivision thereof, or otherwise, and all common-law rights related
thereto, including any of the foregoing referred to in Schedule 6, and
(ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including any of the foregoing referred to in Schedule 6.
"Vehicles": all cars, trucks, trailers, construction and earth
moving equipment and other vehicles (other than Inventory) covered by a
certificate of title law of any state and, in any event including the
vehicles listed on Schedule 7 and all tires and other appurtenances to any
of the foregoing.
1.2 Other Definitional Provisions. (a) The words "hereof," "herein",
"hereto" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section and Schedule references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms. The words
include, includes and including shall be deemed to be followed by the phrase
"without limitation".
(c) Where the context requires, terms relating to the Collateral or
any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrowers when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
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6
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding (unless
cash collateralized) and the Commitments shall be terminated, notwithstanding
that from time to time during the term of the Credit Agreement the Borrowers may
be free from any Borrower Obligations.
(e) No payment made by either of the Borrowers, any of the
Guarantors, any other guarantor or any other Person or received or collected by
the Administrative Agent or any Lender from either of the Borrowers, any of the
Guarantors, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Borrower Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of any
Guarantor hereunder which shall, notwithstanding any such payment (other than
any payment made by such Guarantor in respect of the Borrower Obligations or any
payment received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations are paid in
full, no Letter of Credit shall be outstanding (unless cash collateralized) and
the Commitments are terminated.
2.2 Right of Contribution. Each Subsidiary Guarantor hereby agrees
that to the extent that a Subsidiary Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Subsidiary Guarantor
shall be entitled to seek and receive contribution from and against any other
Subsidiary Guarantor hereunder which has not paid its proportionate share of
such payment. Each Subsidiary Guarantor's right of contribution shall be subject
to the terms and conditions of Section 2.3. The provisions of this Section 2.2
shall in no respect limit the obligations and liabilities of any Subsidiary
Guarantor to the Administrative Agent and the Lenders, and each Subsidiary
Guarantor shall remain liable to the Administrative Agent and the Lenders for
the full amount guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrowers or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from either of the Borrowers
or any other Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Administrative Agent and the Lenders by the
Borrowers on account of the Borrower Obligations are paid in full, no Letter of
Credit shall be outstanding (unless cash collateralized) and the Commitments are
terminated. If any amount shall be paid to any Guarantor on account of such
subrogation rights at any time when all of the Borrower
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7
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Administrative Agent and the Lenders, segregated from
other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Administrative Agent in the exact form received
by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent,
if required), to be applied against the Borrower Obligations, whether matured or
unmatured, in such order as the Administrative Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement and the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Lender for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between either of the
Borrowers and any of the Guarantors, on the one hand, and the Administrative
Agent and the Lenders, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section 2. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon
either of the Borrowers or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee contained
in this Section 2 shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity or enforceability of the
Credit Agreement or any other Loan Document, any of the Borrower Obligations or
any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the Administrative
Agent or any Lender, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by either of the Borrowers or any other Person against the
Administrative Agent or any Lender, or (c) any other circumstance
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8
whatsoever (with or without notice to or knowledge of either of the Borrowers or
such Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of either of the Borrowers for the Borrower
Obligations, or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Administrative Agent or any Lender may, but shall be under no obligation to,
make a similar demand on or otherwise pursue such rights and remedies as it may
have against either of the Borrowers, any other Guarantor or any other Person or
against any collateral security or guarantee for the Borrower Obligations or any
right of offset with respect thereto, and any failure by the Administrative
Agent or any Lender to make any such demand, to pursue such other rights or
remedies or to collect any payments from either of the Borrowers, any other
Guarantor or any other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of either of
the Borrowers, any other Guarantor or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any Guarantor of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against any Guarantor. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
either of the Borrowers or any Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, either Borrower or any Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at the
Payment Office specified in the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit of
the Lenders, a security interest in, all of the following property now owned or
at any time hereafter acquired by such Grantor or in which such Grantor now has
or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral", provided that the Excluded Assets shall be
deemed not to constitute part of the Collateral), as collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of such Grantor's Obligations:
(a) all Accounts;
(b) all Chattel Paper;
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9
(c) all Documents;
(d) all Equipment;
(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
(i) all Pledged Securities;
(j) all Vehicles;
(k) all Investment Property (other than as limited by the provisions
of the definition Pledged Stock);
(l) all deposit accounts and other bank accounts;
(m) all books and records pertaining to the Collateral; and
(n) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions
of credit to the Borrowers thereunder, each Grantor hereby represents and
warrants to the Administrative Agent and each Lender that:
4.1 Representations in Credit Agreement; Holdings Representations.
(a) In the case of each Guarantor, the representations and warranties set forth
in Section 4 of the Credit Agreement as they relate to such Guarantor or to the
Loan Documents to which such Guarantor is a party, each of which is hereby
incorporated herein by reference, are true and correct in all material respects,
and the Administrative Agent and each Lender shall be entitled to rely on each
of them as if they were fully set forth herein, provided that each reference in
each such representation and warranty to each Borrower's knowledge shall, for
the purposes of this Section 4.1(a), be deemed to be a reference to such
Guarantor's knowledge.
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10
(b) In the case of Holdings:
(i) Holdings (w) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (x)
has the limited liability company power and authority, and the legal
right, to own and operate its property, to lease the property it operates
as lessee and to conduct the business in which it is currently engaged,
(y) is duly qualified as a foreign corporation and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification,
except to the extent that the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect, and (z) is in
compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(ii) Holdings has the limited liability company to make,
deliver and perform the Loan Documents to which it is a party and has
taken all necessary limited liability company action to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is
required in connection with the execution, delivery, performance, validity
or enforceability of the Loan Documents to which Holdings is a party,
except (i) the filings specified in Schedule 3 and (ii) those which, in
the aggregate, could not be reasonably expected to have a Material Adverse
Effect if not obtained or made. This Agreement has been, and each other
Loan Document to which it is a party will be, duly executed and delivered
on behalf of Holdings. This Agreement constitutes, and each other Loan
Document to which it is a party when executed and delivered will
constitute, a legal, valid and binding obligation of Holdings enforceable
against Holdings in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.
(iii) The execution, delivery and performance of the Loan
Documents to which Holdings is a party will not violate any material
Requirement of Law or material Contractual Obligation of Holdings or of
any of its Subsidiaries and will not result in, or require, the creation
or imposition of any Lien on any of its or their respective material
properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation (other than pursuant to this Agreement).
(iv) Except as set forth on Schedule 4.6 of the Credit
Agreement, no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
Holdings, threatened by or against Holdings or any of its Subsidiaries or
against any of its or their respective properties or revenues (x) with
respect to any of the Loan Documents or any of the transactions
contemplated hereby or thereby, or (y) which could reasonably be expected
to have a Material Adverse Effect.
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4.2 Title; No Other Liens. Except for the security interest granted
to the Administrative Agent for the ratable benefit of the Lenders pursuant to
this Agreement and the other Liens permitted to exist on the Collateral by the
Credit Agreement, such Grantor owns each item of the Collateral free and clear
of any and all Liens or claims of others. No financing statement or other public
notice with respect to all or any part of the Collateral is on file or of record
in any public office, except such as have been filed in favor of the
Administrative Agent, for the ratable benefit of the Lenders, pursuant to this
Agreement or as are permitted by the Credit Agreement.
4.3 Perfected First Priority Liens. Other than as set forth on
Schedule 4.3, the security interests (other than those in Proceeds, to the
extent that such security interests may be perfected under the UCC only by
possession) granted pursuant to this Agreement (other than cash) (a) upon
completion of the timely (as defined, if applicable, in a manner consistent with
the provisions of Section 205 of 17 U.S.C., Section 1060 of 15 U.S.C. and
Section 261 of 35 U.S.C.) filings and other actions specified on Schedule 3
(which, in the case of all filings and other documents referred to on said
Schedule, have been delivered to the Administrative Agent in completed and duly
executed form) will constitute valid perfected security interests in all of the
Collateral in favor of the Administrative Agent, for the ratable benefit of the
Lenders, as collateral security for such Grantor's Obligations, effective
against all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor (except purchasers of Inventory in the ordinary
course), and (b) are prior to all other Liens on the Collateral in existence on
the date hereof except for Liens permitted by the Credit Agreement.
4.4 Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 4.
4.5 Inventory and Equipment. On the date hereof, the material
Inventory and the Equipment (other than goods in transit or leased by a Grantor
to a customer) are kept at the locations listed on Schedule 5.
4.6 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7 Pledged Securities. (a) The shares of Pledged Stock pledged by
such Grantor hereunder constitute (i) 100% of the issued and outstanding shares
of all classes of the Capital Stock of each Issuer owned by such Grantor which
is a Borrower or a Subsidiary Guarantor, (ii) provided that the actions required
by Section 6.10(f) of the Credit Agreement have been complied with, 65% of the
issued and outstanding shares of all classes of the Capital Stock of each Issuer
owned by such Grantor which is a First-Tier Foreign Subsidiary or (iii) 100% of
the issued and outstanding shares of all classes of the Capital Stock of each
Issuer owned by such Grantor which is a Check-the-Box Subsidiary (provided that
the pledge of 100% of the Capital Stock of a Check-the-Box Subsidiary shall be
reduced to 65% if either (x) such Check-the-Box Subsidiary elects to no longer
be treated as a partnership or to no longer be disregarded as an entity separate
from its owner for United States Federal income tax purposes or (y) the pledge
of more than 65% of the Capital Stock of such Check-the-Box Subsidiary results
in material adverse tax consequences to such Check-
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12
the-Box Subsidiary as notified by the Company to the Administrative Agent).
(b) Provided that the actions required by Section 6.10(f) of the
Credit Agreement have been complied with, all the shares of the Pledged Stock
have been duly and validly issued and are, unless not applicable, fully paid and
nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Securities pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person, except
the security interest created by this Agreement.
4.8 Receivables. (a) No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument or Chattel Paper
which has not been delivered to the Administrative Agent (except as contemplated
by Section 5.2).
(b) The amounts represented by such Grantor to the Lenders from time
to time as owing to such Grantor in respect of the Receivables will at such
times be accurate in all material respects.
4.9 Intellectual Property. (a) Schedule 6 lists all material
Intellectual Property owned by such Grantor in its own name on the date hereof
and that has been registered, or for which there is a pending application for
registration, in the U.S. Patent and Trademark Office or the U.S. Copyright
Office, as applicable.
(b) On the date hereof, all material Intellectual Property owned by
each Grantor in its own name and that has been registered in the U.S. Patent and
Trademark Office or the U.S. Copyright Office, as applicable, is valid,
subsisting, unexpired and enforceable, has not been abandoned and does not
infringe the intellectual property rights of any other Person except as set
forth in Schedule 6.
(c) Except as set forth in Schedule 6, on the date hereof, none of
the material Intellectual Property owned such Grantor in its own name is the
subject of any licensing or franchise agreement pursuant to which such Grantor
is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of, or
such Grantor's rights in, any Intellectual Property owned such Grantor in its
own name in any respect that could reasonably be expected to have a Material
Adverse Effect.
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13
(e) Except as set forth on Schedule 6, no action or proceeding is
pending, or, to the knowledge of such Grantor, threatened, on the date hereof
(i) seeking to limit, cancel or question the validity of any material
Intellectual Property owned by such Grantor in its own name or such Grantor's
ownership interest therein, or (ii) which, if adversely determined, would have a
material adverse effect on the value of any material Intellectual Property.
(f) Nothing contained in the preceding paragraphs (a), (b), (c), (d)
or (e) shall in any way be construed in a manner that would alter the
representations made by the Borrowers in Section 4.19 of the Credit Agreement.
4.10 Vehicles. Schedule 7 is a complete and correct list of all
Vehicles owned by such Grantor on the date hereof.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding (unless cash collateralized) and the Commitments shall have
terminated:
5.1 Covenants in Credit Agreement. (a) In the case of each
Guarantor, such Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take such
action or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
(b) Without in any way limiting the obligations of Holdings pursuant
to the preceding paragraph (a), Holdings hereby agrees to be bound by and act in
accordance with the terms and conditions of Sections 2.12(a) and 2.12(b) of the
Credit Agreement as such terms are applicable to (x) the issuance of Capital
Stock and (y) the incurrence of Indebtedness by Holdings, and Holdings agrees to
make the necessary capital contributions to the Company in order to enable the
Company to comply with the provisions of such Sections.
5.2 Delivery of Instruments and Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any Instrument (other than checks and similar instruments received in the
ordinary course of business) or Chattel Paper, such Instrument or Chattel Paper
shall be promptly delivered to the Administrative Agent, duly indorsed in a
manner satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Agreement; provided that with respect to a Grantor's
distributor agreements and any related security agreements, which may be Chattel
Paper, the company agrees that, in lieu of delivery to the Administrative Agent,
it shall stamp each such document with the phrase "SUBJECT TO A RECORDED
SECURITY INTEREST".
5.3 Maintenance of Insurance. (a) Such Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Inventory and Equipment against
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14
loss by fire, explosion, theft and such other casualties as may be reasonably
satisfactory to the Administrative Agent and (ii) insuring such Grantor against
liability for personal injury and property damage relating to such Inventory,
Equipment and Vehicles, such policies to be in such form and amounts and having
such coverage as may be reasonably satisfactory to the Administrative Agent and
the Lenders.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party or
loss payee, (iii) if reasonably requested by the Administrative Agent and if
available on commercially reasonable terms, include a breach of warranty clause
and (iv) be reasonably satisfactory in all other respects to the Administrative
Agent.
(c) At the Administrative Agent's request, the Borrowers shall
deliver to the Administrative Agent and the Lenders a report of a reputable
insurance broker with respect to such insurance substantially concurrently with
the delivery by the Borrowers to the Administrative Agent of their audited
financial statements for each fiscal year and such supplemental reports with
respect thereto as the Administrative Agent may from time to time reasonably
request.
5.4 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including claims for labor, materials and supplies) against
or with respect to the Collateral, except that no such charge need be paid if
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings, reserves with respect thereto to the extent, if any,
required by GAAP have been provided on the books of such Grantor and such
proceedings could not reasonably be expected to result in the sale, forfeiture
or loss of any material portion of the Collateral or any interest therein.
5.5 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including the filing of
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15
any financing or continuation statements under the Uniform Commercial Code (or
other similar laws) in effect in any jurisdiction with respect to the security
interests created hereby.
(d) Such Grantor shall use its reasonable best efforts to, within
120 days after the Closing Date, comply with the terms of the Federal Assignment
of Claims Act, with respect to any material contracts it may have with a
Governmental Authority.
5.6 Changes in Locations, Name, etc. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein
and (b) if applicable, a written supplement to Schedule 5 showing any additional
location at which Inventory or Equipment shall be kept:
(i) permit any of the material Inventory or Equipment (other than
goods in transit or leased by a Grantor to a customer) to be kept at a
location other than those listed on Schedule 5;
(ii) change the location of its chief executive office or sole place
of business from that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become misleading.
5.7 Notices. Such Grantor will advise the Administrative Agent and
the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 Pledged Securities. (a) Subject to the limitations of the
definition of Pledged Stock and the right of the Company and its Subsidiaries to
make dividend payments to Holdings permitted by Section 7.6(b) of the Credit
Agreement, if such Grantor shall become entitled to receive or shall receive any
stock certificate (including any certificate representing a stock dividend or a
distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights in respect of the Capital Stock of any Issuer, whether in addition to,
in substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Administrative Agent and the Lenders, hold the same in
trust for the Administrative Agent
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16
and the Lenders and deliver the same forthwith to the Administrative Agent in
the exact form received, duly indorsed by such Grantor to the Administrative
Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by such Grantor and with, if the
Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Pledged
Securities upon the liquidation or dissolution of any Issuer shall be paid over
to the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Securities or any property shall be
distributed upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Administrative Agent,
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities shall be
received by such Grantor, such Grantor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or property in
trust for the Lenders, segregated from other funds of such Grantor, as
additional collateral security for the Obligations.
(b) Except as expressly permitted by the Credit Agreement, without
the prior written consent of the Administrative Agent, such Grantor will not (i)
vote to enable, or take any other action to permit, any Issuer to issue any
stock or other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of any nature of any Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Pledged Securities or Proceeds thereof, (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Pledged Securities or Proceeds thereof, or any interest therein,
except for the security interests created by this Agreement or (iv) enter into
any agreement or undertaking restricting the right or ability of such Grantor or
the Administrative Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(a) with respect to the Pledged Securities issued by it and (iii) the terms
of Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to
all actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Pledged Securities issued by it.
5.9 Receivables. (a) With respect to the Collateral, other than in
the ordinary course of business consistent with its past practice, such Grantor
will not (i) grant any extension of the time of payment of any Receivable, (ii)
compromise or settle any Receivable for less than the full amount thereof, (iii)
release, wholly or partially, any Person liable for the payment of any
Receivable, (iv) allow any credit or discount whatsoever on any Receivable or
(v) amend, supplement or modify any Receivable in any manner that could
adversely affect the value thereof.
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17
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables.
5.10 Intellectual Property. (a) Such Grantor (either itself or
through licensees) will, unless (i) it has a purpose, in the ordinary course of
business, to do otherwise or (ii) to do otherwise could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
(A) continue to use each material Trademark on each and every trademark class of
goods applicable to its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such Trademark in full force free
from any claim of abandonment for non-use, (B) maintain as in the past the
quality of products and services offered under such Trademark, (C) use such
Trademark with the appropriate notice of registration and all other notices and
legends required by applicable Requirements of Law, (D) not adopt or use any
mark which is confusingly similar or a colorable imitation of such Trademark
unless the Administrative Agent, for the ratable benefit of the Lenders, shall
obtain a perfected security interest in such mark pursuant to this Agreement,
and (E) not (and not permit any licensee or sublicensee thereof to) do any act
or knowingly omit to do any act whereby such Trademark may become invalidated or
impaired in any way.
(b) Such Grantor (either itself or through licensees) will not do
any act, or omit to do any act, whereby any material Patent may become
forfeited, abandoned or dedicated to the public, unless (i) it has a purpose, in
the ordinary course of business, to do otherwise or (ii) to do otherwise could
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
(c) Such Grantor (either itself or through licensees) , unless (i)
it has a purpose, in the ordinary course of business, to do otherwise or (ii) to
do otherwise could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect (A) will employ each material Copyright and
(B) will not (and will not permit any licensee or sublicensee thereof to) do any
act or knowingly omit to do any act whereby any material portion of any material
Copyrights may become invalidated or otherwise impaired. Such Grantor will not
(either itself or through licensees) do any act whereby any material portion of
the Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do
any act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the
Lenders immediately if it knows, or could reasonably be expected to know, that
any application or registration relating to any material Intellectual Property
may become forfeited, abandoned or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal)
regarding such Grantor's ownership of, or the validity of, any such material
Intellectual Property or such Grantor's right to register the same or to own and
maintain the same.
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18
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office, such Grantor shall report such filing to the
Administrative Agent within fifteen Business Days after the last day of the
fiscal quarter in which such filing occurs. Upon request of the Administrative
Agent, such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers necessary to evidence the
Administrative Agent's and the Lenders' security interest in any Copyright,
Patent or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including in any proceeding before the United States Patent and Trademark
Office, the United States Copyright Office to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the material Intellectual Property, including filing of
applications for renewal, affidavits of use and affidavits of incontestability,
unless (i) it has a purpose, in the ordinary course of business, to do otherwise
or (ii) to do otherwise could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and to
recover any and all damages for such infringement, misappropriation or dilution,
unless (i) it has a purpose, in the ordinary course of business, to do otherwise
or (ii) to do otherwise could not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
5.11 Vehicles. (a) No Vehicle shall be removed from the state which
has issued the certificate of title/ownership therefor for a period in excess of
4 months, provided that the leased fleet owned by National Crane Corporation
shall be excluded from the provisions of this paragraph.
(b) With respect to any Vehicles acquired by such Grantor subsequent
to the date hereof, within 45 days after the end of the fiscal quarter in which
any such Vehicle is acquired, all applications for certificates of
title/ownership indicating the Administrative Agent's first priority security
interest in the Vehicle covered by such certificate, and any other necessary
documentation, shall be filed in each office in each jurisdiction which the
Administrative Agent shall deem advisable to perfect its security interests in
the Vehicles.
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19
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) With respect to the
Collateral, the Administrative Agent shall have the right to make test
verifications of the Receivables in any manner and through any medium that it
reasonably considers advisable, and each Grantor shall furnish all such
assistance and information as the Administrative Agent may require in connection
with such test verifications. At any time and from time to time, upon the
Administrative Agent's request (at reasonable intervals) and at the expense of
the relevant Grantor, such Grantor shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Receivables.
(b) With respect to the Collateral, the Administrative Agent hereby
authorizes each Grantor to collect such Grantor's Receivables, subject to the
Administrative Agent's direction and control, and the Administrative Agent may
curtail or terminate said authority at any time after the occurrence and during
the continuance of an Event of Default. If required by the Administrative Agent
at any time after the occurrence and during the continuance of an Event of
Default, any payments of Receivables, when collected by any Grantor, (i) shall
be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Lenders only as provided in
Section 6.5, and (ii) until so turned over, shall be held by such Grantor in
trust for the Administrative Agent and the Lenders, segregated from other funds
of such Grantor. Each such deposit of Proceeds of Receivables shall be
accompanied by a report identifying in reasonable detail the nature and source
of the payments included in the deposit.
(c) With respect to the Collateral, at the Administrative Agent's
request, each Grantor shall deliver to the Administrative Agent all original and
other documents evidencing, and relating to, the agreements and transactions
which gave rise to the Receivables, including all original orders, invoices and
shipping receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a) With
respect to the Collateral, the Administrative Agent in its own name or in the
name of others may at any time communicate with obligors under the Receivables
to verify with them to the Administrative Agent's satisfaction the existence,
amount and terms of any Receivables.
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables that the Receivables have been assigned
to the Administrative Agent for the ratable benefit of the Lenders and that
payments in respect thereof shall be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables to observe and perform all the
conditions and obligations to be
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20
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise thereto. Neither the Administrative Agent nor any Lender
shall have any obligation or liability under any Receivable (or any agreement
giving rise thereto) by reason of or arising out of this Agreement or the
receipt by the Administrative Agent or any Lender of any payment relating
thereto, nor shall the Administrative Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party thereunder, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends paid in respect of the Pledged Stock and all
payments made in respect of the Pledged Notes, and to exercise all voting and
corporate rights with respect to the Pledged Securities; provided, however, that
no vote shall be cast or corporate right exercised or other action taken which,
in the Administrative Agent's reasonable judgment, would impair the Collateral
or which would be inconsistent with or result in any violation of any provision
of the Credit Agreement, this Agreement or any other Loan Document and, provided
further that this paragraph (a) shall not be deemed in any way to modify the
provisions of Section 7.6(b) of the Credit Agreement.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, and subject to the right of the Company and
its Subsidiaries to make dividend payments to Holdings permitted by Section
7.6(b) of the Credit Agreement, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in the order set forth in Section 6.5, and (ii) any or all of the
Pledged Securities shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such Pledged
Securities at any meeting of shareholders of the relevant Issuer or Issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Pledged
Securities as if it were the absolute owner thereof (including the right to
exchange at its discretion any and all of the Pledged Securities upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any Issuer, or upon the exercise by any
Grantor or the Administrative Agent of any right, privilege or option pertaining
to such Pledged Securities, and in connection therewith, the right to deposit
and deliver any and all of the Pledged Securities with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
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21
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Pledged Securities pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby and subject to the right of the Company and its Subsidiaries to
make dividend payments to Holdings permitted by Section 7.6(b) of the Credit
Agreement, pay any dividends or other payments with respect to the Pledged
Securities directly to the Administrative Agent.
6.4 Proceeds to be Turned Over To Administrative Agent. In addition
to the rights of the Administrative Agent and the Lenders specified in Section
6.1 with respect to payments of Receivables, if an Event of Default shall occur
and be continuing, all Proceeds received by any Grantor on account of any
Collateral consisting of cash, checks and other near-cash items shall be held by
such Grantor in trust for the Administrative Agent and the Lenders, segregated
from other funds of such Grantor, and shall, forthwith upon receipt by such
Grantor, be turned over to the Administrative Agent in the exact form received
by such Grantor (duly indorsed by such Grantor to the Administrative Agent, if
required). All Proceeds received by the Administrative Agent hereunder shall be
held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative Agent
in a Collateral Account (or by such Grantor in trust for the Administrative
Agent and the Lenders) shall continue to be held as collateral security for all
the Obligations and shall not constitute payment thereof until applied as
provided in Section 6.5. Nothing contained in this Section 6.4 shall be deemed
to modify in any way the provisions of Section 7.6(b) of the Credit Agreement.
6.5 Application of Proceeds. At such intervals as may be agreed upon
by the Borrowers and the Administrative Agent, or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may (subject to the right of the Company and
its Subsidiaries to make dividend payments to Holdings permitted by Section
7.6(b) of the Credit Agreement) apply all or any part of Proceeds constituting
Collateral, whether or not held in any Collateral Account, and any proceeds of
the guarantee set forth in Section 2, in payment of the Obligations in the
following order:
First, to pay incurred and unpaid fees and expenses of the
Administrative Agent under the Loan Documents;
Second, to the Administrative Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the Lenders according to the amounts of
the Obligations then due and owing and remaining unpaid to the Lenders;
Third, to the Administrative Agent, for application by it towards
prepayment of the Obligations, pro rata among the Lenders according to the
amounts of the Obligations then held by the Lenders; and
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22
Fourth, any balance of such Proceeds remaining after the Obligations
shall have been paid in full, no Letters of Credit shall be outstanding
(unless cash collateralized) and the Commitments shall have terminated
shall be paid over to the Borrowers or to whomsoever may be lawfully
entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may when an Event of Default has occurred and is continuing forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Administrative Agent or any Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Administrative Agent or any Lender shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in any Grantor, which right or equity is
hereby waived and released. Each Grantor further agrees, at the Administrative
Agent's request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall reasonably
select, whether at such Grantor's premises or elsewhere. The Administrative
Agent shall apply the net proceeds of any action taken by it pursuant to this
Section 6.6, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Obligations,
in such order as the Administrative Agent may elect, and only after such
application and after the payment by the Administrative Agent of any other
amount required by any provision of law, including Section 9- 504(1)(c) of the
New York UCC, need the Administrative Agent account for the surplus, if any, to
any Grantor. To the extent permitted by applicable law, each Grantor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Lender arising out of the exercise by them of any rights hereunder, except
to the extent arising out of the gross negligence or willful misconduct of the
Administrative Agent or any Lenders. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition. All waivers by any Grantor of rights (including rights to notice),
and all rights and remedies afforded the Administrative Agent herein, and all
other provisions of this Agreement, are expressly made subject to any applicable
mandatory provisions of law limiting, or imposing conditions upon, such waivers
or the effectiveness thereof or any such rights and remedies.
<PAGE>
23
6.7 Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 6.6, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and use its
best efforts to cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts as may be, in the reasonable opinion of the Administrative Agent,
necessary or advisable to register the Pledged Stock, or that portion thereof to
be sold, under the provisions of the Securities Act, (ii) use its best efforts
to cause the registration statement relating thereto to become effective and to
remain effective for a period of one year from the date of the first public
offering of the Pledged Stock, or that portion thereof to be sold, and (iii)
make all amendments thereto and/or to the related prospectus which, in the
reasonable opinion of the Administrative Agent, are necessary or advisable, all
in conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. Each
Grantor agrees to cause such Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the
Administrative Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the Securities
Act.
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit the Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Administrative Agent and
the Lenders, that the Administrative Agent and the Lenders have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 6.7 shall be specifically enforceable
against such Grantor, and such Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred and was continuing under the
Credit Agreement at the time the Administrative Agent gave notice pursuant to
Section 6.3(b).
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall
<PAGE>
24
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay its Obligations and the
fees and disbursements of any attorneys employed by the Administrative Agent or
any Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a)
Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or with respect to any other Collateral and file any claim or
take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Administrative Agent for the purpose
of collecting any and all such moneys due under any Receivable or with
respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the
Administrative Agent's and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section
6.6 or 6.7, any indorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse
<PAGE>
25
receipts, drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (4) commence and
prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any Collateral; (5)
defend any suit, action or proceeding brought against such Grantor with
respect to any Collateral; (6) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or
releases as the Administrative Agent may deem appropriate; (7) assign any
Copyright, Patent or Trademark (along with the goodwill of the business to
which any such Copyright, Patent or Trademark pertains), throughout the
world for such term or terms, on such conditions, and in such manner, as
the Administrative Agent shall in its sole discretion determine; and (8)
generally, sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes, and do, at the Administrative Agent's option and such Grantor's
expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent's and the Lenders' security
interests therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Credit Loans that are Base Rate Loans
under the Credit Agreement, from the date of payment by the Administrative Agent
to the date reimbursed by the relevant Grantor, shall be payable by such Grantor
to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in
<PAGE>
26
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Grantor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Administrative Agent and the Lenders hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in the
Collateral and shall not impose any duty upon the Administrative Agent or any
Lender to exercise any such powers. The Administrative Agent and the Lenders
shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers,
directors, employees or agents shall be responsible to any Grantor for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of
the New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any jurisdiction.
During such time as no Default or Event of Default has occurred and is
continuing, the Administrative Agent shall provide to such Grantor a
file-stamped copy of such financing statement or other filing or recording
document or instrument promptly following its return to the Administrative Agent
by the relevant filing officer; provided, that the failure to provide such
financing statement or other filing or recording document or instrument shall
not impair the validity thereof and shall not subject the Administrative Agent
to any liability to such Grantor.
7.4 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit
<PAGE>
27
Agreement; provided that any such notice, request or demand to or upon any
Guarantor shall be addressed to such Guarantor at its notice address set forth
on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor agrees
to pay or reimburse each Lender and the Administrative Agent for all its
reasonable costs and expenses incurred in collecting against such Guarantor
under the guarantee contained in Section 2 or otherwise enforcing or preserving
any rights under this Agreement and the other Loan Documents to which such
Guarantor is a party, including the reasonable fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the Borrowers would be required to do so pursuant to Section 10.5 of the
Credit Agreement.
(d) The agreements in this Section shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their successors and assigns; provided
that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.
<PAGE>
28
8.6 Set-Off. Each Grantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time, without
notice to such Grantor or any other Grantor, any such notice being expressly
waived by each Grantor, to set-off and appropriate and apply any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Administrative Agent or such Lender
to or for the credit or the account of such Grantor, or any part thereof in such
amounts as the Administrative Agent or such Lender may elect, against and on
account of the obligations and liabilities of such Grantor to the Administrative
Agent or such Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. The Administrative Agent and each Lender shall notify such Grantor
promptly of any such set-off and the application made by the Administrative
Agent or such Lender of the proceeds thereof, provided that the failure to give
such notice shall not affect the validity of such set-off and application. The
rights of the Administrative Agent and each Lender under this Section are in
addition to other rights and remedies (including other rights of set-off) which
the Administrative Agent or such Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof and thereof not expressly
set forth or referred to herein or in the other Loan Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. (a) Each Grantor hereby
irrevocably and unconditionally:
<PAGE>
29
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(ii) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Grantor at its address referred to in Section 8.2 or at
such other address of which the Administrative Agent shall have been
notified pursuant thereto;
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(b) Each of the Grantors, the Administrative Agent and the Lenders
waives, to the maximum extent not prohibited by law, any right it may have to
claim or recover in any legal action or proceeding referred to in this Section
any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to any Grantor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Grantors, on the one hand, and the Administrative
Agent and Lenders, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Grantors and the Lenders.
8.14 Additional Grantors. Each Subsidiary of either Borrower that is
required to become a party to this Agreement pursuant to Section 6.10 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the form
of Annex 1 hereto.
<PAGE>
30
8.15 Releases. (a) At such time as the Loans, the Reimbursement
Obligations and the other Obligations shall have been paid in full, the
Commitments have been terminated and no Letters of Credit shall be outstanding
(unless cash collateralized), the Collateral shall be released from the Liens
created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Grantor hereunder shall terminate, all without delivery of any instrument
or performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor following
any such termination, the Administrative Agent shall deliver to such Grantor any
Collateral held by the Administrative Agent hereunder, and execute and deliver
to such Grantor such documents as such Grantor shall reasonably request to
evidence such termination.
(b) If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Grantor in a transaction permitted by the Credit Agreement,
then the Administrative Agent, at the request and sole expense of such Grantor,
shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on
such Collateral. At the request and sole expense of either Borrower, a
Subsidiary Guarantor shall be released from its obligations hereunder in the
event that all the Capital Stock of such Subsidiary Guarantor shall be sold,
transferred or otherwise disposed of in a transaction permitted by the Credit
Agreement; provided that such Borrower shall have delivered to the
Administrative Agent, at least ten Business Days prior to the date of the
proposed release, a written request for release identifying the relevant
Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by such Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.17 Dealer Receivables Financing. If requested by the Borrowers,
the Administrative Agent shall enter into a satisfactory intercreditor
arrangement with respect to any Dealer Receivables Financing, provided that the
terms of any such arrangement shall be upon terms and conditions reasonably
satisfactory to the Administrative Agent and the Required Lenders.
[rest of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
GROVE HOLDINGS LLC
By: /s/ Salvatore J. Bonanno
---------------------------------
Title:
GROVE WORLDWIDE LLC
By: /s/ Salvatore J. Bonanno
---------------------------------
Title:
GROVE CAPITAL, INC.
By: /s/ Salvatore J. Bonanno
---------------------------------
Title:
GROVE U.S. LLC
By: /s/ Salvatore J. Bonanno
---------------------------------
Title:
CRANE ACQUISITION CORPORATION
By: /s/ Salvatore J. Bonanno
---------------------------------
Title:
<PAGE>
CRANE HOLDING INC.
By: /s/ Salvatore J. Bonanno
---------------------------------
Title:
GROVE FINANCE LLC
By: /s/ Salvatore J. Bonanno
---------------------------------
Title:
<PAGE>
Exhibit 10.14
SOFTWARE LICENSE AND SUPPORT AGREEMENT
This SOFTWARE LICENSE AND SUPPORT AGREEMENT (this "Agreement") is entered
into by and between Grove Worldwide, acting through Grove North America,
Division of Kidde Industries, Inc., together with its Subsidiaries (as defined
below) collectively "Customer"), and Baan U.S.A., Inc. ("Baan"), and describes
the terms and conditions pursuant to which Baan by license of Baan Development
B.V. shall license to Customer and support certain Software (as defined below).
In consideration of the mutual promises and upon the terms and conditions
set forth below, the parties agree as follows:
I Definitions
1.1 "Baan Tools" means (i) the customization tools which offer the
facilities required for running any Software application and
customize forms and reports, among other things, and (ii) the
development tools which enable the user thereof to develop
additional software programs.
1.2 "Concurrent Users" means all log-ons into the Baan Shell of the
Software at any one time, as specified per Site in Schedule B.
1.3 "Confidential Information" means this Agreement and all its
Schedules, any addenda hereto signed by both parties, all Software
listings, Documentation, information, data, drawings, benchmark
tests, specifications, trade secrets, object code and
machine-readable copies of the Software, source code relating to the
Software, and any other proprietary information supplied to Customer
by Baan, or by Customer to Baan and clearly marked as "confidential
information", including all items defined as "confidential
information" in any other agreement between Customer and Baan
whether executed prior to or after the date of this Agreement.
1.4 "Documentation" means any on-line help files or written instructions
manuals regarding the Use of the Software.
1.5 "Effective Date" means the later of the dates on which Customer and
Baan have signed this Agreement.
1.6 "Equipment" means the computer system, including peripheral
equipment and operating system software, specified in Schedule B.
1.7 "Maintenance and Support" means the services described in Section
6.3.
1.8 "Release" means a set of the Software in which in addition to
possible corrections of detected shortcomings, (small) functional
enhancements have been included. New Releases are registered by
means of a change of the number to the right of the decimal point,
e.g. BAAN IV.0 >> BAAN IV.1.
1.9 "Response Time" means the elapsed time between the receipt of a
service call and the time when Baan begins the Maintenance and
Support, including a verbal or written confirmation to the Customer
thereof.
1.10 "Site" means each physical location specified in Schedule B of one
or more CPU's of the Equipment at which Customer is entitled to Use
the Software.
1.11 "Software" means the computer software programs specified in
Schedule A and otherwise provided to Customer pursuant to this
Agreement, and includes without limitation the Third Party Software.
1.12 "Subsidiaries" means all current and future business entities of
which a party owns, directly or indirectly, more than fifty percent
(50%) of the equity securities or other equity interest granting
such party voting rights exercisable in electing the management of
the entities, for so long as such ownership exists.
1.13 "Support Call (priority 10)" means a reported problem in the
Software which causes a total system standstill.
1.14 "Support Call (priority 20)" means a reported problem in the
Software which causes serious disruption of a major business
function and which can not be (temporarily) solved by a workaround.
1.15 "Support Call (priority 30)" means a reported problem in the
Software for which a workaround is available.
1.16 "Support Call (priority 40)" means general questions and wishes
pertaining to the Software and all reported problems in the Software
which are not included in Sections 1.13, 1.14 or 1.15.
1.17 "Third Party Software" means the third party software product
licensed to Baan, if any, that is specified on Schedule A. The Third
Party Software is subject to all the terms and conditions of this
Agreement that apply to the Software except where specifically indi-
-1-
<PAGE>
cated otherwise. In addition, the terms and conditions of the Third
Party Software Exhibit apply to the Third Party Software. In the
event of any conflict between the Third Party Software Exhibit and
this Agreement, the Third Party Software Exhibit shall govern. No
addendum to this Agreement shall be deemed to modify any terms or
conditions that govern the Third Party Software unless such addendum
specifically mentions the Third Party Software.
1.18 "Third Party Software Exhibit" means the exhibit, if any, which sets
forth the specific terms and conditions that apply to the Third
Party Software.
1.19 "Update" means a set of the Software in which detected shortcomings
are being remedied. Updates are registered by means of a letter
indication after the version number of the Software, e.g. BAAN IV.0
>> BAAN IV.0A.
1.20 "Use" means loading, utilization, storage or display of the Software
by Customer (and such other entities as are expressly permitted by
Section 3(c)) by no more than the number of Concurrent Users set
forth on Schedule B, for its own internal information processing
services and computing needs (except as expressly permitted by
Section 3(c)), by copying or transferring the same into Customer's
Equipment.
1.21 "Version" means a set of the Software in which substantial new
functionalities or other substantial changes are introduced.
Versions are registered by means of a change of the number to the
left of the decimal point, e.g. BAAN IV.0 >> BAAN V.0.
2 Grant of License
2.1 Subject to the terms and conditions of this Agreement, Baan hereby
grants to Customer during an unlimited period of time, a
non-exclusive and non-transferable license to (a) Use the Software
on the Equipment (or with prior written notice to Baan, on
substitute, upgraded, or additional equipment) and at the Site (or
with prior written notice to Baan on additional sites of Customer,
to be specified in Schedule B), and to make sufficient copies as
necessary for such Use, (b) use the Documentation in connection with
Use of the Software, and (c) modify the Software pursuant to
authorized Use of the Baan Tools specified in Schedule A, if any;
provided that, although Customer does not transfer to Baan any of
Customer's rights to such modifications, all such modifications
shall be subject to the restrictions of this Agreement that apply to
the Software.
This license transfers to Customer neither title nor any proprietary
or intellectual property rights to the Software, Documentation, or
any copyrights, patents, or trademarks, embodied or used in
connection therewith, except for the rights expressly granted
herein.
2.2 Baan shall issue to Customer, as soon as practicable, one (1)
machine-readable copy of the Software for Use at the Site only,
along with one (1) copy of the on-line Documentation. Baan will
provide Customer with written copies of the Documentation at Baan's
standard charges. Customer may not copy the Documentation. Customer
acknowledges that no copy of the source code of the Software will be
provided to Customer, except as expressly provided in Section 5
below.
2.3 If the specified Equipment is inoperable or under repair, Customer
will be entitled to transfer the Software to substitute Equipment at
the same Site using an operating system that is supported by Baan,
provided that Customer shall promptly notify Baan in writing of the
transfer. Customer will be responsible for any services required if
the Software has to be ported to an operating system that is not
supported by Baan.
2.4 Customer will be entitled to make a reasonable number of
machine-readable copies of the Software for backup or archival
purposes only. Customer may not copy the Software, except as
permitted by this Agreement. Customer shall maintain accurate and
up-to-date records of the number and location of all copies of the
Software and inform Baan in writing of such location(s). All copies
of the Software will be subject to all terms and conditions of this
Agreement. Whenever Customer is permitted to copy or reproduce all
or any part of the Software, all titles, trademark symbols,
copyright symbols and legends, and other proprietary markings must
be reproduced.
2.5 Notwithstanding the inclusion of Subsidiaries in the definition of
Customer in this Agreement, Baan's affirmative obligations will be
limited to the entity named above. Such entity hereby guarantees the
performance of its Subsidiaries under this Agreement and shall
indemnify and hold harmless Baan from and against all losses, costs,
liabilities and expenses arising out of or relating to any breaches
by such Subsidiaries of this Agreement.
3 License Restrictions
Customer agrees that it will not itself or through any parent, subsidiary,
affiliate, agent or other third party:
(a) sell, lease, license or sublicense the Software or the
Documentation;
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(b) decompile, disassemble, or reverse engineer the Software, in whole
or in part;
(c) allow access to the Software by any Concurrent User not located at
the Site other than Customer's employees and employees of Customer's
customers, dealers and distributors who Use such Software (excluding
the Third Party Software) pursuant to the terms of Section 3(f)
below;
(d) write or develop any derivative software or any other software
program based upon the Software or any Confidential Information,
except pursuant to authorized Use of Baan Tools, if any;
(e) use the Software to provide processing services to third parties,
commercial timesharing, rental or sharing arrangements, or otherwise
use the Software on a "service bureau" basis; or
(f) provide, disclose, divulge or make available to, or permit use of
the Software by any third party without Baan's prior written
consent; provided, however, that Customer may allow its customers,
dealers and distributors to Use the Software (excluding the Third
Party Software) solely for the purpose of conducting business with
Customer within the scope of their customer relationship, dealership
or distributorship with Customer.
4 License Fee
4.1 License Fee. In consideration of the license granted pursuant to
Section 2.1, Customer agrees to pay Baan the License Fee specified
in Schedule A. The License Fee is due and payable in fill upon the
Effective Date.
4.2 Expansion of License. Customer will have the option to expand the
license granted pursuant to Section 2.1 by increasing the authorized
number of Concurrent Users after Baan's prior written consent and
further after Baan's receipt of additional license fees for the
expanded Use as set forth in Baan's then-current standard commercial
price list.
4.3 Taxes. Customer agrees to pay or reimburse Baan for all federal,
state, dominion, provincial, or local sales, use, personal property,
payroll, excise or other taxes, fees, or duties arising out of this
Agreement or the transactions contemplated by this Agreement (other
than taxes on the net income of Baan).
4.4 No Offset. Fees and expenses due from Customer under this Agreement
may not be withheld or offset by Customer against other amounts owed
by Customer for any reason.
5 Escrow of Source Code
A Master Source Code Escrow Agreement with respect to the Software
(excluding the Third Party Software) has been established with Fort Knox
Escrow Services, Inc. Customer shall have the right to become a
beneficiary of the Escrow Agreement provided that Customer agrees to be
bound by the terms of such Escrow Agreement.
6 Maintenance and Support
For so long as Customer is current in the payment of all Maintenance Fees
(described below), Customer will be entitled to Maintenance and Support as
specified in this Section 6.
6.1 Term and Termination. Baan's provision of Maintenance and Support to
Customer will commence on the Effective Date and will continue for
an initial term of one (1) year. Maintenance and Support will
automatically renew at the end of the initial term and any
subsequent term for a renewal term of one (1) year unless Customer
has provided Baan with a written termination notice of its intention
not to renew the Maintenance and Support at least ninety (90) days
prior to the termination expiration of the then-current term.
Termination of Maintenance and Support upon failure to renew will
not affect the license of the Software.
6.2 Maintenance and Support Services. Maintenance and Support will be
provided only with respect to versions of the Software that are
being supported by Baan, according to the following schedule: (a) a
Version will be supported for five (5) years after the commercial
release of the next Version, provided always that Customer makes use
of the last Release and Update of the first mentioned Version; (b) a
Release will be supported for one (1) year after the commercial
release of the next Release, provided always that Customer makes use
of the last Update of the related Version; and (c) an Update will be
supported for six (6) months after the commercial release of the
next Update.
6.3 Levels of Maintenance and Support. Maintenance and Support is
available at the following Response Times: (i) Support Call
(priority 10): one (1) hour, (ii) Support Call (priority 20): two
(2) hours; (iii) Support Call (priority 30): four (4) hours; and
(iv) Support Call (priority 40): eight (8) hours.
6.4 Basic Maintenance. Basic Maintenance means that Baan will provide
during Baan's standard hours of service: (i) Updates and Releases,
when and if available, and related on-line Documentation, and (ii)
telephone assistance with respect to the Soft-
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ware, including (a) clarification of functions and features of the
Software; (b) clarification of the Documentation; (c) guidance in
the operation of the Software; and (d) error verification, analysis
and correction to the extent possible by telephone. Baan's standard
hours of service are Monday through Friday, 8:30 a.m. to 5:00 p.m.,
local Site time, except for holidays as observed by Baan.
6.5 On-site Assistance. At Baan's discretion, Baan can decide to provide
Maintenance and Support at the Customer Site. In such event Customer
will reimburse Baan for all related traveling expenses and costs for
board and lodging.
6.6 Installation and Conversion. Upon Customer's request, Baan or a
designated Baan partner can perform the installation and/or
conversion of the Software. Unless otherwise agreed, the costs
hereof shall be invoiced to Customer on the basis of Baan's
then-current rates.
6.7 Causes which are not attributable to Baan. Maintenance and Support
will not include services requested as a result of, or with respect
to causes which are not attributable to Baan. These services will be
billed to Customer at Baan's then-current rates. Causes which are
not attributable to Baan include but are not limited to:
(a) accident; unusual physical, electrical or electromagnetic
stress; neglect; misuse; failure or fluctuation of electric
power, air conditioning or humidity control; failure of
rotation media not furnished by Baan; excessive heating; fire
and smoke damage; operation of the Software with other media
and hardware, software or telecommunication interfaces not
meeting or not maintained in accordance with the
manufacturer's specifications; or causes other than ordinary
use;
(b) improper installation by Customer or use of the Software that
deviates from any operating procedures established by Baan in
the applicable Documentation;
(c) modification, alteration or addition or attempted
modification, alteration or addition of the Software
undertaken by persons other than Baan or Baan's authorized
representatives;
(d) software programs made by Customer, Baan or other parties.
6.8 Responsibilities of Customer. Baan's provision of Maintenance and
Support to Customer is subject to the following:
(a) Customer shall provide Baan with access to Customer's
personnel and Equipment during normal business hours. This
access must include the ability to dial-in to the Equipment on
which the Software is operating and to obtain the same access
to the Equipment as those of Customer's employees having the
highest privilege or clearance level. Baan will inform
Customer of the specifications of the modem equipment and
associated software needed, and Customer will be responsible
for the costs and use of said equipment.
(b) Customer shall provide supervision, control and management of
the Use of the Software. In addition, Customer shall implement
procedures for the protection of information and the
implementation of backup facilities in the event of errors or
malfunction of the Software or Equipment.
(c) Customer shall document and promptly report all errors or
malfunctions of the Software to Baan. Customer shall take all
steps necessary to carry out procedures for the rectification
of errors or malfunctions within a reasonable time after such
procedures have been received from Baan.
(d) Customer shall maintain a current backup copy of all programs
and data.
(e) Customer shall properly train its personnel in the Use and
application of the Software and the Equipment on which it is
used.
6.9 Maintenance Fee. The Maintenance Fee for each calendar year of
Maintenance and Support will be 15% of the listprice for the
Software, as set forth in Baan's price list in effect as of the
Effective Date. The Maintenance Fee is due and payable in full in
advance within thirty (30) days after the date of delivery of the
Software. Any amounts not paid within thirty (30) days will be
subject to interest of 1% per month, which interest will be
immediately due and payable. Each calendar year, the Maintenance Fee
may be modified by Baan due to general price increases and/or
general inflation increases which are reflected in the Consumer
Price Index, but shall, for a period of four years from the
Effective Date, in no event exceed five percent (5%) plus the
increase in the Consumer Price Index for the applicable time period,
by written notice to Customer at least thirty (30) days prior to the
end of the then-current term. In the event of a modification of the
Maintenance Fee, Customer may discontinue Maintenance and Support.
If Customer elects not to renew Maintenance and Support, Customer
may re-enroll only upon payment of the annual Maintenance Fee for
the coming year
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and fifty (50) per cent of all Maintenance Fees that would have been
paid had Customer not terminated Maintenance and Support, which
entitles Customer to all Updates and Releases of the Software which
have been released during the same period.
6.10 Assignment of Duties. Baan may assign its duties of Maintenance and
Support to a third party, provided that Baan will remain responsible
for the actions of such third party. Any such assignment is subject
to Customer's consent, which consent shall not be unreasonably
withheld or delayed.
7 Limited Warranty and Limitation of Liability
7.1 Baan warrants that the Software will perform in substantial
accordance with the Documentation for a period of one (1) year from
the Effective Date. if during this time period the Software does not
perform as warranted, Baan shall undertake to correct the Software,
or if correction of the Software is reasonably not possible, replace
such Software free of charge. If neither of the foregoing is
commercially practicable, Baan shall terminate this Agreement and
refund to Customer the License Fee. In addition, Baan warrants that
the media on which the Software is distributed will be free from
defects in materials and workmanship under normal use for a period
of ninety (90) days from the Effective Date. Baan will replace any
defective media returned to Baan within the 90-day period. The
foregoing are Customer's sole and exclusive remedies for breach of
warranty. The warranty set forth above is made to and for the
benefit of Customer only. The warranty will apply only if:
(a) the Software has been properly installed and used at all times
and in accordance with the instructions for Use; and
(b) no modification, alteration or addition has been made to the
Software by persons other than Baan or Baan's authorized
representative (except pursuant to the authorized Use of the
Baan Tools specified in Schedule A); and
(c) Customer has not requested modifications, alterations or
additions to the Software that cause it to deviate from the
Documentation.
7.2 Except as set forth above, Baan makes no warranties, whether
express, implied, or statutory regarding or relating to the Software
or the Documentation, or any materials or services furnished or
provided to Customer under this Agreement, including Maintenance and
Support. Baan, specifically disclaims all implied warranties of
merchantability and fitness for a particular purpose with respect to
the Software, Documentation and said other materials and services,
and with respect to the use of any of the foregoing. In addition,
Baan disclaims any warranty with respect to, and will not be liable
or otherwise responsible for, the operation of the Software if
programs are made through the use of Baan Tools or non-Baan
software that change, or are able to change, the data model of the
Software.
7.3 In no event will Baan be liable for any loss of profits, loss of
use, business interruption, loss of data, cost of cover or indirect,
special, incidental or consequential damages of any kind in
connection with or arising out of the furnishing, performance or use
of the Software or services performed hereunder, whether alleged as
a breach of contract or tortious conduct, including negligence, even
if Baan has been advised of the possibility of such damages. In
addition, Baan will not be liable for any damages caused by delay in
delivery or furnishing the Software or said services. Baan`s
liability under this Agreement for direct, indirect, special,
incidental and/or consequential damages of any kind, including,
without limitation, restitution, will not, in any event, exceed the
License Fee paid by Customer to Baan under this Agreement
7.4 Customer shall indemnify and hold Baan harmless from and against any
costs, losses, liabilities and expenses (including reasonable
attorneys fees) arising out of third party claims related to
Customers Use of the Software under this Agreement.
7.5 Any pre-production versions of the Software distributed to Customer
are delivered "as-is," without any express or implied warranties.
7.6 The provisions of this Section 7 allocate risks under this Agreement
between Customer and Baan. Baan's pricing reflects this allocation
of risks and limitation of liability.
7.7 No action arising out of any breach or claimed breach of this
Agreement or transactions contemplated by this Agreement may be
brought by either party more than one (1) year after the cause of
action has accrued. For purposes of this Agreement, a cause of
action will be deemed to have accrued when a party knew or
reasonably should have known of the breach or claimed breach.
7.8 No employee, agent, representative or affiliate of Baan has
authority to bind Baan to any oral representations or warranty
concerning the Software. Any written representation or warranty not
expressly contained in this Agreement will not be enforceable.
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8. Indemnification for Infringement
8.1 Baan shall, at its expense, defend or settle any claim, action or
allegation brought against Customer that the Software infringes any
patent, copyright, trade secret or other proprietary right of any
third party and shall pay any final judgments awarded or settlements
entered into; provided that Customer gives prompt written notice to
Baan of any such claim, action or allegation of infringement and
gives Baan the authority to proceed as contemplated herein. Baan
will have the exclusive right to defend any such claim, action or
allegation and make settlements thereof at its own discretion, and
Customer may not settle or compromise such claim, action or
allegation, except with prior written consent of Baan. Customer
shall give such assistance and information as Baan may reasonably
require to settle or oppose such claims. In the event any such
infringement, claim, action or allegation is brought or threatened,
Baan may, at its sole option and expense:
(a) procure for Customer the right to continue Use of the Software
or infringing part thereof; or
(b) modify or amend the Software or infringing part thereof, or
replace the Software or infringing part thereof with other
software having substantially the same or better capabilities;
or, if neither of the foregoing is commercially practicable,
(c) terminate this Agreement and repay to Customer a portion, if
any, of the License Fee equal to the amount paid by Customer
less one-forty-eighth (1/48) thereof for each month or portion
thereof that this Agreement has been in effect. Baan and
Customer will then be released from any further obligation to
the other under this Agreement, except for the obligations of
indemnification provided for above and such other obligations
that survive termination.
8.2 The foregoing obligations shall not apply to the extent the
infringement arises as a result of modifications to the Software
made by any party other than Baan or Baan's authorized
representative. The foregoing obligations shall not apply to the
Third Party Software.
8.3 The foregoing states the entire liability of Baan with respect to
infringement of any patent, copyright, trade secret or other
proprietary right.
9 Confidential Information
9.1 Each party acknowledges that the Confidential Information
constitutes valuable trade secrets and each party agrees that it
shall use Confidential Information solely in accordance with the
provisions of this Agreement and will not disclose, or permit to be
disclosed, the same, directly or indirectly, to any third party
without the other party's prior written consent. Each party agrees
to exercise due care in protecting the Confidential Information from
unauthorized use and disclosure. However, neither party bears any
responsibility for safeguarding information that (i) is publicly
available, (ii) already in the other party's possession and not
subject to a confidentiality obligation, (iii) obtained by the other
party from third parties without restrictions on disclosure, (iv)
independently developed by the other part without reference to
Confidential Information, or (v) required to be disclosed by order
of a court or other governmental entity. Nothing herein will prevent
routine discussions by the parties that normally take place in a
"user group" context
9.2 In the event of actual or threatened breach of the provisions of
Section 9.1, the non-breaching party will have no adequate remedy at
law and will be entitled to immediate and injunctive and other
equitable relief, without bond and without the necessity of showing
actual money damages.
10 Term and Termination
10.1 This Agreement will take effect on the Effective Date and will
remain in force until terminated in accordance with this Agreement.
10.2 This Agreement may be terminated by Customer upon thirty (30) days'
prior written notice to Baan, with or without cause, provided that
no such termination will entitle Customer to a refund of any portion
of the License Fee or Maintenance Fee.
10.3 Baan may, by written notice to Customer, terminate this Agreement if
any of the following events ("Termination Events") occur, provided
that, except as set forth in Section 10.3 (d) below, no such
termination will entitle Customer to a refund of any portion of the
License Fee or Maintenance Fee:
(a) Customer fails to pay any amount due to Baan within thirty
(30) days after Baan gives Customer written notice of such
non-payment; or
(b) Customer is in material breach of any non-monetary term,
condition or provision of this Agreement, which breach, if
capable of being cured, is not cured within thirty (30) days
after Baan gives Customer written notice of such breach; or
(c) Customer (i) terminates or suspends its business
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<PAGE>
activities, (ii) becomes insolvent, admits in writing its
inability to pay its debts as they mature, makes an assignment
for the benefit of creditors, or becomes subject to direct
control of a trustee, receiver or similar authority, or (iii)
becomes subject to any bankruptcy or insolvency proceeding
under federal or state statutes; or
(d) Baan elects to refund Customer's fees in accordance with
Section 7.1 or Section 8.1(c).
If any Termination Event occurs, termination will become effective
immediately or on the date set forth in the written notice of
termination. Termination of this Agreement will not affect the
provisions regarding Customers or Baan's treatment of Confidential
Information, provisions relating to the payment of amounts due, or
provisions limiting or disclaiming Baan's liability, which
provisions will survive termination of this Agreement.
10.4 Within fourteen (14) days after the date of termination or
discontinuance of this Agreement for any reason whatsoever, Customer
shall return the Software, derivative works and all copies thereof,
in whole or in part, all related Documentation and all copies
thereof, and any other Confidential Information in its possession.
Customer shall furnish Baan with a certificate signed by an
executive officer of Customer verifying that the same has been done.
11 Non-assignment/Binding Agreement
Neither this Agreement nor any rights under this Agreement may be assigned
or otherwise transferred by Customer, in whole or in part, whether
voluntary or by operation of law, including by way of sale of assets,
merger or consolidation, without the prior written consent of Baan, which
consent will not be unreasonably withheld. Subject to the foregoing, this
Agreement will be binding upon and will inure to the benefit of the
parties and their respective successors and assigns.
12 Notices
Any notice required or permitted under the terms of this Agreement or
required by law must be in wilting and must be (a) delivered in person,
(b) sent by first class registered mail, or air mail, as appropriate, (c)
sent by overnight air courier, or (d) by facsimile, in each case properly
posted to the appropriate address set forth below. Either party may change
its address for notice by notice to the other party given in accordance
with this Section. Notices will be considered to have been given at the
time of actual delivery in person, three (3) business days after deposit
in the mail as set forth above, one (1) day after delivery to an overnight
air courier service, or one (1) day after the moment of transmission by
facsimile.
13 Miscellaneous
13.1 Force Majeure. Neither party will incur any liability to the other
party on account of any loss or damage resulting from any delay or
failure to perform all or any part of this Agreement if such delay
or failure is caused, in whole or in part, by events, occurrences,
or causes beyond the control and without negligence of the parties.
Such events, occurrences, or causes will include, without
limitation, acts of God, strikes, lockouts, riots, acts of war,
earthquakes, fire and explosions, but the inability to meet
financial obligations is expressly excluded.
13.2 Waiver. Any waiver of the provisions of this Agreement or of a
party's rights or remedies under this Agreement must be in writing
to be effective. Failure, neglect, or delay by a party to enforce
the provisions of this Agreement or its rights or remedies at any
time, will not be construed and will not be deemed to be a waiver of
such party's rights under this Agreement and will not in any way
affect the validity of the whole or any part of this Agreement or
prejudice such party's right to take subsequent action. Except as
expressly stated in this Agreement, no exercise or enforcement by
either party of any right or remedy under this Agreement will
preclude the enforcement by such party of any other right or remedy
under this Agreement or that such party is entitled by law to
enforce.
13.3 Severability, if any term, condition, or provision in this Agreement
is found to be invalid, unlawful or unenforceable to any extent, the
parties shall endeavor in good faith to agree to such amendments
that will preserve, as far as possible, the intentions expressed in
this Agreement. If the parties fail to agree on such an amendment,
such invalid term, condition or provision will be severed from the
remaining terms, conditions and provisions, which will continue to
be valid and enforceable to the fullest extent permitted by law.
13.4 Entire Agreement. This Agreement (including the Schedules and any
addenda hereto signed by both parties) contains the entire agreement
of the parties with respect to the subject matter of this Agreement
and supersedes all previous communications, representations,
understandings and agreements, either oral or written, between the
parties with respect to said subject matter, except as provided in
Section 1.3 with respect to the definition of "Confidential
Information."
13.5 Standard terms of Customer. No terms, provisions
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or conditions of any purchase order, acknowledgment or other
business form that Customer may use in connection with the
acquisition or licensing of the Software will have any effect on the
rights, duties or obligations of the parties under, or otherwise
modify, this Agreement, regardless of any failure of Baan to object
to such terms, provisions or conditions.
13.6 Amendments to this Agreement. This Agreement may not be amended,
except by a writing signed by both parties.
13.7 Baan's prior consent. Unless expressly provided otherwise in this
Agreement, any prior consent of Baan that is required before
Customer may take an action may be granted or withheld in Baan's
sole and absolute discretion.
13.8 Export of Software. Customer may not export or re-export the
Software without the prior written consent of Baan and without the
appropriate United States and foreign government licenses.
13.9 Public Announcements. Customer acknowledges that Baan may desire to
use its name in press releases, product brochures and financial
reports indicating that Customer is a customer of Baan, and Customer
agrees that Baan may use its name in such a manner.
13.10 Counterparts. This Agreement may be executed in counterparts, each
of which so executed will be deemed to be an original and such
counterparts together will constitute one and the same agreement.
13.11 Applicable law. This Agreement will be interpreted and construed in
accordance with the laws of the State of California and the United
States of America, without regard to conflict of law principles.
13.12 Headings. Section and Schedule headings are for ease of reference
only and do not form part of this Agreement.
13.13 Non-solicitation. Customer acknowledges and agrees that the
employees and consultants of Baan who perform the Maintenance and
Support Services or other services are a valuable asset to Baan and
are difficult to replace. Accordingly, Customer agrees that, for a
period of twelve (12) months after the completion of the Maintenance
and Support Services or other services, it will not offer employment
as an employee, independent contractor, or consultant to any Baan
employee or consultant who performs any of the Maintenance and
Support Services or other services.
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IN WITNESS WHEREOF, the parties have executed this Agreement.
GROVE NORTH AMERICA, DIVISION BAAN U.S.A., INC.
OF KIDDE INDUSTRIES, INC.
By: /s/ G.F. Heidinger Sr. By: /s/ Kevin Calderwood
------------------------------ ------------------------------
G.F. Heidinger Sr. V.P. & CFO Kevin Calderwood VP
- ---------------------------------- ----------------------------------
(print name and title) (print name and title)
Date: 6/29/96 Date: 7/2/96
Address: Address:
1565 Buchanan Trail Street East 11911 Freedom Drive
Shady Grove, PA 17256 Reston, VA 22094
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ADDENDA
<PAGE>
ADDENDUM NUMBER ONE TO SOFTWARE LICENSE
AND SUPPORT AGREEMENT
This is Addendum Number One (the "Addendum") to that certain Software
License and Support Agreement dated June 29, 1996 (the "Agreement"), by and
between Grove Worldwide, acting through Grove North America, Division of Kidde
Industries, Inc. ("Customer") and Baan U.S.A., Inc. ("Baan").
In consideration of the mutual covenants set forth herein and in the
Agreement, Customer and Baan agree as follows:
Priority. The parties agree that the Agreement is hereby amended as set
forth in this Addendum. Any inconsistency between this Addendum and the
Agreement shall be resolved in favor of the intent of the parties as expressed
by this Addendum. Terms used herein with the initial letter capitalized which
are not otherwise defined herein, shall have the meaning given said terms in the
Agreement. The Agreement as amended by this Addendum Number One shall remain in
full force and effect.
Affiliates. For purposes of the Agreement, "Affiliates" shall be included in the
definition of "Customer"(first set forth above) and shall mean those operations
and/or companies which now or hereafter make-up the Grove Worldwide group of
companies. As of the Effective Date, Affiliates include Grove North America
(Division of Kidde Industries, Inc.), National Crane Corporation. Grove Europe
Limited, Deutsche Grove GmbH, Grove France, the Delta Systemes Group, Grove
Crane and Grove Manlift. No Affiliate other than Grove North America shall be
permitted to exercise any rights granted to Customer under the Agreement until
Grove North America advises the Affiliate of its obligations under this
Agreement, including this Addendum. Grove North America hereby guarantees the
performance of such Affiliates' obligations under the Agreement and shall
indemnify and hold harmless Baan from and against all losses, costs, liabilities
and expenses arising out of or relating to any breaches by such Affiliates of
such obligations.
1.3 "Confidential Information". The words "and clearly marked as 'Confidential
Information'" are hereby deleted from Section 1.3.
1.6 "Equipment". The following is added at the end of Section 1.6:
"Customer shall have the right, at no additional cost, to update Schedule B with
respect to additional equipment used by Customer by giving written notice
thereof to Baan."
1.10 "Site". The following is added to the end of Section 1.10:
"Customer shall have the right, at no additional cost, to update
Schedule B with respect to additional physical locations owned or leased and
operated by Customer by giving written notice thereof to Baan."
2 Grant of License. The words "one (1)" are hereby deleted from the first
sentence of Section 2.2, the second time they appear, and replaced by the words
"three (3), one of which shall be in German."
<PAGE>
Addendum Number One To Software
License and Support Agreement
Grove North America
================================================================================
The words "Section 2.6 and" are added to the last sentence of Section 2.2, after
the words "except as expressly provided in."
A new Section 2.6 is added after Section 2.5, as follows:
"2.6 Source Code License. If deemed necessary by both Customer and Baan,
Baan shall provide, free of charge to Customer, one copy of the Source Code for
certain modules of the Software as requested by Customer pursuant to an
Agreement Regarding the Use of Source Code with terms substantially similar to
those contained in the agreement attached hereto as Exhibit C."
3. License Restrictions. The words ", although the development of additional
derivative software for the purpose of integrating with the Software to support
business requirements of Customer is permitted" is inserted at the end of
Section 3(d), before the semicolon.
4 License Fee. The last sentence of Section 4.1 is hereby deleted and
replaced by the following:
"The License Fee is due and payable in full on October 1, 1996."
6.4 Basic Maintenance. The following is inserted at the end of Section 6.4,
after the period:
"Maintenance is also available at an Advanced Level and at a Full Level.
The Advanced Level gives the Customer coverage Monday through Friday, 8 a.m.
through 8 p.m., local Site time, and the Full Level gives the Customer coverage
seven days per week, twenty-four hours per day. The Maintenance Fee for Advanced
coverage is 18% of the price of the Software, as set forth in Baan's price list
in effect as of the Effective Date and the Maintenance Fee for Full coverage is
21%. Any calls received outside the hours contracted for by the Customer will be
charge to Customer at Baan's then-current rates. These rates, as of the
Effective Date, are $250.00 per hour."
6.5 On-Site Assistance. The words ", but with Customer's prior consent," are
inserted after the words "At Baan's discretion" in the first sentence of Section
6.5.
The word "reasonable" is inserted after the words "reimburse Baan for all
related" in Section 6.5.
6.7 Causes which are not attributable to Baan. Section 6.7 (d) is hereby
deleted and replaced by the following:
"(d) software programs made by Customer or other parties and software
programs, excluding the Software, made by Baan Company N.V."
6.9 Maintenance Fee. The following is inserted after the first sentence of
Section 6.9:
"Notwithstanding the foregoing, the Maintenance Fee for the first three
months after the Effective Date shall be $1.00. Customer agrees that for this
first three-month period, Customer shall not be entitled to place calls to
Baan's International Service Center regarding the Software unless Customer
agrees to pay Baan the hourly rates charged by Baan for calls received outside
of hours contracted for. The Maintenance Fee for the next period of Maintenance
and Support, the twelve (12)
2
<PAGE>
Addendum Number One To Software
License and Support Agreement
Grove North America
================================================================================
month period from October 1, 1996 through September 30, 1997, shall be 15% of
the price of the Software as set forth in this Agreement."
The words "for each calendar year" are hereby inserted after the words "The
Maintenance Fee" in the second sentence of Section 6.9.
The words "thirty (30)" in the second and third sentences of Section 6.9 are
hereby deleted and replaced by the words "forty-five (45)."
The fourth sentence of Section 6.9 is hereby deleted and replaced by the
following:
"Each calendar year, the Maintenance Fee may be modified by Baan due to
general price increases and/or general inflation increases which are reflected
in the U.S. Producer Price Index, but Baan agrees that, prior to the fifth
anniversary of the Effective Date, the Maintenance Fee shall not increase by
more than the increase in the U.S. Producer Price Index, Total Finished Goods,
for each year during the applicable time period, by written notice to Customer
at least thirty (30) days prior to the end of the then-current term."
A new Section 7.1 (d) is hereby added as follows:
"(d) After the expiration of the warranty period as set forth in this
Section 7.1, defects in the Software will be addressed as set forth in Section
6."
Section 7.4 is hereby deleted in its entirety.
Section 7.7 is hereby deleted in its entirety.
10 Term and Termination. The word "thirty (30)" where it appears in Sections
10.3(a) and 10.3(b) is hereby deleted and replaced by the word "forty-five
(45)."
The words "provisions relating to Baan's indemnification for infringement," are
hereby inserted after the words "amounts due," in the last paragraph of Section
10.3.
The words "of Baan" are inserted after the words "other Confidential
information" in Section 10.4.
The word "its" in Section 10.4 is hereby deleted and replaced by the word
"Customer's."
11 Non-Assignment/Binding Agreement. The following phrase is added at the end of
Section 11, after the period:
"Notwithstanding the foregoing, this restriction of transfer shall not
apply to any assignment or transfer resulting from the pending Hanson de-merger
or any future Hanson- Grove Worldwide demerger or reorganization as long as no
entity involved in any such future transaction makes commercially available
software which is in competition with the Software."
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<PAGE>
Addendum Number One To Software
License and Support Agreement
Grove North America
================================================================================
12. Notices. The following is added after the period following the last
sentence in Section 12:
"For Customer: Grove Worldwide
1565 Buchanan Trail East
P.O. Box 21
Shady Grove, Pennsylvania 17256
Attn: George Gunther
Director of Information Systems
with copy to: Grove Worldwide
1565 Buchanan Trail East
P.O. Box 21
Shady Grove, Pennsylvania 17256
Attn: General Counsel
For Baan: Baan USA, Inc.
4600 Bohannon Drive
Suite 105
Menlo Park, CA 94025
Attn: Susanne Hereford
Corporate Counsel
with copy to: Baan USA, Inc.
11911 Freedom Drive
Suite 780
Reston, VA 22090
Attn: Kevin Calderwood
Vice President
The parties agree that the above named individuals may be changed by the
respective parties with notice to the other party."
13.8 Export of Software. The words "without the prior written consent of Baan"
are deleted from the first sentence of section 13.8 and replaced with the words
"in violation of United States government export control laws and other laws
regulating the exportation of software."
13.9 Public Announcements. The following phrase is added to the end of
Section 13.9, before the period:
",assuming that Customer is given prior written notice of the use by
Baan."
A new Section 13.14 is hereby added as follows:
"13.14 Lighthouse Account. Baan agrees that Customer shall be entitled to
certain attention from Baan's executive management to ensure that Customer's
implementation process proceeds in a timely fashion and to monitor Customer's
satisfaction. Furthermore, Customer shall be invited to meetings held with the
development group within Baan in order to facilitate the Customer giving Baan
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<PAGE>
Addendum Number One To Software
License and Support Agreement
Grove North America
================================================================================
feedback on Baan's Software as it relates to, among other things,
functionality enhancements and future product direction."
A new Section 13.15 is hereby added as follows:
"13.15 Commitment to Manufacturing. Baan acknowledges that Baan and its
affiliates have developed a core specialty in developing software for
manufacturing operations. Baan recognizes the importance of this core specialty
to Customer and agrees to take commercially reasonable steps to continue to
pursue the development of such functionality consistent with the demands of
Baan's customer base but Baan shall in no event be obligated to do so."
IN WITNESS WHEREOF, the parties have executed this Addendum as of the date first
written above.
GROVE NORTH AMERICA, DIVISION BAAN U.S.A., INC.
OF KIDDE INDUSTRIES, INC.
By: /s/ G.F. Heidinger By: /s/ Kevin Calderwood
------------------------------ ------------------------------
Name: G.F. Heidinger Name: Kevin Calderwood
Title: Sr. VP & CFO Title: VP
<PAGE>
Exhibit 10.15
PROFESSIONAL SERVICES AGREEMENT
This PROFESSIONAL SERVICES AGREEMENT (this "Agreement") is entered into by
and between Grove Worldwide, acting through Grove North America, Division of
Kidde Industries, Inc. ("Customer"), and Baan U.S.A., Inc. ("Baan"), and
describes the terms and conditions pursuant to which Baan will provide
professional services with respect to the Software licensed by Baan to Customer
and certain subsidiaries of Customer pursuant to a certain Software License and
Support Agreement (the "License Agreement"). Any capitalized terms not expressly
defined in this Agreement have the meanings given to such terms in the License
Agreement.
In consideration of the mutual promises and upon the terms and conditions
set forth below, the parties agree as follows:
1. Scope of Services
1.1 Services. Baan shall provide the professional services (the
"Services") described in Schedule A attached hereto, as amended from
time to time by agreement of the parties.
1.2 Manner of Performance. Baan will retain the sole and exclusive right
to control or direct the manner or means by which the Services are
performed and may subcontract or assign any or all of its
obligations and rights under this Agreement. Any such subcontract or
assignment is subject to Customer's consent, which consent shall not
be unreasonably withheld or delayed.
1.3 Software. The Services will be provided for the current release of
the Software, unless otherwise specifically noted. Baan will not be
responsible for the migration or reimplementation of the Services
for Updates, Releases and Versions of the Software, unless Customer
separately contracts for such migration or reimplementation.
2 Customizations
If the Services to be performed hereunder include the development of
customized versions of the Software, then the following terms shall apply.
2.1 Definitions
(a) "Customizations" means the development of new software and/or
the adaptation of the Software by Baan at the request of
Customer.
(b) "Functional Specifications" means the determination of the
functional requirements with which the Customizations shall
comply.
(c) "Functional Design" means a detailed statement of the
Functional Specifications which includes the screens and print
reports to be developed.
2.2 Development
(a) Customizations shall be developed in accordance with the
Functional Specifications and the Functional Design.
(b) If Baan is so instructed by Customer, Baan shall develop the
Functional Specifications in consultation with the Contact
Person, as defined in Section 4.2 below, who shall bear the
ultimate responsibilitv on behalf of the Customer. The
Functional Specifications shall be approved in writing by the
Contact Person on behalf of the Customer.
(c) If the Functional Specifications are drawn up by the Customer
or by a third party on behalf of the Customer, they shall be
subject to Bann's prior written approval.
(d) After approval of the Functional Specifications they shall be
detailed by Baan in the Functional Design in consultation with
the Customer. The Functional Design shall also be approved in
writing on behalf of the Customer by the Contact Person.
(e) Only after approval of the Functional Design shall the
Customizations be developed. The Functional Design shall be
binding for the acceptance of the Customizations. All prior
oral and/or written undertakings by Baan as well as oral
and/or written wishes of the Customer not included in the
Functional Design shall herewith be of no further force or
effect.
(f) Within two weeks after the delivery of the Customizations to
Customer, the parties shall perform an acceptance test.
2.3 Acceptance
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(a) Immediately after an acceptance test has been executed, the
parties shall draw up and sign an official record. This
official record shall state whether or not the (relevant part
of the) Customizations have been approved.
(b) In the event of approval the date of signing of the official
record shall be regarded as the date of acceptance.
(c) If (part of) the Customizations are rejected, the reason
therefor shall be stated in the official record. Defects which
have an adverse effect on the use of the Customizations, but
which do not materially interfere with its normal use, shall
not constitute a reason for Customer to withhold approval,
without prejudice to Baan's obligation to remedy such defects
free of charge.
(d) If the Customer has rejected (part of) the Customizations, new
acceptance tests will be executed within four weeks after the
date of the previous acceptance test. The official record then
to be drawn up shall state whether the defects described in
the previous official record have been remedied and whether or
not (part of) the Customizations have been approved.
3 Customer's Duties and Responsibilities
3.1 Data and Information. Customer shall make available in a timely
manner at no charge to Baan all technical data, computer facilities,
programs, files, documentation, test data, sample output, or other
information and resources required by Baan for the performance of
the Services. Customer will be responsible for, and assumes the risk
of any problems resulting from, the content, accuracy, completeness
and consistency of all such data, materials and information supplied
by Customer.
3.2 Equipment. Customer shall provide, at no charge to Baan, office
space, services and equipment (such as copiers, fax machines and
modems) as Baan reasonably requires to perform the Services.
3.3 Tasks. Responsibility for the proper implementation of the Software
is with Customer, Baan's role is to assist Customer with such
implementation. Tasks that are primarily the responsibility of
Customer's personnel will remain Customer's responsibility and will
remain under Customer's supervision, management and control, even if
Baan assists Customer in performing such tasks.
4 Relationship of Parties
4.1 Independent Contractors. Each party will be and act as an
independent contractor and not as an agent or partner of, or joint
venture with, the other party for any purpose related to this
Agreement or the transactions contemplated by this Agreement, and
neither party by virtue of this Agreement will have any right, power
or authority to act or create any obligation, expressed or implied,
on behalf of the other party.
4.2 Contact Person. Each party will appoint in writing an employee or
agent of such party to act as the "Contact Person" for all
communication between the parties related to the Services. The
Contact Person will be responsible for monitoring the status of the
Services and will schedule regular meetings with both technical and
management personnel of each party to review the status of the
Services. Either party may change its Contact Person upon written
notice to the other.
5 Fees and Payments
5.1 Fees. Customer shall pay Baan on a time and materials basis for the
Services in accordance with the fees set forth on Schedule B
attached hereto. Baan will invoice Customer on a biweekly basis as
Services are performed. All payments for fees and expenses must be
made within thirty (30) days of the date of invoice.
5.2 Expenses. Customer shall reimburse all reasonable travel and other
related expenses incurred by Baan in performance of the Services.
5.3 Taxes. Customer also agrees to pay or reimburse Baan for all
federal, state, dominion, provincial or local sales, use, personal
property, excise or other taxes, fees or duties arising out of this
Agreement or the transactions contemplated by this Agreement (other
than taxes on the net income of Baan).
5.4 Interest and further costs. Customer shall pay Baan one (1) per cent
interest per month on the outstanding balance of any fees or
expenses not paid within thirty (30) days of the date of invoice.
Customer shall further be responsible for all costs incurred by Baan
in connection with any claim made by Baan in order to recover
payment of Customers account, including without limitation, all
professional fees and legal costs.
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<PAGE>
5.5 Invoices. Services will commence as soon as practical following
Baan's receipt and acceptance of a signed copy of this Agreement and
a purchase order or other written authorization of the Services. If
Customer's procedures allow payment of invoices without a purchase
order, Customer shall provide a letter stating that fact to Baan.
Notwithstanding the foregoing, no terms, provisions or conditions of
any purchase order or other business form or written authorization
used by Customer will have any effect on the rights, duties or
obligations of the parties under, or otherwise modify, this
Agreement, regardless of any failure of Baan to object to such
terms, provisions, or conditions.
6 Ownership of Work Product
6.1 Creations. All software programs (including Customizations), source
and object code, specifications, designs, processes, techniques,
concepts, improvements, discoveries, and inventions made or
developed in connection with the Services (collectively,
"Creations") will be the sole and exclusive property of Baan.
6.2 License. Customer will be entitled to use the Creations solely in
connection with its authorized use of the Software, such right being
embodied in, and subject to, Customer's license of the Software
under the License Agreement.
7 Maintenance and Support
7.1 Term and Termination. Maintenance and Support (as defined below) of
any Customizations may be optionally contracted for by Customer
concurrent with the execution of this Agreement. If contracted for,
Baan's provision of Maintenance and Support to Customer will
commence upon the Effective Date and will continue for an initial
term of one (1) year. Maintenance and Support will automatically
renew at the end of the initial term and any subsequent term for a
renewal term of one (1) year unless Customer has provided Baan with
a written termination notice of its intention not to renew the
Maintenance and Support at least ninety (90) days prior to the
expiration of the then-current term. Termination of Maintenance and
Support upon failure to renew will not affect Customer's license of
the Software or the Creations.
7.2 Maintenance and Support Services. Maintenance and Support means that
Baan will provide telephone assistance with respect to the
Customizations, including: (a) clarification of functions and
features of the Customizations; (b) clarification of Documentation
pertaining to the Customizations, if any; (c) guidance in the
operation of the Customizations; and (d) error verification,
analysis and correction to the extent possible by telephone. Baan's
standard hours of service are Monday through Friday, 9:00 a.m. to
5:00 p.m., local time, except for holidays as observed by Baan.
Customer may contract for expanded days and hours of service as
agreed upon by Baan.
7.3 On-site Assistance. At Baan's discretion, Baan can decide to provide
Maintenance and Support at the Customer Site. In such event Customer
will reimburse Baan for all related traveling expenses and costs for
board and lodging.
7.4 Installation and Conversion. Customer may require Installation
and/or conversion of the Customizations. Unless otherwise agreed,
the costs hereof shall be invoiced to Customer on the basis of
Baan's then-current rates.
7.5 Maintenance Fee. The Maintenance Fee for standard hours of service
for each twelve (12) month period of Maintenance and Support will be
19% of the total amount paid by Customer for the Customizations;
provided that Customer has contracted for Maintenance and Support
under the License Agreement. Such Maintenance Fee is in addition to
the Maintenance Fee due under the License Agreement. Customer owes a
percentage of the Maintenance Fee which corresponds to the number of
months of the first term. The Maintenance Fee is due and payable in
fill in advance within thirty (30) days after the date of Baan's
invoice. Any amounts not paid within thirty (30) days will be
subject to interest of one percent (1%) per month, which interest
will be immediately due and payable. Each calendar year, the
Maintenance Fee may be modified by Baan due to general price
increases and/or general inflation increases which is reflected in
the Consumer Price Index, but shall, for a period of four years from
the Effective Date, in no event exceed five percent (5%) plus the
increase in the Consumer Price Index for the applicable time period,
by written notice to Customer at least thirty (30) days prior to the
end of the then-current term. In the event of a modification of the
Maintenance Fee, Customer may discontinue Maintenance and Support.
If Customer elects not to renew Maintenance and Support, Customer
may re-enroll only with Baan's consent and only upon payment of the
annual Maintenance Fee for the coming year and fifty (50) per cent
of all Maintenance Fees that would have been paid had Customer not
terminated Maintenance and Support.
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<PAGE>
7.6 Eligibility of Software/Responsibility of Customer. The provisions
of Sections 6.6 and 6.7 of the License Agreement will be applicable
to Maintenance and Support for Customizations, as if set forth in
full in this Agreement.
7.7 Assignment of Duties. Baan may assign its duties of Maintenance and
Support to a third party, provided that Baan will remain responsible
for the actions of such third party. Any such assignment is subject
to Customers consent, which consent shall not be unreasonably
withheld or delayed.
8 Limited Warranty and Limitation of Liability
8.1 Baan warrants that for a period of ninety (90) days from Baan's
completion of any Customizations, these Customizations will conform
to the Functional Specifications. If the Customizations are
demonstrated not to conform to such Functional Specifications, Baan
will, at Baan's option, undertake to correct the Customizations so
it conforms with such Functional Specifications, or, if the
foregoing is not commercially practicable, terminate this Agreement
and refund the fees paid for the Customizations pursuant to Section
5.1. The foregoing are Customer's sole and exclusive remedies for
breach of warranty. The warranty set forth above is made to and for
the benefit of Customer only. The warranty will apply only if:
(a) the Customizations have been properly used at all times and in
accordance with the instructions for use; and
(b) no modification, alteration or addition has been made to the
Software and/or the Customizations, by persons other than Baan
or Baans authorized representative.
8.2 Except as set forth above, Baan makes no warranties, whether
express, implied, or statutory, regarding or relating to the
Customizations, any Documentation, or any materials or services
furnished or provided to Customer under this Agreement Baan
specifically disclaims all implied warranties of merchantability and
fitness for a particular purpose with respect to the Customizations,
Documentation and said other materials and services, and with
respect to the use of any of the foregoing. In addition, Baan
disclaims any warranty with respect to, and will not be liable or
otherwise responsible for, the operation of the Customizations if
programs are made through the use of Baan Tools or non-Baan software
that change, or are able to change, the data model of the
Customizations.
8.3 In no event will Baan be liable for any loss of profits, loss of
use, business interruption, loss of data, cost of cover, or
indirect, special, incidental, or consequential damages of any kind
in connection with or arising out of the furnishing, performance or
use of the Customizations, or the services, whether alleged as a
breach of contract or tortious conduct, including negligence, even
if Baan has been advised of the possibility of such damages. In
addition, Baan will not be liable for any damages caused by delay in
delivery or furnishing the Customizations or the services. Baan's
liability under this Agreement for direct, indirect, special
incidental and/or consequential damages of any kind, including,
without limitation, restitution, will not, in any event, exceed the
fees paid by Customer to Baan under Section 5.1 of this Agreement.
8.4 Customer shall indemnify Baan against all claims by third parties
related to (the performance of) this Agreement.
8.5 The provisions of this Section 8 allocate risks under this Agreement
between Customer and Baan. Baan's pricing reflects this allocation
of risk and limitation of liabilities.
8.6 No action arising out of any breach or claimed breach of this
Agreement or the transactions contemplated by this Agreement may be
brought by either party more than one (1) year after the cause of
action has accrued. For purposes of this Agreement, a cause of
action will be deemed to have accrued when a party knew or
reasonably should have known of the breach or claimed breach.
8.7 No employee, agent, representative, or affiliate of Baan has
authority to bind Baan to any oral representations or warranty
concerning the Software or the Services. Any written representation
or warranty not expressly contained in this Agreement will not be
enforceable.
9 Term and Termination
9.1 Term. This Agreement will take effect on the Effective Date and will
remain in effect, unless earlier terminated in accordance with
Section 9.2, until all of the Services have been completed.
9.2 Termination.
(a) This Agreement may be terminated, with or without cause, by
Customer upon thirty (30)
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days' prior written notice to Baan, provided that no such
termination will entitle Customer to a refund of any portion
of the Services fee.
(b) This Agreement may be terminated by Baan if Customer (i) fails
to pay any amount due to Baan under this Agreement within
thirty (30) days after Baan gives written notice of such
non-payment, or (ii) commits a material non-monetary breach of
this Agreement, which breach, if capable of being cured, is
not cured within thirty (30) days of a written notice of such
breach by Baan.
(c) This Agreement may be terminated by Baan if Customer (i)
terminates or suspends its business activities, (ii) becomes
insolvent, admits in writing its inability to pay its debts as
they mature, makes an assignment for the benefit of creditors,
or becomes subject to direct control of a trustee, receiver or
similar authority, or (iii) becomes subject to any bankruptcy
or insolvency proceeding under federal or state statutes.
(d) This Agreement may be terminated by Baan if it elects to
refund Customer's fees in accordance with Section 8.1 or
Section 8.1(c) of the License Agreement..
9.3 Effect of Termination. Termination of this Agreement will not affect
the provisions of this Agreement relating to the payment of amounts
due, the provisions of Sections 6 and 8 of this Agreement, or
Sections 8, 9 and 13.14 of the License Agreement, all of which will
survive termination of this Agreement, regardless of the reason for
termination.
10 Incorporation by Reference
The following Sections of the License Agreement are incorporated herein by
this reference as if set forth in full in this Agreement; Sections 4.4, 8,
9, 11, 12 and 13. References in those incorporated Sections to the
"Agreement" will mean this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement.
GROVE NORTH AMERICA, DIVISION OF BAAN U.S.A., INC.
KIDDE INDUSTRIES, INC.
By: /s/ Kevin Calderwood VP
By: /s/ G. F. Heidinger -----------------------------
----------------------------- Kevin Calderwood VP
G. F. Heidinger --------------------------------
- -------------------------------- (print name and title)
(print name and title)
Date: 7/2/96
Date: 6/29/96
Address:
Address:
11911 Freedom Drive
1565 [ILLEGIBLE] Reston, VA 22090
Shady Grove, PA 17256
-6-
<PAGE>
ADDENDA
<PAGE>
ADDENDUM NUMBER ONE TO PROFESSIONAL SERVICES AGREEMENT
This is Addendum Number One (the "Addendum") to that certain Professional
Services Agreement dated June 26, 1996 (the "Agreement"), by and between Grove
Worldwide, acting through Grove North America, Division of Kidde Industries,
Inc. ("Customer") and Baan U.S.A., Inc. ("Baan").
In consideration of the mutual covenants set forth herein and in the
Agreement, Customer and Baan agree as follows:
Priority. The parties agree that the Agreement is hereby amended as set
forth in this Addendum. Any inconsistency between this Addendum and the
Agreement shall be resolved in favor of the intent of the parties as expressed
by this Addendum. Terms used herein with the initial letter capitalized which
are not otherwise defined herein, shall have the meaning given said terms in the
Agreement. The Agreement as amended by this Addendum shall remain in full force
and effect.
Affiliates. For purposes of the Agreement, "Affiliates" shall be included
in the definition of "Customer"(first set forth above) and shall mean those
operations and/or companies which now or hereafter make-up the Grove Worldwide
group of companies. As of the Effective Date, Affiliates include Grove North
America (Division of Kidde Industries, Inc.), National Crane Corporation, Grove
Europe Limited, Deutsche Grove GmbH, Grove France, the Delta Systems Group,
Grove Crane and Grove Manlift. No Affiliate other than Grove North America shall
be permitted to exercise any rights granted to Customer under the Agreement
until Grove North America advises the Affiliate of its obligations under this
Agreement, including this Addendum. Grove North America hereby guarantees the
performance of such Affiliates' obligations under the Agreement and shall
indemnify and hold harmless Baan from and against all losses, costs, liabilities
and expenses arising out of or relating to any breaches by such Affiliates of
such obligations.
3.2 Equipment. The words "at the Site" are inserted after the words "Customer
shall provide" in Section 3.2.
5.1 Fees. The following phrase is added at the end of Section 5.1, after the
period:
"If Customer decides to pre-pay for all services required for the
implementation of the Software from July 1, 1996 through January 1, 1997, these
services shall be available to Customer at a discount equal to ten percent (10%)
off Baan's then-current list price for those services. The payment for such
services shall be due and payable by Customer in full on October 1, 1996."
5.4 Interests and Further Costs. The word "thirty (30)" in the first sentence
of Section 5.4 is hereby deleted and replaced by the word "forty-five
(45)."
The second sentence of Section 5.4 is hereby deleted.
6.1 Creations. Section 6.1 is deleted and replaced by the following:
"6.1 Creations. All software programs, source and object code,
specifications, designs, processes, techniques, concepts,
improvements, discoveries and inventions made or developed in
connection with the Services (collectively, "Creations") will be
jointly owned by Baan and Customer, subject to Baan's underlying
rights in the Software and, furthermore, Customer's scope of rights
to the Creations shall be limited to
<PAGE>
Addendum Number One To Professional
Services Agreement
Grove North America
================================================================================
Customer's scope of rights to the Software as set forth in the License
Agreement. Baan shall have the right to license or otherwise exploit such
Creations without the consent of Customer and without accounting to Customer for
any royalties or compensation therefrom.
6.2 License. Section 6.2 is deleted in its entirety.
7.5 Maintenance Fee. The words "for each calendar year" are hereby inserted
after the words "The Maintenance Fee" in the fourth sentence of Section
7.5.
The words thirty (30)" in the fourth and fifth sentences of Section 7.5 are
hereby deleted and replaced by the words "forty-five (45)."
The sixth sentence of Section 7.5 is hereby deleted and replaced by the
following:
"Each calendar year, the Maintenance Fee may be modified by Baan due to
general price increases and/or general inflation increases which are reflected
in the U.S. Producer Price Index, but Baan agrees that, prior to the fifth
anniversary of the Effective Date, the Maintenance Fee shall not increase by
more than the increase in the U.S. Producer Price Index, Total Finished Goods,
for each year during the applicable time period, by written notice to Customer
at least thirty (30) days prior to the end of the then-current term."
Sections 8.4 and 8.6 are hereby deleted in their entirety.
9 Term and Termination. The word "thirty (30)" where it appears in Sections
9.2(a) and 9.2(b) is hereby deleted and replaced by the word "forty-five
(45)."
9.3 Effect of Termination. The word "13.14" is hereby deleted and
replaced by the word "13.13."
IN WITNESS WHEREOF, the undersigned have executed this Addendum as of the date
first written above.
GROVE NORTH AMERICA, DIVISION
OF KIDDE INDUSTRIES, INC.
By: /s/ G. F Heidinger
-------------------------------
Name: G. F Heidinger
Title: SR VP & CFO
BAAN U.S.A., INC.
By: /s/ Kevin Calderwood
-------------------------------
Name: Kevin Calderwood
Title: VP
2
<PAGE>
Exhibit 10.16
[LETTERHEAD OF GROVE WORLDWIDE]
April 7, 1998
Ms. Gloria Bart
Baan U.S.A., Inc.
4600 Bohannon Drive
Menlo Park, CA 94025
Re: Consent to Assignment
Dear Ms. Bart:
Grove North America, Division of Kidde Industries, Inc. ("Kidde")
requests your company's consent to the proposed transfer of the Agreements,
described on Exhibit A attached herein (the "Agreements"), from Kidde to Grove
U.S. L.L.C., a Delaware limited liability company ("Grove US").
Grove Worldwide LLC, a Delaware limited liability company, has
formed Grove US to own and operate substantially all of the business and assets
of Kidde. Grove US expects to grant to its lenders a security interest in such
assets, including the Agreements.
In substance, Kidde proposes to transfer the Agreements to Grove US,
and Grove US will assume certain obligations, including all obligations of Kidde
under the Agreements, effective on the date of transfer. We anticipate that
Grove US will carry on the business previously conducted by Kidde with respect
to the transferred assets, including the Agreements, and that the day-to-day
operations of the business will be essentially unchanged. The effective date of
the transfer is expected to be on or about April 30, 1998.
We request that your company consent to the above transfer.
To evidence your company's consent, please have the appropriate
authorized representative of your company sign and return this letter (including
the Exhibit A) to us as soon as possible. A stamped, self-addressed envelope is
enclosed for your convenience.
Time is of the essence. Please respond promptly. As noted above, the
effective date of the transfer is expected to be on or about April 30, 1998.
<PAGE>
GROVE WORLDWIDE]
Ms. Gloria Bart
Baan
April 7, 1998
Page 2
Although our records indicate that the Agreements may contain a
consent to assign requirement in your company's favor, this letter should not be
construed to admit that such consent rights exist or to waive or prejudice our
right, if any, to treat any failure to respond to this letter as a waiver of
your company's consent rights, if any.
Thank you for your assistance. If you have any questions regarding
this request, please contact Ed Wine of my staff at 717-593-5097.
Sincerely,
/s/ Keith Simmons
Keith R. Simmons
Senior Vice President
General Counsel and
Business Development
Enclosure
CONSENT
The undersigned, on behalf of Baan U.S.A., Inc., hereby consents to
the transfer and grant of a security interest in the Agreements described above.
Signature: /s/ John J. Cordio Title: COO -- Americas
Print Name: John J. Cordio Date: 4-21-98
EXHIBIT A
Software License and Support Agreement, dated June 29, 1996, between Baan
U.S.A., Inc. and Grove North America, Division of Kidde Industries, Inc., as
amended, and Professional Services Agreement, dated June 26, 1996, between Baan
U.S.A., Inc. and Grove North America, Division of Kidde Industries, Inc., as
amended.
<PAGE>
Exhibit 10.17
OPTION AGREEMENT
GROVE INVESTORS LLC
MANAGEMENT OPTION PLAN
Dear Mr.:
We are pleased to inform you that the Management Committee of Grove
Investors LLC, a Delaware limited liability company (the "Company"), has
selected you to receive an option under the Grove Investors LLC Management
Option Plan (the "Plan"). This letter serves as the Option Agreement governing
your Option, as described in the Plan and is subject to the terms of the Plan.
The grant date of this Option is the Effective Date, as defined in the Plan.
The Company hereby grants you the right and option (the "Option") to
purchase, on the terms and conditions set forth in the Plan and this Agreement,
all or any part of an aggregate of ______ Class A Units (representing __% of the
initial purchased Interests of the Company), subject to adjustment as set forth
in the Plan. The exercise price of each whole Class A Unit subject to the
Option shall be $1000 per Class A Unit (the "Exercise Price").
This Option is subject to the provisions of the Plan, a copy of which
has been furnished to you. By accepting the Option, you hereby agree to the
terms of the Plan, including the provisions with respect to vesting, exercise,
call, cancellation, payment, withholding and termination of the Option. If
there is any inconsistency between the terms of this letter and the Plan, the
Plan shall govern.
Sincerely,
GROVE INVESTORS LLC
-------------------------------
Salvatore J. Bonanno
Chief Executive Officer
I have received and read this Agreement
and a copy of the Plan and I agree to
be bound by the terms thereof.
- -------------------------------
XXXXXXXX
<PAGE>
Exhibit 10.18
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("FIRST AMENDMENT") entered
into as of June 23, 1998, between Salvatore J. Bonanno ("Executive") and Grove
Worldwide LLC ("Grove").
In recognition of the opportunity given to the Executive to invest
in Grove Investors LLC (the "Company"), the provisions of Section 4(b) of the
Employment Agreement dated March 5, 1998 are deleted and declared void.
IN WITNESS WHEREOF, Grove has caused this instrument to be executed
by its duly authorized officer and, except as modified by this letter, the
Employment Agreement remains in full force and effect.
GROVE WORLDWIDE LLC
Signed
---------------------------------
By:
/s/ Salvatore J. Bonanno
- -----------------------------
Salvatore J. Bonanno
<PAGE>
Exhibit 10.19
MAKER: Salvatore J. Bonanno
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$912,663 June 27, 1998
FOR VALUE RECEIVED, Salvatore J. Bonanno ("Maker"), promises to pay
to the order of Grove Worldwide LLC (collectively with all subsequent holders
of this Note, "Payee"), at 201 Main Street, Suite 2600, Fort Worth, Texas
76102, or at such other address or addresses as payee may from time to time
designate in writing, in lawful money of the United States of America, an
amount equal to Nine Hundred Twelve Thousand Six Hundred and Sixty Three
dollars ($912,663) (the "Principal Amount"), together with interest on the
unpaid Principal Amount owing hereunder from time to time at the rate per annum
equal to the lesser of (1) or (2) below:
(1) a varying rate per annum equal to the prevailing designated
prime or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments
in such varying rate to be made on the same date as any change in the Prime
Rate (the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, or reserved by Payee in accordance
with New York law from time to time in effect except to the extent federal law
permits Payee to contract for, charge, take, receive, or reserve a greater
amount of interest, due credit being given for all charges made in connection
with the loan evidenced hereby that may be treated as interest under applicable
law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any
time the Applicable Rate, together with all fees and charges, if any,
contracted for, charged, received, taken, or reserved by Payee in connection
with the loan evidenced hereby that may be treated as interest under applicable
law (collectively, the "Charges"), computed over the full term of this Note,
exceeds the Maximum Rate, then the rate of interest payable hereunder, together
with all Charges, will be limited to the Maximum Rate. If, however, the Maximum
Rate from time to time subsequently increases, then the interest charged on the
unpaid Principal Amount will remain equal to the Maximum Rate, and any
subsequent reduction in the Applicable Rate will not reduce the rate borne by
this Note, until the total amount of interest earned hereunder, together with
all Charges, equals the total amount of interest that would have accrued at the
Applicable Rate if the Applicable Rate had at all times been in effect.
Moreover, if at maturity or final payment of this Note the total amount of
interest paid or accrued under the foregoing provisions is less than the total
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, Maker agrees to pay to Payee, to the
<PAGE>
2
extent allowed by then-applicable law, an amount equal to the difference
between (a) the lesser of (i) the amount of interest that would have been
accrued on this Note if the Maximum Rate had at all times been in effect, and
(ii) the amount of interest that would have accrued if the Applicable Rate had
at all times been in effect, and (b) the amount of interest actually accrued
under this Note.
This Note evidences the loan, between the Maker and the Payee for
the purchase by Maker of a membership interest (the "Equity") in Grove
Investors LLC, a Delaware limited liability company ("Investors"). So much of
the Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to Investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as
the purchase price for the Equity.
This Note is due and payable with accrued interest on the seventh
anniversary of the date hereof. The Note and all accrued interest will be
forgiven upon the occurrence of any of the following events prior to the
scheduled payment date: (A) the Maker dies while in service, (B) the Maker
becomes disabled, (C) the Maker is discharged involuntarily, (D) the Maker
quits with Good Reason as defined in the Employment Agreement, (E) the Maker
remains in employment continuously from the date hereof until the seventh
anniversary of this agreement, or (F) the occurrence of a Change of Control.
The amount due under this Note that shall be forgiven shall be increased or
decreased based on the positive difference, if any, between the fair market
value of shares of stock of Foamex International, Inc. ("Foamex") under option
to Maker which were not exercisable by Maker as of the announcement of Maker's
termination of employment from Foamex (the "Announcement") and the exercise
price for such stock under such options. As of the Announcement there were
44,754 such shares under option at an exercise price of $6 7/8 per share and
50,000 such shares under option at an exercise price of $11 1/2 per share. The
fair market value of a share of stock of Foamex shall be the average closing
price of a share of Foamex stock on the stock exchange on which such shares are
principally traded for the ten trading days prior to the Announcement or, if a
going-private transaction is announced, on or before July 28, 1998, the price
paid for a share of stock of Foamex in such transaction.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the Default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion
of this Note without premium or penalty upon at least two days written notice
to the Payee. All
<PAGE>
3
payments on this Note will, at the option of Payee, be applied first to pay
unpaid accrued interest and any remainder will be applied to reduce the
Principal Amount.
The forgiveness of this Note and the related interest that would
otherwise occur shall be conditioned on the Maker's providing the Payee with
sufficient funds to satisfy all applicable withholding requirements.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
(a) Maker fails to perform or observe any provision of this
Note.
(b) Maker commences a voluntary case under Title 11 of the
United States Code as from time to time in effect (the "Bankruptcy
Code").
(c) Maker seeks relief as a debtor under any applicable law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consents to or acquiesces
in such relief.
(d) Maker has entered against him any order by a court of
competent jurisdiction finding him to be bankrupt or insolvent, or
assuming custody of, or appointing a receiver or other custodian
for, all or a substantial part of his property.
(e) Maker makes an assignment for the benefit of, or enters
into a composition with, his creditors, or appoints or consents to
the appointment of a receiver or other custodian for all or a
substantial part of his property.
(f) A court having jurisdiction enters a decree or order for
relief in respect of Maker in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law
<PAGE>
4
now or hereafter in effect, which decree or order is not stayed; or
any other similar relief is granted under any applicable federal or
state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a
court having jurisdiction for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian, or other officer
having similar powers over Maker, or over all or a substantial part
of his property, has been entered; or the involuntary appointment of
an interim receiver, trustee, or other custodian of Maker for all or
a substantial part of his property has occurred; or a warrant of
attachment, execution, or similar process has been issued against
any substantial part of Maker's property, and any such event
described in this clause (g) continues for 60 days unless dismissed,
bonded or discharged.
If a Default occurs, then and in each and every such case the
unpaid Principal Amount and all accrued interest will automatically become due
and payable without presentation, presentment, protest, or further demand or
notice of any kind, all of which Maker expressly waives. Payee may proceed to
enforce payment of all or part of such amount in a commercially reasonable
manner. Payee will also be entitled to exercise any and all other rights,
remedies, and recourses now or later existing in equity or at law. All remedies
under this Note are cumulative, not exclusive.
Upon Default under this Note, at Payee's option all amounts then
due and payable under this Note will bear interest from the date the Default
occurs at a rate of interest per annum (the "Default Rate") equal to the lesser
of (a) 4% over the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable
law now or hereafter governing the terms of this Note and the interest payable
on this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts
previously collected by Payee be credited on the Principal Amount of this Note
(or, if the Note has been paid in full, refunded to Maker). This Note
immediately will then be deemed reformed and the amounts later collectible
hereunder reduced without the need to execute any new
<PAGE>
5
document, so as to comply with the then-applicable law, but so as to permit the
recovery of the greatest amount otherwise called for hereunder.
All sums paid or agreed to be paid to Payee for the use,
forbearance, or detention of this indebtedness evidenced by this note will, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of this Note until paid in full so that the
rate or amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK
LAW EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE,
TAKE, RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
Any suit, action, proceeding, controversy or claim arising out of
or relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any objection that he now has or may later have to the
venue of such court, and (ii) any objection that any such suit, action, or
proceeding brought in such court has been brought in an inconvenient forum.
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first
above written.
"MAKER"
/s/ Salvatore J. Bonanno
------------------------
SALVATORE J. BONANNO
"PAYEE"
/s/ Charles Zemene
------------------------
GROVE WORLDWIDE LLC
<PAGE>
6
By: /s/ CHARLES A. ZEMENE
--------------------------
Title: Treasurer
-----------------------
(Payee's signature is added solely to
acknowledge the statement in the next to the
last paragraph above that this is the final
written agreement between the parties.)
Acknowledged and agreed to for the
limited purposes stated herein by:
GROVE INVESTORS LLC, a
Delware limited liability company.
By: /s/ Charles Zemene
------------------------
Title: Treasurer
---------------------
<PAGE>
EX-10.20
MAKER: Salvatore J. Bonanno
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$1,000,000 June 27, 1998
FOR VALUE RECEIVED, Salvatore J. Bonanno ("Maker"), promises to pay
to the order of Grove Worldwide LLC (collectively with all subsequent holders
of this Note, "Payee"), at 201 Main Street, Suite 2600, Fort Worth, Texas
76102, or at such other address or addresses as payee may from time to time
designate in writing, in lawful money of the United States of America, an
amount equal to One Million dollars ($1,000,000) (the "Principal Amount"),
together with interest on the unpaid Principal Amount owing hereunder from time
to time at the rate per annum equal to the lesser of (1) or (2) below:
(1) a varying rate per annum equal to the prevailing designated
prime or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments
in such varying rate to be made on the same date as any change in the Prime
Rate (the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, or reserved by Payee in accordance
with New York law from time to time in effect except to the extent federal law
permits Payee to contract for, charge, take, receive, or reserve a greater
amount of interest, due credit being given for all charges made in connection
with the loan evidenced hereby that may be treated as interest under applicable
law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any
time the Applicable Rate, together with all fees and charges, if any,
contracted for, charged, received, taken, or reserved by Payee in connection
with the loan evidenced hereby that may be treated as interest under applicable
law (collectively, the "Charges"), computed over the full term of this Note,
exceeds the Maximum Rate, then the rate of interest payable hereunder, together
with all Charges, will be limited to the Maximum Rate. If, however, the Maximum
Rate from time to time subsequently increases, then the interest charged on the
unpaid Principal Amount will remain equal to the Maximum Rate, and any
subsequent reduction in the Applicable Rate will not reduce the rate borne by
this Note, until the total amount of interest earned hereunder, together with
all Charges, equals the total amount of interest that would have accrued at the
Applicable Rate if the Applicable Rate had at all times been in effect.
Moreover, if at maturity or final payment of this Note the total amount of
interest paid or accrued under the foregoing provisions is less than the total
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, Maker agrees to pay to Payee, to the
<PAGE>
2
extent allowed by then-applicable law, an amount equal to the difference
between (a) the lesser of (i) the amount of interest that would have been
accrued on this Note if the Maximum Rate had at all times been in effect, and
(ii) the amount of interest that would have accrued if the Applicable Rate had
at all times been in effect, and (b) the amount of interest actually accrued
under this Note.
This Note evidences the loan, between the Maker and the Payee for
the purchase by Maker of a membership interest (the "Equity") in Grove
Investors LLC, a Delaware limited liability company ("Investors"). So much of
the Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to Investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as
the purchase price for the Equity.
This Note is secured by Maker's pledge of: (i) Maker's membership
interest in Investors (the "Pledged Equity"), as more fully set forth in that
certain Pledge Agreement (the "Pledge Agreement") dated as of the date hereof
by and between Maker and Payee; and (ii) such other assets or documents as are
at any time given as security for or relating to this Note (the Pledge
Agreement and all other security documents are collectively referred to as the
"Security Instruments," and the Pledged Equity and any other assets that are at
any time pledged as security for this Note are collectively referred to as the
"Collateral").
This Note is due and payable as follows:
(A) At the time of, and to the extent of the after-tax proceeds of,
all distributions respecting and proceeds and payments on, from, or in
connection with the Collateral and any other amounts to which Maker becomes
entitled with respect to the Collateral (such amounts to be paid to Payee as
provided below). For this purpose, after-tax proceeds shall be computed by
taking into account income taxes attributable to Maker's ownership or
disposition of the Collateral (including income tax liability attributable to
Maker's distributive share of taxable income of Investors) and by assuming that
Maker will pay taxes at the maximum federal income tax rate and the maximum
state income tax rate for the state in which the Pledgor pays income taxes with
respect to such ownership or disposition of the Collateral, taking into account
the deductibility of state income taxes for federal income tax purposes.
(B) At the time of and to the extent of (i) proceeds from
Investors' redemption of the Pledged Equity (such amounts to be paid to Payee
as provided below) and (ii) other proceeds arising out of the sale or other
disposition of all or any portion of the Pledged Equity.
<PAGE>
3
(C) If a bonus is payable under the Short Term Incentive Plan to
the Maker in a year, fifty percent of the after tax proceeds of such bonus
calculated at the highest marginal tax rate applicable to the Maker is due.
(D) Unless sooner paid under this Note, any unpaid Principal Amount
and all unpaid interest accrued thereon is finally due and payable on the tenth
anniversary of the date hereof.
Maker hereby acknowledges that, except as expressly provided above,
all distributions, redemptions and other payments in respect of the Collateral
payable by Investors to Maker will be paid directly to Payee as payments under
this Note. Maker hereby directs and authorizes Investors to pay the foregoing
amounts directly to Payee to be applied against this Note. By signing below
Investors agrees to make all such payments directly to Payee unless otherwise
notified in writing to the contrary by Payee. The parties hereto acknowledge
and agree that such amounts will be deemed to have been distributed to Maker
and thereafter paid by Maker to Payee as payment under this Note.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion
of this Note without premium or penalty upon at least two days written notice
to the Payee. All payments on this Note will, at the option of Payee, be
applied first to pay unpaid accrued interest and any remainder will be applied
to reduce the Principal Amount.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
(a) Maker fails to perform or observe any provision of this
Note, the Pledge Agreement, or any other Security Instrument.
<PAGE>
4
(b) Maker commences a voluntary case under Title 11 of the
United States Code as from time to time in effect (the "Bankruptcy
Code").
(c) Maker seeks relief as a debtor under any applicable law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consents to or acquiesces
in such relief.
(d) Maker has entered against him any order by a court of
competent jurisdiction finding him to be bankrupt or insolvent, or
assuming custody of, or appointing a receiver or other custodian
for, all or a substantial part of his property.
(e) Maker makes an assignment for the benefit of, or enters
into a composition with, his creditors, or appoints or consents to
the appointment of a receiver or other custodian for all or a
substantial part of his property.
(f) A court having jurisdiction enters a decree or order for
relief in respect of Maker in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, which decree or order is
not stayed; or any other similar relief is granted under any
applicable federal or state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a
court having jurisdiction for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian, or other officer
having similar powers over Maker, or over all or a substantial part
of his property, has been entered; or the involuntary appointment of
an interim receiver, trustee, or other custodian of Maker for all or
a substantial part of his property has occurred; or a warrant of
attachment, execution, or similar process has been issued against
any substantial part of Maker's property, and any such event
described in this clause (g) continues for 60 days unless dismissed,
bonded or discharged.
If a Default occurs, then and in each and every such case the
unpaid Principal Amount and all accrued interest will automatically become due
and payable without presentation, presentment, protest, or further demand or
notice of any kind, all of which Maker expressly waives. Payee may proceed to
enforce payment of all or part of such amount in a commercially reasonable
manner. Payee will also be entitled to exercise any and all other rights,
remedies, and recourses now or later existing in equity
<PAGE>
5
or at law. All remedies under this Note and the Security Instruments are
cumulative, not exclusive.
Upon Default under this Note, or under any of the Security
Instruments, at Payee's option all amounts then due and payable under this Note
or the Security Instruments will bear interest from the date the Default occurs
at a rate of interest per annum (the "Default Rate") equal to the lesser of
(a) 4% over the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable
law now or hereafter governing the terms of this Note and the interest payable
on this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts
previously collected by Payee be credited on the Principal Amount of this Note
(or, if the Note has been paid in full, refunded to Maker). This Note and the
Security Instruments immediately will then be deemed reformed and the amounts
later collectible hereunder and thereunder reduced without the need to execute
any new document, so as to comply with the then-applicable law, but so as to
permit the recovery of the greatest amount otherwise called for hereunder and
thereunder.
All sums paid or agreed to be paid to Payee for the use,
forbearance, or detention of this indebtedness evidenced by this note will, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of this Note until paid in full so that the
rate or amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK
LAW EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE,
TAKE, RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
Any suit, action, proceeding, controversy or claim arising out of
or relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any
<PAGE>
6
objection that he now has or may later have to the venue of such court, and
(ii) any objection that any such suit, action, or proceeding brought in such
court has been brought in an inconvenient forum.
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first
above written.
"MAKER"
/s/ Salvatore J. Bonanno
----------------------------
SALVATORE J. BONANNO
"PAYEE"
/s/ Salvatore J. Bonanno
----------------------------
GROVE WORLDWIDE LLC
By: Salvatore J. Bonanno
-------------------------
Title: CEO
----------------------
(Payee's signature is added solely to
acknowledge the statement in the next to
the last paragraph above that this is
the final written agreement between the
parties.)
Acknowledged and agreed to for
the limited purposes stated herein
by:
GROVE INVESTORS LLC, a
Delaware limited liability company
By: /s/ Salvatore J. Bonanno
-------------------------
Title: CEO
----------------------
<PAGE>
Exhibit 10.21
MAKER: Jeff Bust
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$375,000 June 27, 1998
FOR VALUE RECEIVED, Jeff Bust ("Maker"), promises to pay to the
order of Grove Worldwide LLC (collectively with all subsequent holders of this
Note, "Payee"), at 201 Main Street, Suite 2600, Fort Worth, Texas 76102, or at
such other address or addresses as payee may from time to time designate in
writing, in lawful money of the United States of America, an amount equal to
Three Hundred and Seventy-Five Thousand dollars ($375,000) (the "Principal
Amount"), together with interest on the unpaid Principal Amount owing hereunder
from time to time at the rate per annum equal to the lesser of (1) or (2) below:
(1) a varying rate per annum equal to the prevailing designated
prime or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments
in such varying rate to be made on the same date as any change in the Prime
Rate (the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, or reserved by Payee in accordance
with New York law from time to time in effect except to the extent federal law
permits Payee to contract for, charge, take, receive, or reserve a greater
amount of interest, due credit being given for all charges made in connection
with the loan evidenced hereby that may be treated as interest under applicable
law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any
time the Applicable Rate, together with all fees and charges, if any,
contracted for, charged, received, taken, or reserved by Payee in connection
with the loan evidenced hereby that may be treated as interest under applicable
law (collectively, the "Charges"), computed over the full term of this Note,
exceeds the Maximum Rate, then the rate of interest payable hereunder, together
with all Charges, will be limited to the Maximum Rate. If, however, the Maximum
Rate from time to time subsequently increases, then the interest charged on the
unpaid Principal Amount will remain equal to the Maximum Rate, and any
subsequent reduction in the Applicable Rate will not reduce the rate borne by
this Note, until the total amount of interest earned hereunder, together with
all Charges, equals the total amount of interest that would have accrued at the
Applicable Rate if the Applicable Rate had at all times been in effect.
Moreover, if at maturity or final payment of this Note the total amount of
interest paid or accrued under the foregoing provisions is less than the total
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, Maker agrees to pay to Payee, to the
<PAGE>
2
extent allowed by then-applicable law, an amount equal to the difference
between (a) the lesser of (i) the amount of interest that would have been
accrued on this Note if the Maximum Rate had at all times been in effect, and
(ii) the amount of interest that would have accrued if the Applicable Rate had
at all times been in effect, and (b) the amount of interest actually accrued
under this Note.
This Note evidences the loan, between the Maker and the Payee for
the purchase by Maker of a membership interest (the "Equity") in Grove
Investors LLC, a Delaware limited liability company ("Investors"). So much of
the Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to Investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as
the purchase price for the Equity.
This Note is secured by Maker's pledge of: (i) Maker's membership
interest in Investors (the "Pledged Equity"), as more fully set forth in that
certain Pledge Agreement (the "Pledge Agreement") dated as of the date hereof
by and between Maker and Payee; and (ii) such other assets or documents as are
at any time given as security for or relating to this Note (the Pledge
Agreement and all other security documents are collectively referred to as the
"Security Instruments," and the Pledged Equity and any other assets that are at
any time pledged as security for this Note are collectively referred to as the
"Collateral").
This Note is due and payable as follows:
(A) At the time of, and to the extent of the after-tax proceeds of,
all distributions respecting and proceeds and payments on, from, or in
connection with the Collateral and any other amounts to which Maker becomes
entitled with respect to the Collateral (such amounts to be paid to Payee as
provided below). For this purpose, after-tax proceeds shall be computed by
taking into account income taxes attributable to Maker's ownership or
disposition of the Collateral (including income tax liability attributable to
Maker's distributive share of taxable income of Investors) and by assuming that
Maker will pay taxes at the maximum federal income tax rate and the maximum
state income tax rate for the state in which the Pledgor pays income taxes with
respect to such ownership or disposition of the Collateral, taking into account
the deductibility of state income taxes for federal income tax purposes.
(B) At the time of and to the extent of (i) proceeds from
Investors' redemption of the Pledged Equity (such amounts to be paid to Payee
as provided below) and (ii) other proceeds arising out of the sale or other
disposition of all or any portion of the Pledged Equity.
<PAGE>
3
(C) If a bonus is payable under the Short Term Incentive Plan to
the Maker in a year, fifty percent of the after tax proceeds of such bonus
calculated at the highest marginal tax rate applicable to the Maker is due.
(D) Unless sooner paid under this Note, any unpaid Principal Amount
and all unpaid interest accrued thereon is finally due and payable on the tenth
anniversary of the date hereof.
Maker hereby acknowledges that, except as expressly provided above,
all distributions, redemptions and other payments in respect of the Collateral
payable by Investors to Maker will be paid directly to Payee as payments under
this Note. Maker hereby directs and authorizes Investors to pay the foregoing
amounts directly to Payee to be applied against this Note. By signing below
Investors agrees to make all such payments directly to Payee unless otherwise
notified in writing to the contrary by Payee. The parties hereto acknowledge
and agree that such amounts will be deemed to have been distributed to Maker
and thereafter paid by Maker to Payee as payment under this Note.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the Default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion
of this Note without premium or penalty upon at least two days written notice
to the Payee. All payments on this Note will, at the option of Payee, be
applied first to pay unpaid accrued interest and any remainder will be applied
to reduce the Principal Amount.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
(a) Maker fails to perform or observe any provision of this Note,
the Pledge Agreement, or any other Security Instrument.
<PAGE>
4
(b) Maker commences a voluntary case under Title 11 of the United
States Code as from time to time in effect (the "Bankruptcy Code").
(c) Maker seeks relief as a debtor under any applicable law, other
than the Bankruptcy Code, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the
rights of creditors or consents to or acquiesces in such relief.
(d) Maker has entered against him any order by a court of competent
jurisdiction finding him to be bankrupt or insolvent, or assuming custody
of, or appointing a receiver or other custodian for, all or a substantial
part of his property.
(e) Maker makes an assignment for the benefit of, or enters into a
composition with, his creditors, or appoints or consents to the
appointment of a receiver or other custodian for all or a substantial part
of his property.
(f) A court having jurisdiction enters a decree or order for relief
in respect of Maker in an involuntary case under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, which decree or order is not stayed; or any other
similar relief is granted under any applicable federal or state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian, or other officer having similar powers
over Maker, or over all or a substantial part of his property, has been
entered; or the involuntary appointment of an interim receiver, trustee,
or other custodian of Maker for all or a substantial part of his property
has occurred; or a warrant of attachment, execution, or similar process
has been issued against any substantial part of Maker's property, and any
such event described in this clause (g) continues for 60 days unless
dismissed, bonded or discharged.
If a Default occurs, then and in each and every such case the unpaid
Principal Amount and all accrued interest will automatically become due and
payable without presentation, presentment, protest, or further demand or notice
of any kind, all of which Maker expressly waives. Payee way proceed to enforce
payment of all or part of such amount in a commercially reasonable manner. Payee
will also be entitled to exercise any and all other rights, remedies, and
recourses now or later existing in equity
<PAGE>
5
or at law. All remedies under this Note and the Security Instruments are
cumulative, not exclusive.
Upon Default under this Note, or under any of the Security
Instruments, at Payee's option all amounts then due and payable under this Note
or the Security Instruments will bear interest from the date the Default occurs
at a rate of interest per annum (the "Default Rate") equal to the lesser of (a)
4% over the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable
law now or hereafter governing the terms of this Note and the interest payable
on this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts
previously collected by Payee be credited on the Principal Amount of this Note
(or, if the Note has been paid in full, refunded to Maker). This Note and the
Security Instruments immediately will then be deemed reformed and the amounts
later collectible hereunder and thereunder reduced without the need to execute
any new document, so as to comply with the then-applicable law, but so as to
permit the recovery of the greatest amount otherwise called for hereunder and
thereunder.
All sums paid or agreed to be paid to Payee for the use,
forbearance, or detention of this indebtedness evidenced by this note will, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of this Note until paid in full so that the
rate or amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK
LAW EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE,
TAKE, RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
Any suit, action, proceeding, controversy or claim arising out of
or relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any
<PAGE>
6
objection that he now has or may later have to the venue of such court, and
(ii) any objection that any such suit, action, or proceeding brought in such
court has been brought in an inconvenient forum.
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first
above written.
"MAKER"
/s/ Jeff Bust
----------------------------------
JEFF BUST
"PAYEE"
/s/ Salvatore J. Bonanno
----------------------------------
GROVE WORLDWIDE LLC
By: /s/ Salvatore J. Bonanno
----------------------------------
Title: CEO
----------------------------------
(Payee's signature is added solely to
acknowledge the statement in the next to
the last paragraph above that this is
the final written agreement between the
parties.)
Acknowledged and agreed to for the
limited purposes stated herein by:
GROVE INVESTORS LLC, a
Delaware limited liability company
By: /s/ Salvatore J. Bonanno
--------------------------
Title: CEO
-----------------------
<PAGE>
Exhibit 10.22
MAKER: James Kolinski
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$250,000 June 27, 1998
FOR VALUE RECEIVED, James Kolinski ("Maker"), promises to pay to
the order of Grove Worldwide LLC (collectively with all subsequent holders of
this Note, "Payee"), at 201 Main Street, Suite 2600, Fort Worth, Texas 76102,
or at such other address or addresses as payee may from time to time designate
in writing, in lawful money of the United States of America, an amount equal to
Two Hundred and Fifty Thousand dollars ($250,000) (the "Principal Amount"),
together with interest on the unpaid Principal Amount owing hereunder from time
to time at the rate per annum equal to the lesser of (1) or (2) below:
(1) a varying rate per annum equal to the prevailing designated
prime or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments
in such varying rate to be made on the same date as any change in the Prime
Rate (the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, or reserved by Payee in accordance
with New York law from time to time in effect except to the extent federal law
permits Payee to contract for, charge, take, receive, or reserve a greater
amount of interest, due credit being given for all charges made in connection
with the loan evidenced hereby that may be treated as interest under applicable
law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any
time the Applicable Rate, together with all fees and charges, if any,
contracted for, charged, received, taken, or reserved by Payee in connection
with the loan evidenced hereby that may be treated as interest under applicable
law (collectively, the "Charges"), computed over the full term of this Note,
exceeds the Maximum Rate, then the rate of interest payable hereunder, together
with all Charges, will be limited to the Maximum Rate. If, however, the Maximum
Rate from time to time subsequently increases, then the interest charged on the
unpaid Principal Amount will remain equal to the Maximum Rate, and any
subsequent reduction in the Applicable Rate will not reduce the rate borne by
this Note, until the total amount of interest earned hereunder, together with
all Charges, equals the total amount of interest that would have accrued at the
Applicable Rate if the Applicable Rate had at all times been in effect.
Moreover, if at maturity or final payment of this Note the total amount of
interest paid or accrued under the foregoing provisions is less than the total
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, Maker agrees to pay to Payee, to the
<PAGE>
2
extent allowed by then-applicable law, an amount equal to the difference
between (a) the lesser of (i) the amount of interest that would have been
accrued on this Note if the Maximum Rate had at all times been in effect, and
(ii) the amount of interest that would have accrued if the Applicable Rate had
at all times been in effect, and (b) the amount of interest actually accrued
under this Note.
This Note evidences the loan, between the Maker at the Payee for
the purchase by Maker of a membership interest (the "Equity") in Grove
Investors LLC, a Delaware limited liability company ("Investors"). So much of
the Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to Investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as
the purchase price for the Equity.
This Note is secured by Maker's pledge of: (i) Maker's membership
interest in Investors (the "Pledged Equity"), as more fully set forth in that
certain Pledge Agreement (the "Pledge Agreement") dated as of the date hereof
by and between Maker and Payee; and (ii) such other assets or documents as are
at any time given as security for or relating to this Note (the Pledge
Agreement and all other security documents are collectively referred to as the
"Security Instruments," and the Pledged Equity and any other assets that are at
any time pledged as security for this Note are collectively referred to as the
"Collateral").
This Note is due and payable as follows:
(A) At the time of, and to the extent of the after-tax proceeds of,
all distributions respecting and proceeds and payments on, from, or in
connection with the Collateral and any other amounts to which Maker becomes
entitled with respect to the Collateral (such amounts to be paid to Payee as
provided below). For this purpose, after-tax proceeds shall be computed by
taking into account income taxes attributable to Maker's ownership or
disposition of the Collateral (including income tax liability attributable to
Maker's distributive share of taxable income of Investors) and by assuming that
Maker will pay taxes at the maximum federal income tax rate and the maximum
state income tax rate for the state in which the Pledgor pays income taxes with
respect to such ownership or disposition of the Collateral, taking into account
the deductibility of state income taxes for federal income tax purposes.
(B) At the time of and to the extent of (i) proceeds from
Investors' redemption of the Pledged Equity (such amounts to be paid to Payee
as provided below) and (ii) other proceeds arising out of the sale or other
disposition of all or any portion of the Pledged Equity.
<PAGE>
3
(C) If a bonus is payable under the Short Term Incentive Plan to
the Maker in a year, fifty percent of the after tax proceeds of such bonus
calculated at the highest marginal tax rate applicable to the Maker is due.
(D) Unless sooner paid under this Note, any unpaid Principal Amount
and all unpaid interest accrued thereon is finally due and payable on the tenth
anniversary of the date hereof.
Maker hereby acknowledges that, except as expressly provided above,
all distributions, redemptions and other payments in respect of the Collateral
payable by Investors to Maker will be paid directly to Payee as payments under
this Note. Maker hereby directs and authorizes Investors to pay the foregoing
amounts directly to Payee to be applied against this Note. By signing below
Investors agrees to make all such payments directly to Payee unless otherwise
notified in writing to the contrary by Payee. The parties hereto acknowledge
and agree that such amounts will be deemed to have been distributed to Maker
and thereafter paid by Maker to Payee as payment under this Note.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the Default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion
of this Note without premium or penalty upon at least two days written notice
to the Payee. All payments on this Note will, at the option of Payee, be
applied first to pay unpaid accrued interest and any remainder will be applied
to reduce the Principal Amount.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
(a) Maker fails to perform or observe any provision of this Note,
the Pledge Agreement, or any other Security Instrument.
<PAGE>
4
(b) Maker commences a voluntary case under Title 11 of the United
States Code as from time to time in effect (the "Bankruptcy Code").
(c) Maker seeks relief as a debtor under any applicable law, other
than the Bankruptcy Code, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the
rights of creditors, or consents to or acquiesces in such relief.
(d) Maker has entered against him any order by a court of competent
jurisdiction finding him to be bankrupt or insolvent, or assuming custody
of, or appointing a receiver or other custodian for, all or a substantial
part of his property.
(e) Maker makes an assignment for the benefit of, or enters into a
composition with, his creditors, or appoints or consents to the
appointment of a receiver or other custodian for all or a substantial part
of his property.
(f) A court having jurisdiction enters a decree or order for relief
in respect of Maker in an involuntary case under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, which decree or order is not stayed; or any other
similar relief is granted under any applicable federal or state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian, or other officer having similar powers
over Maker, or over all or a substantial part of his property, has been
entered; or the involuntary appointment of an interim receiver, trustee,
or other custodian of Maker for all or a substantial part of his property
has occurred; or a warrant of attachment, execution, or similar process
has been issued against any substantial part of Maker's property, and any
such event described in this clause (g) continues for 60 days unless
dismissed, bonded or discharged.
If a Default occurs, then and in each and every such case the
unpaid Principal Amount and all accrued interest will automatically become due
and payable without presentation, presentment, protest, or further demand or
notice of any kind, all of which Maker expressly waives. Payee may proceed to
enforce payment of all or part of such amount in a commercially reasonable
manner. Payee will also be entitled to exercise any and all other rights,
remedies, and recourses now or later existing in equity
<PAGE>
5
or at law. All remedies under this Note and the Security Instruments are
cumulative, not exclusive.
Upon Default under this Note, or under any of the Security
Instruments, at Payee's option all amounts then due and payable under this Note
or the Security Instruments will bear interest from the date the Default occurs
at a rate of interest per annum (the "Default Rate") equal to the lesser of (a)
4% over the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable
law now or hereafter governing the terms of this Note and the interest payable
on this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts
previously collected by Payee be credited on the Principal Amount of this Note
(or, if the Note has been paid in full, refunded to Maker). This Note and the
Security Instruments immediately will then be deemed reformed and the amounts
later collectible hereunder and thereunder reduced without the need to execute
any new document, so as to comply with the then-applicable law, but so as to
permit the recovery of the greatest amount otherwise called for hereunder and
thereunder.
All sums paid or agreed to be paid to Payee for the use,
forbearance, or detention of this indebtedness evidenced by this note will, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of this Note until paid in full so that the
rate or amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK
LAW EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE,
TAKE, RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
Any suit, action, proceeding, controversy or claim arising out of
or relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any
<PAGE>
6
objection that he now has or may later have to the venue of such court, and
(ii) any objection that any such suit, action, or proceeding brought in such
court has been brought in an inconvenient forum.
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first
above written.
"MAKER"
/s/ James Kolinski
----------------------------------
JAMES KOLINSKI
"PAYEE"
/s/ Salvatore J. Bonanno
----------------------------------
GROVE WORLDWIDE LLC
By: Salvatore J. Bonanno
-------------------------------
Title: CEO
----------------------------
(Payee's signature is added solely to
acknowledge the statement in the next to
the last paragraph above that this is
the final written agreement between the
parties.)
Acknowledged and agreed to for the
limited purposes stated herein by:
GROVE INVESTORS LLC, a
Delaware limited liability company
By: /s/ Salvatore J. Bonanno
--------------------------
Title: CEO
-----------------------
<PAGE>
Exhibit 10.23
MAKER: John Wheeler
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$150,000 June 27, 1998
FOR VALUE RECEIVED, John Wheeler ("Maker"), promises to pay to the
order of Grove Worldwide LLC (collectively with all subsequent holders of this
Note, "Payee"), at 201 Main Street, Suite 2600, Fort Worth, Texas 76102, or at
such other address or addresses as payee may from time to time designate in
writing, in lawful money of the United States of America, an amount equal to
One Hundred and Fifty Thousand dollars ($150,000) (the "Principal Amount"),
together with interest on the unpaid Principal Amount owing hereunder from time
to time at the rate per annum equal to the lesser of (1) or (2) below:
(1) a varying rate per annum equal to the prevailing designated
prime or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments
in such varying rate to be made on the same date as any change in the Prime
Rate (the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, or reserved by Payee in accordance
with New York law from time to time in effect except to the extent federal law
permits Payee to contract for, charge, take, receive, or reserve a greater
amount of interest, due credit being given for all charges made in connection
with the loan evidenced hereby that may be treated as interest under applicable
law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any
time the Applicable Rate, together with all fees and charges, if any,
contracted for, charged, received, taken, or reserved by Payee in connection
with the loan evidenced hereby that may be treated as interest under applicable
law (collectively, the "Charges"), computed over the full term of this Note,
exceeds the Maximum Rate, then the rate of interest payable hereunder, together
with all Charges, will be limited to the Maximum Rate. If, however, the Maximum
Rate from time to time subsequently increases, then the interest charged on the
unpaid Principal Amount will remain equal to the Maximum Rate, and any
subsequent reduction in the Applicable Rate will not reduce the rate borne by
this Note, until the total amount of interest earned hereunder, together with
all Charges, equals the total amount of interest that would have accrued at the
Applicable Rate if the Applicable Rate had at all times been in effect.
Moreover, if at maturity or final payment of this Note the total amount of
interest paid or accrued under the foregoing provisions is less than the total
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, Maker agrees to pay to Payee, to the
<PAGE>
2
extent allowed by then-applicable law, an amount equal to the difference
between (a) the lesser of (i) the amount of interest that would have been
accrued on this Note if the Maximum Rate had at all times been in effect, and
(ii) the amount of interest that would have accrued if the Applicable Rate had
at all times been in effect, and (b) the amount of interest actually accrued
under this Note.
This Note evidences the loan, between the Maker and the Payee for
the purchase by Maker of a membership interest (the "Equity") in Grove
Investors LLC, a Delaware limited liability company ("Investors"). So much of
the Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to Investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as
the purchase price for the Equity.
This Note is secured by Maker's pledge of: (i) Maker's membership
interest in Investors (the "Pledged Equity"), as more fully set forth in that
certain Pledge Agreement (the "Pledge Agreement") dated as of the date hereof
by and between Maker and Payee; and (ii) such other assets or documents as are
at any time given as security for or relating to this Note (the Pledge
Agreement and all other security documents are collectively referred to as the
"Security Instruments," and the Pledged Equity and any other assets that are at
any time pledged as security for this Note are collectively referred to as the
"Collateral").
This Note is due and payable as follows:
(A) At the time of, and to the extent of the after-tax proceeds of,
all distributions respecting and proceeds and payments on, from, or in
connection with the Collateral and any other amounts to which Maker becomes
entitled with respect to the Collateral (such amounts to be paid to Payee as
provided below). For this purpose, after-tax proceeds shall be computed by
taking into account income taxes attributable to Maker's ownership or
disposition of the Collateral (including income tax liability attributable to
Maker's distributive share of taxable income of Investors) and by assuming that
Maker will pay taxes at the maximum federal income tax rate and the maximum
state income tax rate for the state in which the Pledgor pays income taxes with
respect to such ownership or disposition of the Collateral, taking into account
the deductibility of state income taxes for federal income tax purposes.
(B) At the time of and to the extent of (i) proceeds from
Investors' redemption of the Pledged Equity (such amounts to be paid to Payee
as provided below) and (ii) other proceeds arising out of the sale or other
disposition of all or any portion of the Pledged Equity.
<PAGE>
3
(C) If a bonus is payable under the Short Term Incentive Plan to
the Maker in a year, fifty percent of the after tax proceeds of such bonus
calculated at the highest marginal tax rate applicable to the Maker is due.
(D) Unless sooner paid under this Note, any unpaid Principal Amount
and all unpaid interest accrued thereon is finally due and payable on the tenth
anniversary of the date hereof.
Maker hereby acknowledges that, except as expressly provided above,
all distributions, redemptions and other payments in respect of the Collateral
payable by Investors to Maker will be paid directly to Payee as payments under
this Note. Maker hereby directs and authorizes Investors to pay the foregoing
amounts directly to Payee to be applied against this Note. By signing below
Investors agrees to make all such payments directly to Payee unless otherwise
notified in writing to the contrary by Payee. The parties hereto acknowledge
and agree that such amounts will be deemed to have been distributed to Maker
and thereafter paid by Maker to Payee as payment under this Note.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the Default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion
of this Note without premium or penalty upon at least two days written notice
to the Payee. All payments on this Note will, at the option of Payee, be
applied first to pay unpaid accrued interest and any remainder will be applied
to reduce the Principal Amount.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
(a) Maker fails to perform or observe any provision of this
Note, the Pledge Agreement, or any other Security Instrument.
<PAGE>
4
(b) Maker commences a voluntary case under Title 11 of the
United States Code as from time to time in effect (the "Bankruptcy
Code").
(c) Maker seeks relief as a debtor under any applicable law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consents to or acquiesces
in such relief.
(d) Maker has entered against him any order by a court of
competent jurisdiction finding him to be bankrupt or insolvent, or
assuming custody of, or appointing a receiver or other custodian
for, all or a substantial part of his property.
(e) Maker makes an assignment for the benefit of, or enters
into a composition with, his creditors, or appoints or consents to
the appointment of a receiver or other custodian for all or a
substantial part of his property.
(f) A court having jurisdiction enters a decree or order for
relief in respect of Maker in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, which decree or order is
not stayed; or any other similar relief is granted under any
applicable federal or state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a
court having jurisdiction for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian, or other officer
having similar powers over Maker, or over all or a substantial part
of his property, has been entered; or the involuntary appointment of
an interim receiver, trustee, or other custodian of Maker for all or
a substantial part of his property has occurred; or a warrant of
attachment, execution, or similar process has been issued against
any substantial part of Maker's property, and any such event
described in this clause (g) continues for 60 days unless dismissed,
bonded or discharged.
If a Default occurs, then and in each and every such case the
unpaid Principal Amount and all accrued interest will automatically become due
and payable without presentation, presentment, protest, or further demand or
notice of any kind, all of which Maker expressly waives. Payee may proceed to
enforce payment of all or part of such amount in a commercially reasonable
manner. Payee will also be entitled to exercise any and all other rights,
remedies, and recourses now or later existing in equity
<PAGE>
5
or at law. All remedies under this Note and the Security Instruments are
cumulative, not exclusive.
Upon Default under this Note, or under any of the Security
Instruments, at Payee's option all amounts then due and payable under this Note
or the Security Instruments will bear interest from the date the Default occurs
at a rate of interest per annum (the "Default Rate") equal to the lesser of (a)
4% over the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable
law now or hereafter governing the terms of this Note and the interest payable
on this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts
previously collected by Payee be credited on the Principal Amount of this Note
(or, if the Note has been paid in full, refunded to Maker). This Note and the
Security Instruments immediately will then be deemed reformed and the amounts
later collectible hereunder and thereunder reduced without the need to execute
any new document, so as to comply with the then-applicable law, but so as to
permit the recovery of the greatest amount otherwise called for hereunder and
thereunder.
All sums paid or agreed to be paid to Payee for the use,
forbearance, or detention of this indebtedness evidenced by this note will, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of this Note until paid in full so that the
rate or amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK
LAW EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE,
TAKE, RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
Any suit, action, proceeding, controversy or claim arising out of
or relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any
<PAGE>
6
objection that he now has or may later have to the venue of such court, and
(ii) any objection that any such suit, action, or proceeding brought in such
court has been brought in an inconvenient forum.
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first
above written.
"MAKER"
/s/ John Wheeler
----------------------------
JOHN WHEELER
"PAYEE"
/s/ Salvatore J. Bonanno
----------------------------
GROVE WORLDWIDE LLC
By: Salvatore J. Bonanno
-------------------------
Title: CEO
----------------------
(Payee's signature is added solely to
acknowledge the statement in the next to
the last paragraph above that this is
the final written agreement between the
parties.)
Acknowledged and agreed to for the
limited purposes stated herein by:
GROVE INVESTORS LLC, a
Delaware limited liability company
By: /s/ Salvatore J. Bonanno
-------------------------
Title: CEO
----------------------
<PAGE>
Exhibit 10.24
MAKER: Stephen Cripe
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$437,500 October 27, 1998
FOR VALUE RECEIVED, Stephen Cripe ("Maker"), promises to pay to the
order of Grove Worldwide LLC (collectively with all subsequent holders of this
Note, "Payee"), at 1565 Buchanan Trail East, P.O. Box 21, Shady Grove,
Pennsylvania 17256-0021, or at such other address or addresses as payee may from
time to time designate in writing, in lawful money of the United States of
America, an amount equal to Four Hundred Thirty-Seven Thousand and Five Hundred
dollars ($437,500) (the "Principal Amount"), together with interest on the
unpaid Principal Amount owing hereunder from time to time at the rate per annum
equal to the lesser of (1) or (2) below:
(1) a varying rate per annum equal to the prevailing designated
prime or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments in
such varying rate to be made on the same date as any change in the Prime Rate
(the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, reserved by Payee in accordance with
New York law from time to time in effect except to the extent federal law
permits Payee to contract for, charge, take, receive, or reserve a greater
amount of interest, due credit being given for all charges made in connection
with the loan evidenced hereby that may be treated as interest under applicable
law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any
time the Applicable Rate, together with all fees and charges, if any, contracted
for, charged, received, taken, or reserved by Payee in connection with the loan
evidenced hereby that may be treated as interest under applicable law
(collectively, the "Charges"), computed over the full term of this Note, exceeds
the Maximum Rate, then the rate of interest payable hereunder, together with
all Charges, will be limited to the Maximum Rate. If, however, the Maximum Rate
from time to time subsequently increases, then the interest charged on the
unpaid Principal Amount will remain equal to the Maximum Rate, and any
subsequent reduction in the Applicable Rate will not reduce the rate borne by
this Note, until the total amount of interest earned hereunder, together with
all Charges, equals the total amount of interest that would have accrued at the
Applicable Rate if the Applicable Rate had at all times been in effect.
Moreover, if at maturity or final payment of this Note the total amount of
interest paid or accrued under the foregoing provisions is less than the total
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, Maker agrees to pay to Payee, to the
<PAGE>
2
extent allowed by then-applicable law, an amount equal to the difference between
(a) the lesser of (i) the amount of interest that would have been accrued on
this Note if the Maximum Rate had at all times been in effect, and (ii) the
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, and (b) the amount of interest actually accrued under this
Note.
This Note evidences the loan, between the Maker and the Payee for
the purchase by Maker of a membership interest (the "Equity") in Grove Investors
LLC, a Delaware limited liability company ("Investors"). So much of the
Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to Investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as the
purchase price for the Equity.
This Note is secured by Maker's pledge of: (i) Maker's membership
interest in Investors (the "Pledged Equity"), as more fully set forth in that
certain Pledge Agreement (the "Pledge Agreement") dated as of the date hereof by
and between Maker and Payee; and (ii) such other assets or documents as are at
any time given as security for or relating to this Note (the Pledge Agreement
and all other security documents are collectively referred to as the "Security
Instruments," and the Pledged Equity and any other assets that are at any time
pledged as security for this Note are collectively referred to as the
"Collateral").
This Note is due and payable as follows:
(A) At the time of, and to the extent of the after-tax proceeds of,
all distributions respecting and proceeds and payments on, from, or in
connection with the Collateral and any other amounts to which Maker becomes
entitled with respect to the Collateral (such amounts to be paid to Payee as
provided below). For this purpose, after-tax proceeds shall be computed by
taking into account income taxes attributable to Maker's ownership or
disposition of the Collateral (including income tax liability attributable to
Maker's distributive share of taxable income of Investors) and by assuming that
Maker will pay taxes at the maximum federal income tax rate and the maximum
state income tax rate for the state in which the Pledgor pays income taxes with
respect to such ownership or disposition of the Collateral, taking into account
the deductibility of state income taxes for federal income tax purposes.
(B) At the time of and to the extent of (i) proceeds from Investors'
redemption of the Pledged Equity (such amounts to be paid to Payee as provided
below) and (ii) other proceeds arising out of the sale or other disposition of
all or any portion of the Pledged Equity.
<PAGE>
3
(C) If a bonus is payable under the Short Term Incentive Plan to the
Maker in a year, fifty percent of the after tax proceeds of such bonus
calculated at the highest marginal tax rate applicable to the Maker is due.
(D) Unless sooner paid under this Note, any unpaid Principal Amount
and all unpaid interest accrued thereon is finally due and payable on the tenth
anniversary of the date hereof.
Maker hereby acknowledges that, except as expressly provided above,
all distributions, redemptions and other payments in respect of the Collateral
payable by Investors to Maker will be paid directly to Payee as payments under
this Note. Maker hereby directs and authorizes Investors to pay the foregoing
amounts directly to Payee to be applied against this Note. By signing below
Investors agrees to make all such payments directly to Payee unless otherwise
notified in writing to the contrary by Payee. The parties hereto acknowledge and
agree that such amounts will be deemed to have been distributed to Maker and
thereafter paid by Maker to Payee as payment under this note.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the Default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion of
this Note without premium or penalty upon at least two days written notice to
the Payee. All payments on this Note will, at the option of Payee, be applied
first to pay unpaid accrued interest and any remainder will be applied to reduce
the Principal Amount.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
(a) Maker fails to perform or observe any provision of this
Note, the Pledge Agreement, or any other Security Instrument.
<PAGE>
4
(b) Maker commences a voluntary case under Title 11 of the
United States Code as from time to time in effect (the "Bankruptcy
Code").
(c) Maker seeks relief as a debtor under any applicable law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consents to or acquiesces
in such relief.
(d) Maker has entered against him any order by a court of
competent jurisdiction finding him to be bankrupt or insolvent, or
assuming custody of, or appointing a receiver or other custodian
for, all or a substantial part of his property.
(e) Maker makes an assignment for the benefit of, or enters
into a composition with, his creditors, or appoints or consents to
the appointment of a receiver or other custodian for all or a
substantial part of his property.
(f) A court having jurisdiction enters a decree or order for
relief in respect of Maker in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, which decree or order is
not stayed; or any other similar relief is granted under any
applicable federal or state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a
court having jurisdiction for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian, or other officer
having similar powers over Maker, or over all or a substantial part
of his property, has been entered; or the involuntary appointment of
an interim receiver, trustee, or other custodian of Maker for all or
a substantial part of his property has occurred; or a warrant of
attachment, execution, or similar process has been issued against
any substantial part of Maker's property, and any such event
described in this clause (g) continues for 60 days unless dismissed,
bonded or discharged.
If a Default occurs, then and in each and every such case the unpaid
Principal Amount and all accrued interest will automatically become due and
payable without presentation, presentment, protest, or further demand or notice
of any kind, all of which Maker expressly waives. Payee may proceed to enforce
payment of all or part of such amount in a commercially reasonable manner. Payee
will also be entitled to exercise any and all other rights, remedies, and
recourses now or later existing in equity or at law. All remedies under this
Note and the Security Instruments are cumulative, not exclusive.
<PAGE>
5
Upon Default under this Note, or under any of the Security
Instruments, at Payee's option all amounts then due and payable under this Note
or the Security Instruments will bear interest from the date the Default occurs
at a rate of interest per annum (the "Default Rate") equal to the lesser of (a)
4% over the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable
law now or hereafter governing the terms of this Note and the interest payable
on this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts previously
collected by Payee be credited on the Principal Amount of this Note (or, if the
Note has been paid in full, refunded to Maker). This Note and the Security
Instruments immediately will then be deemed reformed and the amounts later
collectible hereunder and thereunder reduced without the need to execute any new
document, so as to comply with the then applicable law, but so as to permit the
recovery of the greatest amount otherwise called for hereunder and thereunder.
All sums paid or agreed to be paid to Payee for the use,
forbearance, or detention of this indebtedness evidenced by this note will, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of this Note until paid in full so that the rate
or amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK
LAW EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE,
TAKE, RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
Any suit, action, proceeding, controversy or claim arising out of or
relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any objection that he now has or may later have to the
venue of such court, and (ii) any objection that any such suit, action, or
proceeding brought in such court has been brought in an inconvenient forum.
<PAGE>
6
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first
above written.
"MAKER"
/s/ Stephen Cripe
---------------------------------
STEPHEN CRIPE
"PAYEE"
GROVE WORLDWIDE LLC
By: /s/ Salvatore J. Bonanno
------------------------------
Name: Salvatore J. Bonanno
Title: Chief Executive Officer
(Payee's signature is added
solely to acknowledge the
statement in the next to the
last paragraph above that
this is the final written
agreement between the parties.)
Acknowledged and agreed to for the
limited purposes stated herein by:
GROVE INVESTORS LLC, a
Delaware limited liability company
By: /s/ Salvatore J. Bonanno
------------------------------
Name: Salvatore J. Bonanno
Title Chief Executive Officer
<PAGE>
Exhibit 10.25
MAKER: Stephen Cripe
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$250,000 October 27, 1998
FOR VALUE RECEIVED, Stephen Cripe ("Maker"), promises to pay to the
order of Grove Worldwide LLC (collectively with all subsequent holders of this
Note, "Payee"), at 1565 Buchanan Trail East, P.O. Box 21, Shady Grove,
Pennsylvania 17256-0021, or at such other address or addresses as payee may from
time to time designate in writing, in lawful money of the United States of
America, an amount equal to Two Hundred Fifty-Seven Thousand
dollars ($250,000) (the "Principal Amount"), together with interest on the
unpaid Principal Amount owing hereunder from time to time at the rate per annum
equal to the lesser of (1) or (2) below:
(1) a varying rate per annum equal to the prevailing designated
prime or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments in
such varying rate to be made on the same date as any change in the Prime Rate
(the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, reserved by Payee in accordance with
New York law from time to time in effect except to the extent federal law
permits Payee to contract for, charge, take, receive, or reserve a greater
amount of interest, due credit being given for all charges made in connection
with the loan evidenced hereby that may be treated as interest under applicable
law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any
time the Applicable Rate, together with all fees and charges, if any, contracted
for, charged, received, taken, or reserved by Payee in connection with the loan
evidenced hereby that may be treated as interest under applicable law
(collectively, the "Charges"), computed over the full term of this Note, exceeds
the Maximum Rate, then the rate of interest payable hereunder, together with
all Charges, will be limited to the Maximum Rate. If, however, the Maximum Rate
from time to time subsequently increases, then the interest charged on the
unpaid Principal Amount will remain equal to the Maximum Rate, and any
subsequent reduction in the Applicable Rate will not reduce the rate borne by
this Note, until the total amount of interest earned hereunder, together with
all Charges, equals the total amount of interest that would have accrued at the
Applicable Rate if the Applicable Rate had at all times been in effect.
Moreover, if at maturity or final payment of this Note the total amount of
interest paid or accrued under the foregoing provisions is less than the total
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, Maker agrees to pay to Payee, to the
<PAGE>
2
extent allowed by then-applicable law, an amount equal to the difference between
(a) the lesser of (i) the amount of interest that would have been accrued on
this Note if the Maximum Rate had at all times been in effect, and (ii) the
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, and (b) the amount of interest actually accrued under this
Note.
This Note evidences the loan, between the Maker and the Payee for
the purchase by Maker of a membership interest (the "Equity") in Grove Investors
LLC, a Delaware limited liability company ("Investors"). So much of the
Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to Investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as the
purchase price for the Equity.
This Note is secured by Maker's pledge of: (i) Maker's membership
interest in Investors (the "Pledged Equity"), as more fully set forth in that
certain Pledge Agreement (the "Pledge Agreement") dated as of the date hereof by
and between Maker and Payee; and (ii) such other assets or documents as are at
any time given as security for or relating to this Note (the Pledge Agreement
and all other security documents are collectively referred to as the "Security
Instruments," and the Pledged Equity and any other assets that are at any time
pledged as security for this Note are collectively referred to as the
"Collateral").
This Note is due and payable as follows:
(A) At the time of, and to the extent of the after-tax proceeds of,
all distributions respecting and proceeds and payments on, from, or in
connection with the Collateral and any other amounts to which Maker becomes
entitled with respect to the Collateral (such amounts to be paid to Payee as
provided below). For this purpose, after-tax proceeds shall be computed by
taking into account income taxes attributable to Maker's ownership or
disposition of the Collateral (including income tax liability attributable to
Maker's distributive share of taxable income of Investors) and by assuming that
Maker will pay taxes at the maximum federal income tax rate and the maximum
state income tax rate for the state in which the Pledgor pays income taxes with
respect to such ownership or disposition of the Collateral, taking into account
the deductibility of state income taxes for federal income tax purposes.
(B) At the time of and to the extent of (i) proceeds from Investors'
redemption of the Pledged Equity (such amounts to be paid to Payee as provided
below) and (ii) other proceeds arising out of the sale or other disposition of
all or any portion of the Pledged Equity.
<PAGE>
3
(C) If a bonus is payable under the Short Term Incentive Plan to the
Maker in a year, fifty percent of the after tax proceeds of such bonus
calculated at the highest marginal tax rate applicable to the Maker is due.
(D) Unless sooner paid under this Note, any unpaid Principal Amount
and all unpaid interest accrued thereon is finally due and payable six months
from of the date hereof.
Maker hereby acknowledges that, except as expressly provided above,
all distributions, redemptions and other payments in respect of the Collateral
payable by Investors to Maker will be paid directly to Payee as payments under
this Note. Maker hereby directs and authorizes Investors to pay the foregoing
amounts directly to Payee to be applied against this Note. By signing below
Investors agrees to make all such payments directly to Payee unless otherwise
notified in writing to the contrary by Payee. The parties hereto ackknowledge
and are that such amounts will be deemed to have been distributed to Maker and
thereafter paid by Maker to Payee as payment under this Note.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the Default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion of
this Note without premium or penalty upon at least two days written notice to
the Payee. All payments on this Note will, at the option of Payee, be applied
first to pay unpaid accrued interest and any remainder will be applied to reduce
the Principal Amount.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
(a) Maker fails to perform or observe any provision of this
Note, the Pledge Agreement, or any other Security Instrument.
<PAGE>
4
(b) Maker commences a voluntary case under Title 11 of the
United States Code as from time to time in effect (the "Bankruptcy
Code").
(c) Maker seeks relief as a debtor under any applicable law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consents to or acquiesces
in such relief.
(d) Maker has entered against him any order by a court of
competent jurisdiction finding him to be bankrupt or insolvent, or
assuming custody of, or appointing a receiver or other custodian
for, all or a substantial part of his property.
(e) Maker makes an assignment for the benefit of, or enters
into a composition with, his creditors, or appoints or consents to
the appointment of a receiver or other custodian for all or a
substantial part of his property.
(f) A court having jurisdiction enters a decree or order for
relief in respect of Maker in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, which decree or order is
not stayed; or any other similar relief is granted under any
applicable federal or state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a
court having jurisdiction for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian, or other officer
having similar powers over Maker, or over all or a substantial part
of his property, has been entered; or the involuntary appointment of
an interim receiver, trustee, or other custodian of Maker for all or
a substantial part of his property has occurred; or a warrant of
attachment, execution, or similar process has been issued against
any substantial part of Maker's property, and any such event
described in this clause (g) continues for 60 days unless dismissed,
bonded or discharged.
If a Default occurs, then and in each and every such case the unpaid
Principal Amount and all accrued interest will automatically become due and
payable without presentation, presentment, protest, or further demand or notice
of any kind, all of which Maker expressly waives. Payee may proceed to enforce
payment of all or part of such amount in a commercially reasonable manner. Payee
will also be entitled to exercise any and all other rights, remedies, and
recourses now or later existing in equity or at law. All remedies under this
Note and the Security Instruments are cumulative, not exclusive.
<PAGE>
5
Upon Default under this Note, or under any of the Security
Instruments, at Payee's option all amounts then due and payable under this Note
or the Security Instruments will bear interest from the date the Default occurs
at a rate of interest per annum (the "Default Rate") equal to the lesser of (a)
4% over the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable
law now or hereafter governing the terms of this Note and the interest payable
on this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts previously
collected by Payee be credited on the Principal Amount of this Note (or, if the
Note has been paid in full, refunded to Maker). This Note and the Security
Instruments immediately will then be deemed reformed and the amounts later
collectible hereunder and thereunder reduced without the need to execute any new
document, so as to comply with the then-applicable law, but so as to permit the
recovery of the greatest amount otherwise called for hereunder and thereunder.
All sums paid or agreed to be paid to Payee for the use,
forbearance, or detention of this indebtedness evidenced by this note will, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of this Note until paid in full so that the rate
or amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK
LAW EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE,
TAKE, RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
Any suit, action, proceeding, controversy or claim arising out of or
relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any objection that he now has or may later have to the
venue of such court, and (ii) any objection that any such suit, action, or
proceeding brought in such court has been brought in an inconvenient forum.
<PAGE>
6
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first
above written.
"MAKER"
/s/ Stephen Cripe
---------------------------------
STEPHEN CRIPE
"PAYEE"
GROVE WORLDWIDE LLC
By: /s/ Salvatore J. Bonanno
------------------------------
Name: Salvatore J. Bonanno
Title Chief Executive Officer
(Payee's signature is added
solely to acknowledge the
statement in the next to the
last paragraph above that
this is the final written
agreement between the parties.)
Acknowledged and agreed to for the
limited purposes stated herein by:
GROVE INVESTORS LLC, a
Delaware limited liability company
By: /s/ Salvatore J. Bonanno
------------------------------
Name: Salvatore J. Bonanno
Title: Chief Executive Officer
<PAGE>
Exhibit 10.26
MAKER: Donald Mallo
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$50,000 October 27, 1998
FOR VALUE RECEIVED, Donald Mallo ("Maker") promises to pay to the
order of Grove Worldwide LLC (collectively with all subsequent holders of this
Note, "Payee"), at 1565 Buchanan Trail East. P.O. Box 21, Shady Grove,
Pennsylvania 17256-0021, or at such other address or addresses as payee may
from time to time designate in writing, in lawful money of the United States of
America, an amount equal to Fifty Thousand dollars ($50,000) (the "Principal
Amount"), together with interest on the unpaid Principal Amount owing hereunder
from time to time at the rate per annum equal to the lesser of (1) or (2) below:
(1) a varying rate per annum equal to the prevailing designated
prime or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments in
such varying rate to be made on the same date as any change in the Prime Rate
(the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, or reserved by Payee in accordance
with New York law from time to time in effect except to the extent federal law
permits Payee to contract for, charge, take, receive, or reserve a greater
amount of interest, due credit being given for all charges made in connection
with the loan evidenced hereby that may be treated as interest under applicable
law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any
time the Applicable Rate, together with all fees and charges, if any, contracted
for, charged, received, taken, or reserved by Payee in connection with the loan
evidenced hereby that may be treated as interest under applicable law
(collectively, the "Charges"), computed over the full term of this Note, exceeds
the Maximum Rate, then the rate of interest payable hereunder, together with all
Charges, will be limited to the Maximum Rate. If, however, the Maximum Rate from
time to time subsequently increases, then the interest charged on the unpaid
Principal Amount will remain equal to the Maximum Rate, and any subsequent
reduction in the Applicable Rate will not reduce the rate borne by this Note,
until the total amount of interest earned hereunder, together with all Charges,
equals the total amount of interest that would have accrued at the Applicable
Rate if the Applicable Rate had at all times been in effect. Moreover, if at
maturity or final payment of this Note the total amount of interest paid or
accrued under the foregoing provisions is less than the total amount of interest
that would have accrued if the Applicable Rate had at all times been in effect,
Maker agrees to pay to Payee, to the
<PAGE>
2
extent allowed by then-applicable law, an amount equal to the difference between
(a) the lesser of (i) the amount of interest that would have been accrued on
this Note if the Maximum Rate had at all times been in effect, and (ii) the
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, and (b) the amount of interest actually accrued under this
Note.
This Note evidences the loan, between the Maker and the Payee for
the purchase by Maker of a membership interest (the "Equity") in Grove Investors
LLC, a Delaware limited liability company ("Investors"). So much of the
Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to Investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as the
purchase price for the Equity.
This Note is secured by Maker's pledge of: (i) Maker's membership
interest in Investors (the "Pledged Equity"), as more fully set forth in that
certain Pledge Agreement (the "Pledge Agreement") dated as of the date hereof by
and between Maker and Payee: and (ii) such other assets or documents as are at
any time given as security for or relating to this Note (the Pledge Agreement
and all other security documents are collectively referred to as the "Security
Instruments," and the Pledged Equity and any other assets that are at any time
pledged as security for this Note are collectively referred to as the
"Collateral").
This Note is due and payable as follows:
(A) At the time of, and to the extent of the after-tax proceeds of,
all distributions respecting and proceeds and payments on, from, or in
connection with the Collateral and any other amounts to which Maker becomes
entitled with respect to the Collateral (such amounts to be paid to Payee as
provided below). For this purpose, after-tax proceeds shall be computed by
taking into account income taxes attributable to Maker's ownership or
disposition of the Collateral (including income tax liability attributable to
Maker's distributive share of taxable income of Investors) and by assuming that
Maker will pay taxes at the maximum federal income tax rate and the maximum
state income tax rate for the state in which the Pledgor pays income taxes with
respect to such ownership or disposition of the Collateral, taking into account
the deductibility of state income taxes for federal income tax purposes.
(B) At the time of and to the extent of (i) proceeds from Investors'
redemption of the Pledged Equity (such amounts to be paid to Payee as provided
below) and (ii) other proceeds arising out of the sale or other disposition of
all or any portion of the Pledged Equity.
<PAGE>
3
(C) If a bonus is payable under the Short Term Incentive Plan to the
Maker in a year, fifty percent of the after tax proceeds of such bonus
calculated at the highest marginal tax rate applicable to the Maker is due.
(D) Unless sooner paid under this Note, any unpaid Principal Amount
and all unpaid interest accrued thereon is finally due and payable on the first
anniversary of the date hereof.
Maker hereby acknowledges that, except as expressly provided above,
all distributions, redemptions and other payments in respect of the Collateral
payable by Investors to Maker will be paid directly to Payee as payments under
this Note. Maker hereby directs and authorizes Investors to pay the foregoing
amounts directly to Payee to be applied against this Note. By signing below
Investors agrees to make all such payments directly to Payee unless otherwise
notified in writing to the contrary by Payee. The parties hereto acknowledge and
agree that such amounts will be deemed to have been distributed to Maker and
thereafter paid by Maker to Payee as payment under this Note.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the Default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion of
this Note without premium or penalty upon at least two days written notice to
the Payee. All payments on this Note will, at the option of Payee, be applied
first to pay unpaid accrued interest and any remainder will be applied to reduce
the Principal Amount.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
(a) Maker fails to perform or observe any provision of this Note,
the Pledge Agreement, or any other Security Instrument.
<PAGE>
4
(b) Maker commences a voluntary case under Title 11 of the United
States Code as from time to time in effect (the "Bankruptcy Code").
(c) Maker seeks relief as a debtor under any applicable law, other
than the Bankruptcy Code, of any jurisdiction relating to the liquidation
or reorganization of debtors or to the modification or alteration of the
rights of creditors, or consents to or acquiesces in such relief.
(d) Maker has entered against him any order by a court of competent
jurisdiction finding him to be bankrupt or insolvent, or assuming custody
of, or appointing a receiver or other custodian for, all or a substantial
part of his property.
(e) Maker makes an assignment for the benefit of, or enters into a
composition with, his creditors, or appoints or consents to the
appointment of a receiver or other custodian for all or a substantial part
of his property.
(f) A court having jurisdiction enters a decree or order for relief
in respect of Maker in an involuntary case under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, which decree or order is not stayed; or any other
similar relief is granted under any applicable federal or state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect; or a decree or order of a court
having jurisdiction for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian, or other officer having similar powers
over Maker, or over all or a substantial part of his property, has been
entered; or the involuntary appointment of an interim receiver, trustee,
or other custodian of Maker for all or a substantial part of his property
has occurred; or a warrant of attachment, execution, or similar process
has been issued against any substantial part of Maker's property, and any
such event described in this clause (g) continues for 60 days unless
dismissed, bonded or discharged.
If a Default occurs, then and in each and every such case the unpaid
Principal Amount and all accrued interest will automatically become due and
payable without presentation, presentment, protest, or further demand or notice
of any kind, all of which Maker expressly waives. Payee may proceed to enforce
payment of all or part of such amount in a commercially reasonable manner. Payee
will also be entitled to exercise any and all other rights, remedies, and
recourses now or later existing in equity or at law. All remedies under this
Note and the Security Instruments are cumulative, not exclusive.
<PAGE>
5
Upon Default under this Note, or under any of the Security
Instruments, at Payee's option all amounts then due and payable under this Note
or the Security Instruments will bear interest from the date the Default occurs
at a rate of interest per annum (the "Default Rate") equal to the lesser of (a)
4% dyer the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable
law now or hereafter governing the terms of this Note and the interest payable
on this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts previously
collected by Payee be credited on the Principal Amount of this Note (or, if the
Note has been paid in full, refunded to Maker). This Note and the Security
Instruments immediately will then be deemed reformed and the amounts later
collectible hereunder and thereunder reduced without the need to execute any new
document, so as to comply with the then-applicable law, but so as to permit the
recovery of the greatest amount otherwise called for hereunder and thereunder.
All sums paid or agreed to be paid to Payee for the use,
forbearance, or detention of this indebtedness evidenced by this note will, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of this Note until paid in full so that the rate
or amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK
LAW EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE,
TAKE, RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
Any suit, action, proceeding, controversy or claim arising out of or
relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any objection that he now has or may later have to the
venue of such court, and (ii) any objection that any such suit, action, or
proceeding brought in such court has been brought in an inconvenient forum.
<PAGE>
6
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES, THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first
above written.
"MAKER"
/s/ Donald Mallo
------------------------------------
DONALD MALLO
"PAYEE"
GROVE WORLDWIDE LLC
By: /s/ Salvatore J. Bonanno
--------------------------------
Name: Salvatore J. Bonanno
Title: Chief Executive Officer
(Payee's signature is added solely
to acknowledge the statement in
the next to the last paragraph
above that this is the final
written agreement between the
parties.)
Acknowledged and agreed to for the
limited purposes stated herein by:
GROVE INVESTORS LLC, a
Delaware limited liability company
By: /s/ Salvatore J. Bonanno
-------------------------------------
Name: Salvatore J. Bonanno
Title: Chief Executive Officer
<PAGE>
Exhibit 10.27
MAKER: Donald Mallo
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$100,000 October 27, 1998
FOR VALUE RECEIVED, Donald Mallo ("Maker"), promises to pay to the
order of Grove Worldwide LLC (collectively with all subsequent holders of this
Note, "Payee"), at 1565 Buchanan Trail East. P.O. Box 21, Shady Grove,
Pennsylvania 17256-0021, or at such other address or addresses as payee may from
time to time designate in writing, in lawful money of the United States of
America, an amount equal to One Hundred Thousand dollars ($100,000) (the
"Principal Amount"), together with interest on the unpaid Principal Amount owing
hereunder from time to time at the rate per annum equal to the lesser of (1) or
(2) below:
(1) a varying rate per annum equal to the prevailing designated
prime or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments in
such varying rate to be made on the same date as any change in the Prime Rate
(the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, or reserved by Payee in accordance
with New York law from time to time in effect except to the extent federal law
permits Payee to contract for, charge, take, receive, or reserve a greater
amount of interest, due credit being given for all charges made in connection
with the loan evidenced hereby that may be treated as interest under applicable
law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any
time the Applicable Rate, together with all fees and charges, if any, contracted
for, charged, received, taken, or reserved by Payee in connection with the loan
evidenced hereby that may be treated as interest under applicable law
(collectively, the "Charges"), computed over the full term of this Note, exceeds
the Maximum Rate, then the rate of interest payable hereunder, together with all
Charges, will be limited to the Maximum Rate. If, however, the Maximum Rate from
time to time subsequently increases, then the interest charged on the unpaid
Principal Amount will remain equal to the Maximum Rate, and any subsequent
reduction in the Applicable Rate will not reduce the rate borne by this Note,
until the total amount of interest earned hereunder, together with all Charges,
equals the total amount of interest that would have accrued at the Applicable
Rate if the Applicable Rate had at all times been in effect. Moreover, if at
maturity or final payment of this Note the total amount of interest paid or
accrued under the foregoing provisions is less than the total amount of interest
that would have accrued if the Applicable Rate had at all times been in effect,
Maker agrees to pay to Payee, to the
<PAGE>
2
extent allowed by then-applicable law, an amount equal to the difference between
(a) the lesser of (i) the amount of interest that would have been accrued on
this Note if the Maximum Rate had at all times been in effect, and (ii) the
amount of interest that would have accrued if the Applicable Rate had at all
times been in effect, and (b) the amount of interest actually accrued under this
Note.
This Note evidences the loan, between the Maker and the Payee for
the purchase by Maker of a membership interest (the "Equity") in Grove Investors
LLC, a Delaware limited liability company ("Investors"). So much of the
Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as the
purchase price for the Equity.
This Note is secured by Maker's pledge of: (i) Maker's membership
interest in Investors (the "Pledged Equity"), as more fully set forth in that
certain Pledge Agreement (the "Pledge Agreement") dated as of the date hereof by
and between Maker and Payee; and (ii) such other assets or documents as are at
any time given as security for or relating to this Note (the Pledge Agreement
and all other security documents are collectively referred to as the "Security
Instruments," and the Pledged Equity and any other assets that are at any time
pledged as security for this Note are collectively referred to as the
"Collateral").
This Note is due and payable as follows:
(A) At the time of, and to the extent of the after-tax proceeds of,
all distributions respecting and proceeds and payments on, from, or in
connection with the Collateral and any other amounts to which Maker becomes
entitled with respect to the Collateral (such amounts to be paid to Payee as
provided below). For this purpose, after-tax proceeds shall be computed by
taking into account income taxes attributable to Maker's ownership or
disposition of the Collateral (including income tax liability attributable to
Maker's distributive share of taxable income of Investors) and by assuming that
Maker will pay taxes at the maximum federal income tax rate and the maximum
state income tax rate for the state in which the Pledgor pays income taxes with
respect to such ownership or disposition of the Collateral, taking into account
the deductibility of state income taxes for federal income tax purposes.
(B) At the time of and to the extent of (i) proceeds from Investors'
redemption of the Pledged Equity (such amounts to be paid to Payee as provided
below) and (ii) other proceeds arising out of the sale or other disposition of
all or any portion of the Pledged Equity.
<PAGE>
3
(C) If a bonus is payable under the Short Term Incentive Plan to the
Maker in a year, fifty percent of the after tax proceeds of such bonus
calculated at the highest marginal tax rate applicable to the Maker is due.
(D) Unless sooner paid under this Note, any unpaid Principal Amount
and all unpaid interest accrued thereon is finally due and payable on the tenth
anniversary of the date hereof.
Maker hereby acknowledges that, except as expressly provided above,
all distributions, redemptions and other payments in respect of the Collateral
payable by Investors to Maker will be paid directly to Payee as payments under
this Note. Maker hereby directs and authorizes Investors to pay the foregoing
amounts directly to Payee to be applied against this Note. By signing below
Investors agrees to make all such payments directly to Payee unless otherwise
notified in writing to the contrary by Payee. The parties hereto acknowledge and
agree that such amounts will be deemed to have been distributed to Maker and
thereafter paid by Maker to Payee as payment under this Note.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the Default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion of
this Note without premium or penalty upon at least two days written notice to
the Payee. All payments on this Note will, at the option of Payee, be applied
first to pay unpaid accrued interest and any remainder will be applied to reduce
the Principal Amount.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
(a) Maker fails to perform or observe any provision of this
Note, the Pledge Agreement, or any other Security Instrument.
<PAGE>
4
(b) Maker commences a voluntary case under Title 11 of the
United States Code as from time to time in effect (the "Bankruptcy
Code").
(c) Maker seeks relief as a debtor under any applicable law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consents to or acquieces
in such relief.
(d) Maker has entered against him any order by a court of
competent jurisdiction finding him to be bankrupt or insolvent, or
assuming custody of, or appointing a receiver or other custodian
for, all or a substantial part of his property.
(e) Maker makes an assignment for the benefit of, or enters
into a composition with, his creditors, or appoints or consents to
the appointment of a receiver or other custodian for all or a
substantial part of his property.
(f) A court having jurisdiction enters a decree or order for
relief in respect of Maker in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, which degree or order is
not stayed; or any other similar relief is granted under any
applicable federal or state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a
court having jurisdiction for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian, or other officer
having similar powers over Maker, or over all or a substantial part
of his property, has been entered; or the involuntary appointment of
an interim receiver, trustee, or other custodian of Maker for all or
a substantial part of his property has occurred; or a warrant of
attachment, execution, or similar process has been issued against
any substantial part of Maker's property, and any such event
described in this clause (g) continues for 60 days unless
dismissed, bonded or discharged.
If a Default occurs, then and in each and every such case the unpaid
Principal Amount and all accrued interest will automatically become due and
payable without presentation, presentment, protest, or further demand or notice
of any kind, all of which Maker expressly waives. Payee may proceed to enforce
payment of all or part of such amount in a commercially reasonable manner. Payee
will also be entitled to exercise any and all other rights, remedies, and
recourses now or later existing in equity or at law. All remedies under this
Note and the Security Instruments are cumulative, not exclusive.
<PAGE>
5
Upon Default under this Note, or under any of the Security
Instruments, at Payee's option all amounts then due and payable under this Note
or the Security Instruments will bear interest from the date the Default occurs
at a rate of interest per annum (the "Default Rate") equal to the lesser of (a)
4% over the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable
law now or hereafter governing the terms of this Note and the interest payable
on this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts previously
collected by Payee be credited on the Principal Amount of this Note (or, if the
Note has been paid in full, refunded to Maker). This Note and the Security
Instruments immediately will then be deemed reformed and the amounts later
collectible hereunder and thereunder reduced without the need to execute any new
document, so as to comply with the then-applicable law, but so as to permit the
recovery of the greatest amount otherwise called for hereunder and thereunder.
All sums paid or agreed to be paid to Payee for the use,
forbearance, or detention of this indebtedness evidenced by this note will, to
the extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term of this Note until paid in full so that the rate
or amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK
LAW EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE,
TAKE, RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
Any suit, action, proceeding, controversy or claim arising out of or
relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any objection that he now has or may later have to the
venue of such court, and (ii) any objection that any such suit, action, or
proceeding brought in such court has been brought in an inconvenient forum.
<PAGE>
6
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first
above written.
MAKER
/s/ DONALD MALLO
----------------------------------
DONALD MALLO
"PAYEE"
GROVE WORLDWIDE LLC
By: /S/ Salvatore J. Bonanno
------------------------------
Name: Salvatore J. Bonanno
Title: Chief Executive Officer
(Payee's signature is added
solely to acknowledge the
statement in the next to the
last paragraph above that this
is the final written agreement
between the parties.)
Acknowledged and agreed to for the
limited purposes stated herein by:
GROVE INVESTORS LLC, a
Delaware limited liability company
By: /s/ Salvatore J. Bonanno
--------------------------------
Name: Salvatore J. Bonanno
Title: Chief Executive Officer
<PAGE>
MAKER: Donald Manvel
PAYEE: Grove Worldwide LLC
PROMISSORY NOTE
$300,000 March 1, 1999
FOR VALUE RECEIVED, Donald Manvel ("Maker"), promises to pay to the
order of Grove Worldwide LLC (collectively with all subsequent holders of
this Note, "Payee"), at 1565 Buchanan Trail East. P.O. Box 21, Shady Grove,
Pennsylvania 17256-0021, or at such other address or addresses as payee may
from time to time designate in writing, in lawful money of the United States
of America, an amount equal to Three Hundred Thousand dollars ($300,000) (the
"Principal Amount"), together with interest on the unpaid Principal Amount
owing hereunder from time to time at the rate per annum equal to the lesser
of (1) or (2) below:
(1) a varying rate per annum equal to the prevailing designated prime
or base rate of Wells Fargo Bank, N.A., or its successor, as published or
announced by such bank from time to time (the "Prime Rate"), with adjustments in
such varying rate to be made on the same date as any change in the Prime Rate
(the "Applicable Rate"); or
(2) the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received, or reserved by Payee in accordance
with New York law from time to time in effect except to the extent federal
law permits Payee to contract for, charge, take, receive, or reserve a
greater amount of interest, due credit being given for all charges made in
connection with the loan evidenced hereby that may be treated as interest
under applicable law.
Interest will be based on a 365-day year.
Notwithstanding anything in this Note to the contrary, if at any time
the Applicable Rate, together with all fees and charges, if any, contracted for,
charged, received, taken, or reserved by Payee in connection with the loan
evidenced hereby that may be treated as interest under applicable law
(collectively, the "Charges"), computed over the full term of this Note, exceeds
the Maximum Rate, then the rate of interest payable hereunder, together with all
Charges, will be limited to the Maximum Rate. If, however, the Maximum Rate
from time to time subsequently increases, then the interest charged on the
unpaid Principal Amount will remain equal to the Maximum Rate, and any
subsequent reduction in the Applicable Rate will not reduce the rate borne by
this Note, until the total amount of interest earned hereunder, together with
all Charges, equals the total amount of interest that would have accrued at the
Applicable Rate if the Applicable Rate had at all times been in effect.
Moreover, if at maturity or final payment of this Note the total amount of
interest paid or accrued under the foregoing provisions is less than the total
amount of interest that would have accrued if the Applicable Rate had at all
times
<PAGE>
2
been in effect, Maker agrees to pay to Payee, to the extent allowed by
then-applicable law, an amount equal to the difference between (a) the lesser of
(i) the amount of interest that would have been accrued on this Note if the
Maximum Rate had at all times been in effect, and (ii) the amount of interest
that would have accrued if the Applicable Rate had at all times been in effect,
and (b) the amount of interest actually accrued under this Note.
This Note evidences the loan, between the Maker and the Payee for the
purchase by Maker of a membership interest (the "Equity") in Grove Investors
LLC, a Delaware limited liability company ("Investors"). So much of the
Principal Amount as is required for Maker's purchase of the Equity shall be
advanced by Payee directly to Investors, which will sell the Equity to Maker in
an amount that corresponds to Payee's advance. Maker authorizes and directs
Payee to make the advance to Investors and further authorizes Investors to
evidence the sale of the Equity in such manner with respect to the advance made
by Payee under this Note. Such advance will be deemed to have been received by
Maker upon Maker's receipt of the Equity and thereafter paid to Investors as the
purchase price for the Equity.
This Note is secured by Maker's pledge of: (i) Maker's membership
interest in Investors (the "Pledged Equity"), as more fully set forth in that
certain Pledge Agreement (the "Pledge Agreement") dated as of the date hereof by
and between Maker and Payee; and (ii) such other assets or documents as are at
any time given as security for or relating to this Note (the Pledge Agreement
and all other security documents are collectively referred to as the "Security
Instruments," and the Pledged Equity and any other assets that are at any time
pledged as security for this Note are collectively referred to as the
"Collateral").
This Note is due and payable as follows:
(A) At the time of, and to the extent of the after-tax proceeds of,
all distributions respecting and proceeds and payments on, from, or in
connection with the Collateral and any other amounts to which Maker becomes
entitled with respect to the Collateral (such amounts to be paid to Payee as
provided below). For this purpose, after-tax proceeds shall be computed by
taking into account income taxes attributable to Maker's ownership or
disposition of the Collateral (including income tax liability attributable to
Maker's distributive share of taxable income of Investors) and by assuming that
Maker will pay taxes at the maximum federal income tax rate and the maximum
state income tax rate for the state in which the Pledgor pays income taxes with
respect to such ownership or disposition of the Collateral, taking into account
the deductibility of state income taxes for federal income tax purposes.
(B) At the time of and to the extent of (i) proceeds from Investors'
redemption of the Pledged Equity (such amounts to be paid to Payee as provided
below)
<PAGE>
3
and (ii) other proceeds arising out of the sale or other disposition of
all or any portion of the Pledged Equity.
(C) If a bonus is payable under the Short Term Incentive Plan to the
Maker in a year, fifty percent of the after tax proceeds of such bonus
calculated at the highest marginal tax rate applicable to the Maker is due.
(D) Unless sooner paid under this Note, any unpaid Principal Amount
and all unpaid interest accrued thereon is finally due and payable on the tenth
anniversary of the date hereof.
Maker hereby acknowledges that, except as expressly provided above,
all distributions, redemptions and other payments in respect of the Collateral
payable by Investors to Maker will be paid directly to Payee as payments under
this Note. Maker hereby directs and authorizes Investors to pay the foregoing
amounts directly to Payee to be applied against this Note. By signing below
Investors agrees to make all such payments directly to Payee unless otherwise
notified in writing to the contrary by Payee. The parties hereto acknowledge
and agree that such amounts will be deemed to have been distributed to Maker and
thereafter paid by Maker to Payee as payment under this Note.
Time is of the essence in this Note.
If Maker does not pay this Note as and when due to Payee, then this
Note will bear interest until paid at the Default Rate (as defined below).
Maker may at any time prepay all or from time to time any portion of
this Note without premium or penalty upon at least two days written notice to
the Payee. All payments on this Note will, at the option of Payee, be applied
first to pay unpaid accrued interest and any remainder will be applied to reduce
the Principal Amount.
Except as otherwise specifically provided, Maker: (i) waives grace,
presentment and demand for payment, protest and notice of protest, notice of
intent to accelerate maturity, notice of acceleration of maturity, notice of
nonpayment, and all other notices of any nature, filing of suit, and diligence
in collecting this Note or enforcing any of the Collateral for it; (ii) agrees
that the amount due hereunder must be paid without set-off, counterclaim,
abatement, suspension or diminution; and (iii) agrees that Payee will not be
required first to file suit or exhaust its remedies against Maker, any
guarantor, or others liable or to become liable on this Note to enforce payment
of this Note. No extension or postponement of time for paying this Note or any
installment hereof affects the liability of Maker under this Note.
Any of the following is a "Default" under this Note:
<PAGE>
4
(a) Maker fails to perform or observe any provision of this
Note, the Pledge Agreement, or any other Security Instrument.
(b) Maker commences a voluntary case under Title 11 of the
United States Code as from time to time in effect (the "Bankruptcy
Code").
(c) Maker seeks relief as a debtor under any applicable law,
other than the Bankruptcy Code, of any jurisdiction relating to the
liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors, or consents to or acquiesces
in such relief.
(d) Maker has entered against him any order by a court of
competent jurisdiction finding him to be bankrupt or insolvent, or
assuming custody of, or appointing a receiver or other custodian
for, all or a substantial part of his property.
(e) Maker makes an assignment for the benefit of, or enters
into a composition with, his creditors, or appoints or consents
to the appointment of a receiver or other custodian for all or
a substantial part of his property.
(f) A court having jurisdiction enters a decree or order for
relief in respect of Maker in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, which
decree or order is not stayed; or any other similar relief
is granted under any applicable federal or state law.
(g) An involuntary case is commenced against Maker under the
Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect; or a
decree or order of a court having jurisdiction for the
appointment of a receiver, liquidator, sequestrator, trustee,
custodian, or other officer having similar powers over
Maker, or over all or a substantial part of his property,
has been entered; or the involuntary appointment of an interim
receiver, trustee, or other custodian of Maker for all or a
substantial part of his property has occurred; or a warrant of
attachment, execution, or similar process has been issued against
any substantial part of Maker's property, and any such event
described in this clause (g) continues for 60 days unless
dismissed, bonded or discharged.
If a Default occurs, then and in each and every such case the unpaid
Principal Amount and all accrued interest will automatically become due and
payable without presentation, presentment, protest, or further demand or
notice of any kind, all
<PAGE>
5
of which Maker expressly waives. Payee may proceed to enforce
payment of all or part of such amount in a commercially reasonable manner.
Payee will also be entitled to exercise any and all other rights, remedies, and
recourses now or later existing in equity or at law. All remedies under this
Note and the Security Instruments are cumulative, not exclusive.
Upon Default under this Note, or under any of the Security
Instruments, at Payee's option all amounts then due and payable under this Note
or the Security Instruments will bear interest from the date the Default occurs
at a rate of interest per annum (the "Default Rate") equal to the lesser of (a)
4% over the Applicable Rate, and (b) the Maximum Rate.
Maker agrees to pay all costs of collection hereof when incurred,
including reasonable attorneys' fees of the Payee, whether or not any action is
instituted to enforce this Note.
Maker and Payee at all times intend to comply with the applicable law
now or hereafter governing the terms of this Note and the interest payable on
this Note. If the applicable law is ever revised, repealed, or judicially
interpreted so as to render any provision of this Note invalid, or so as to
render usurious any amount called for under this Note or under any of the
Security Instruments or contracted for, charged, taken, reserved, or received
with respect to the loan evidenced by this Note, or if Payee's exercise of its
rights to accelerate the maturity of this Note, or if any prepayment by Maker
results in Maker's having paid any interest in excess of that permitted by law,
then it is Maker's and Payee's express intent that all excess amounts previously
collected by Payee be credited on the Principal Amount of this Note (or, if the
Note has been paid in full, refunded to Maker). This Note and the Security
Instruments immediately will then be deemed reformed and the amounts later
collectible hereunder and thereunder reduced without the need to execute any new
document, so as to comply with the then-applicable law, but so as to permit the
recovery of the greatest amount otherwise called for hereunder and thereunder.
All sums paid or agreed to be paid to Payee for the use, forbearance,
or detention of this indebtedness evidenced by this note will, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full term of this Note until paid in full so that the rate or
amount of interest on account of such indebtedness does not exceed the
applicable usury ceiling for so long as any amount is outstanding.
THIS NOTE MUST BE GOVERNED BY AND CONSTRUED ACCORDING TO NEW YORK LAW
EXCEPT AS APPLICABLE FEDERAL LAW PERMITS PAYEE TO CONTRACT FOR, CHARGE, TAKE,
RECEIVE, OR RESERVE A GREATER AMOUNT OF INTEREST.
<PAGE>
6
Any suit, action, proceeding, controversy or claim arising out of or
relating to this Note or a Default must be brought in a court of appropriate
jurisdiction in New York City, New York. Maker hereby submits and consents to
the jurisdiction of such court for any such suit, action or proceeding and
irrevocably waives: (i) any objection that he now has or may later have to the
venue of such court, and (ii) any objection that any such suit, action, or
proceeding brought in such court has been brought in an inconvenient forum.
THIS PROMISSORY NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
Maker has duly executed this Note effective as of the date first above
written.
"MAKER"
/s/ Donald Manvel
-----------------
DONALD MANVEL
"PAYEE"
GROVE WORLDWIDE LLC
By: /s/ Salvatore J. Bonanno
------------------------
Name: Salvatore J. Bonanno
Title: Chief Executive Officer
(Payee's signature is added solely
to acknowledge the statement in the
next to the last paragraph above
that this is the final written
agreement between the parties.)
Acknowledged and agreed to for the
limited purposes stated herein by:
GROVE INVESTORS LLC, a
<PAGE>
7
Delaware limited liability company
By: /s/ Salvatore J. Bonanno
------------------------
Name: Salvatore J. Bonanno
Title: Chief Executive Officer
<PAGE>
Exhibit 12.1
Grove Investors LLC
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
<TABLE>
<CAPTION>
Predecessor
---------------------------------------------------------------------------------
Fiscal Year Ended Seven Months Three Months
------------------------------------------------------- Ended Ended
October 1, September 30, September 28, September 27, April 28, December 27,
1994 1995 1996 1997 1998 1997
------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Earnings (loss) before income taxes $4,203 $35,782 $47,636 $68,469 $11,346 $10,453
Interest expense 3,170 2,614 3,326 2,042 2,437 478
Amortization of deferred
financing costs -- -- -- -- -- --
Portion of rent expense
representative of interest (a) 832 535 935 1,162 739 386
------ ------- ------- ------- ------- -------
Earnings before fixed charges $8,205 $38,931 $51,897 $71,673 $14,522 $11,317
====== ======= ======= ======= ======= =======
Fixed charges:
Interest expense $3,170 $ 2,614 $ 3,326 $ 2,042 $ 2,437 $ 478
Amortization of deferred
financing costs -- -- -- -- -- --
Portion of rent expense
representative of interest (a) 832 535 935 1,162 739 386
------ ------- ------- ------- ------- -------
Total fixed charges $4,002 $ 3,149 $ 4,261 $ 3,204 $ 3,176 $ 864
====== ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 2.1 12.4 12.2 22.4 4.6 13.1
====== ======= ======= ======= ======= =======
<CAPTION>
Company
--------------------------
Five Months Three Months
Ended Ended
October 3, January 2,
1998 1999
-------- --------
<S> <C> <C>
Earnings (loss) before income taxes $(25,327) $(16,822)
Interest expense 22,987 13,161
Amortization of deferred
financing costs 884 652
Portion of rent expense
representative of interest (a) 788 343
-------- --------
Earnings before fixed charges $ (668) $ (2,066)
======== ========
Fixed charges:
Interest expense $ 22,987 $ 13,161
Amortization of deferred
financing costs 884 652
Portion of rent expense
representative of interest (a) 788 343
-------- --------
Total fixed charges $ 24,659 $ 14,156
======== ========
Ratio of earnings to fixed charges (b) (c)
======== ========
</TABLE>
(a) Deemed to be one-third of interest expense
(b) Earnings before fixed charges were insufficient to cover fixed charges by
$25,327 for the five months ended October 3, 1998. Earnings for the five
months October 3, 1998 include non-cash charges of $23,871.
(c) Earnings before fixed charges were insufficient to cover fixed charges by
$16,822 for the three months ended January 2, 1999. Earnings for the three
months January 2, 1999 include non-cash charges of $13,813.
<PAGE>
EXHIBIT 21
Each of the Investors direct and indirect subsidiaries are set forth
below:
<TABLE>
<CAPTION>
SUBSIDIARY STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION
<S> <C>
Grove Investors Capital, Inc. (a) Delaware
Grove Holdings LLC Delaware
Grove Holdings Capital, Inc. (b) Delaware
Grove Worldwide LLC Delaware
Grove Capital, Inc. Delaware
Grove U.S. LLC Delaware
Grove Finance LLC Delaware
Crane Acquisition Corp. Delaware
Crane Holding Inc. Delaware
National Crane Corporation Delaware
Grove Worldwide Holdings Germany GmbH Germany
Deutsche Grove GmbH Germany
Grove Europe Limited United Kingdom
Grove Pension Trustees Limited (c) United Kingdom
Grove Cranes Limited (d) United Kingdom
Manlift Limited (c) United Kingdom
Grove Crane SL (c) Spain
Grove Holdings France, SAS (d) France
Grove France SA France
Delta Manlift SAS France
Grove Manlift Pty. Ltd. Australia
______________________
</TABLE>
(a) Grove Investors Capital was organized as a direct wholly-owned subsidiary
of Investors for the purpose of acting as a co-issuer of the Debentures
and is also a co-registrant of this Registration Statement.
(b) Grove Holdings Capital was organized as a direct wholly-owned subsidiary
of Holdings for the purpose of acting as a co-issuer of Holdings
debentures.
(c) Inactive subsidiaries.
(d) Grove Holdings LLC, Worldwide's parent, owns .1% of the outstanding
shares
<PAGE>
of Grove Holdings France, SAS in order to meet French statutory
requirements. Worldwide owns 99.9% of the outstanding shares of Grove
Holdings France, SAS.
<PAGE>
[Letterhead of Ernst & Young LLP]
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated December 15, 1997 (except for Note 19, as to
which the date is April 29, 1998), in the Registration Statement (Form S-4)
and related Prospectus of Grove Investors LLC and Grove Investors Capital,
Inc. for the registration of $252,770,000 14 1/2% Senior Debentures due 2010.
Ernst & Young LLP
Baltimore, Maryland
April 26, 1999
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Grove Investors LLC:
The audit referred to in our report dated December 1, 1998, included the
related financial statement schedules as of October 3, 1998, and for the
seven months ended April 28, 1998 and for the five months ended October 3,
1998, included in the registration statement. These financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statement
schedules based on our audits. In our opinion, such financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG LLP
Baltimore, Maryland
April 26, 1999
<PAGE>
FORM T-1
--------------------------------------------
--------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
GROVE INVESTORS LLC
(Exact name of obligor as specified in its charter)
Delaware 52-2089466
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1565 Buchanan Trail East
Shady Grove, Pennsylvania 17256
(Address of principal executive offices) (Zip Code)
GROVE INVESTORS CAPITAL, INC.
(Exact name of obligor as specified in its charter)
Delaware 52-2097817
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1565 Buchanan Trail East
Shady Grove, Pennsylvania 17256
(Address of principal executive offices) (Zip Code)
14 1/2% Senior Debentures due 2010
(Title of the indenture securities)
<PAGE>
- 2 -
GENERAL
1. GENERAL INFORMATION
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, DC
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
The Obligor currently is not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and
15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by
the State of New York Banking Department to transact
business as a Trust Company, is incorporated by
reference to Exhibit T-1.1 to Form T-1 filed on
September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. LIST OF EXHIBITS
(CONT'D)
T-1.4 -- The By-Laws of United States Trust Company of New
York, as amended, is incorporated by reference to
Exhibit T-1.4 to Form T-1 filed on September 15, 1995
with the Commission pursuant to the Trust Indenture
Act of 1939, as amended by the Trust Indenture Reform
Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section
321(b) of the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the
trustee pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of April 14, 1999, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 14th day
of April, 1999.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ John Guiliano
-------------------
Vice President
<PAGE>
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
----------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
DECEMBER 31, 1998
($ IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Cash and Due from Banks $ 104,220
Short-Term Investments 207,292
Securities, Available for Sale 578,874
Loans 2,061,582
Less: Allowance for Credit Losses 17,199
--------------
Net Loans 2,044,383
Premises and Equipment 58,263
Other Assets 124,079
--------------
TOTAL ASSETS $3,117,111
--------------
--------------
LIABILITIES
Deposits:
Non-Interest Bearing $ 709,221
Interest Bearing 1,908,861
---------
Total Deposits 2,618,082
Short-Term Credit Facilities 170,644
Accounts Payable and Accrued Liabilities 146,324
--------------
TOTAL LIABILITIES $2,935,050
--------------
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 53,041
Retained Earnings 111,402
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,623
--------------
TOTAL STOCKHOLDER'S EQUITY 182,061
--------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,117,111
--------------
--------------
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
February 1, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001062485
<NAME> GROVE INVESTORS LLC/PA
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 5-MOS 7-MOS
<FISCAL-YEAR-END> OCT-02-1999 OCT-03-1998 OCT-03-1998
<PERIOD-START> OCT-04-1998 SEP-28-1997 SEP-28-1997
<PERIOD-END> JAN-02-1999 OCT-03-1998 APR-28-1998
<CASH> 21,155 34,289 0
<SECURITIES> 0 0 0
<RECEIVABLES> 108,140 129,833 0
<ALLOWANCES> 3,390 3,075 0
<INVENTORY> 211,348 207,248 0
<CURRENT-ASSETS> 356,251 396,650 0
<PP&E> 231,831 219,770 0
<DEPRECIATION> 19,844 12,595 0
<TOTAL-ASSETS> 874,720 915,243 0
<CURRENT-LIABILITIES> 175,133 207,708 0
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 0 0 0
<OTHER-SE> 26,471 47,835 0
<TOTAL-LIABILITY-AND-EQUITY> 874,720 915,243 0
<SALES> 164,325 393,779 476,200
<TOTAL-REVENUES> 164,325 393,779 476,200
<CGS> 137,242 335,764 377,337
<TOTAL-COSTS> 137,242 335,764 377,337
<OTHER-EXPENSES> 31,530 61,209 79,041
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 13,913 23,871 2,437
<INCOME-PRETAX> (16,822) (25,327) 11,346
<INCOME-TAX> 933 4,337 11,741
<INCOME-CONTINUING> (17,755) (29,664) (395)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (17,755) (29,664) (395)
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
GROVE INVESTORS LLC
GROVE INVESTORS CAPITAL, INC.
OFFER TO EXCHANGE THEIR
14 1/2% SENIOR DEBENTURES DUE 2010, WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, FOR ANY AND ALL OF THEIR OUTSTANDING 14 1/2%
SENIOR
DEBENTURES DUE 2010
PURSUANT TO THE PROSPECTUS, DATED , 1999
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME,
ON , 1999, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
DELIVERY TO: United States Trust Company of New York, EXCHANGE AGENT
<TABLE>
<S> <C>
BY HAND UP TO 4:30 PM: United States Trust Company of New
York
111 Broadway
Lower Level
New York, New York 10006
Attention: Corporate Trust Services
Telephone: 1(800) 548-6565
Facsimile: (212) 780-0592
BY OVERNIGHT COURIER AND BY HAND AFTER 4:30 PM ON United States Trust Company of New
THE EXPIRATION DATE ONLY: York
770 Broadway, 13th Floor
New York, New York 10003
Attention: Corporate Trust Services
Telephone: 1(800) 548-6565
Facsimile: (212) 780-0592
BY REGISTERED OR CERTIFIED MAIL: United States Trust Company of New
York
Post Office Box 844
New York, New York 10276-0844
Attention: Corporate Trust Services,
Cooper Station
Telephone: 1(800) 548-6565
Facsimile: (212) 780-0592
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
The undersigned acknowledges that he or she has received and reviewed the
Prospectus, dated , 1999 (the "Prospectus"), of Grove Investors LLC,
a Delaware limited liability company (the "Company" or "Grove"), and Grove
Investors Capital, Inc., a Delaware corporation and a wholly owned subsidiary of
the Company ("Grove Capital" and, together with the Company, the "Issuers"), and
this Letter of Transmittal (the "Letter"), which together constitute the
Issuers' offer (the "Exchange Offer") to exchange up to $56,652,000 in aggregate
principal amount of their 14 1/2% Senior Debentures due 2010 (the "Exchange
Debentures"), for a like principal amount of their outstanding 14 1/2% Senior
Debentures due 2010 that were issued and sold in reliance upon an exemption from
registration under the Securities Act of 1933, as amended (the "Securities Act")
(the "Senior Debentures").
For each Senior Debenture accepted for exchange, the holder of such Senior
Debenture will receive an Exchange Debenture having a principal amount equal to
that of the surrendered Senior Debenture.
This Letter is to be completed by a holder of Senior Debentures either if
certificates are to be forwarded herewith or if a tender of certificates for
Senior Debentures, if available, is to be made by book-entry transfer to the
account maintained by the Exchange Agent at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in "The
Exchange Offer-- Procedures for Tendering Senior Debentures" section of the
Prospectus and an Agent's Message (as defined herein) is not delivered. Holders
of Senior Debentures whose certificates are not immediately available, or who
are unable to deliver their certificates or confirmation of the book-entry
tender of their Senior Debentures into the Exchange Agent's account at the
Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other
documents required by this Letter to the Exchange Agent on or prior to the
Expiration Date, must tender their Senior Debentures according to the guaranteed
delivery procedures set forth in "The Exchange Offer--Procedures for Tendering
Senior Debentures" section of the Prospectus. See Instruction 1. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
The undersigned has completed the appropriate boxes below and signed this
Letter to indicate the action the undersigned desires to take with respect to
the Exchange Offer.
<PAGE>
List below the Senior Debentures to which this Letter relates. If the space
provided below is inadequate, the certificate numbers and principal amount of
Senior Debentures should be listed on a separate signed schedule affixed hereto.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
DESCRIPTION OF SENIOR DEBENTURES 1 2 3
-------------------------------------------------------------------------------------------
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED AMOUNT OF PRINCIPAL
HOLDER(S) CERTIFICATE SENIOR AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S)* DEBENTURE(S) TENDERED**
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTAL
- ---------------------------------------------------------------------------------------------
* NEED NOT BE COMPLETED IF SENIOR DEBENTURES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER.
** UNLESS OTHERWISE INDICATED IN THIS COLUMN, A HOLDER WILL BE DEEMED TO HAVE TENDERED ALL
OF THE SENIOR DEBENTURES REPRESENTED BY THE SENIOR DEBENTURES INDICATED IN COLUMN 2. SEE
INSTRUCTION 2. SENIOR DEBENTURES TENDERED HEREBY MUST BE IN DENOMINATIONS OF PRINCIPAL
AMOUNT OF $1,000 AND ANY INTEGRAL MULTIPLE THEREOF. SEE INSTRUCTION 1.
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
/ / CHECK HERE IF TENDERED SENIOR DEBENTURES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
Account Number __________________ Transaction Code Number __________________
By crediting Senior Debentures to the Exchange Agent's Account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer, including
transmitting an Agent's Message to the Exchange Agent in which the Holder of
Senior Debentures acknowledges and agrees to be bound by the terms of this
Letter, the participant in ATOP confirms on behalf of itself and the
beneficial owners of such Senior Debentures all provisions of this Letter
applicable to it and such beneficial owners as if it had completed the
information required herein and executed and transmitted this Letter to the
Exchange Agent.
/ / CHECK HERE IF TENDERED SENIOR DEBENTURES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) ____________________________________________
Widow Ticket Number (if any) _______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Eligible Institution that guaranteed delivery ______________________
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number __________________ Transaction Code Number __________________
/ / 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: ___________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not participating in, and does not intend to participate in, a
distribution of the Exchange Debentures. If the undersigned is a broker-dealer
that will receive Exchange Debentures for its own account in exchange for Senior
Debentures, it represents that the Senior Debentures to be exchanged for
Exchange Debentures were acquired by it as a result of market-making or other
trading activities and acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Debentures; 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.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Issuers the aggregate principal amount of
Senior Debentures indicated above. Subject to, and effective upon, the
acceptance for exchange of the Senior Debentures tendered hereby, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Issuers all right, title and interest in and to such Senior Debentures as are
being tendered hereby, and irrevocably constitutes and appoints the Exchange
Agent as agent and attorney-in-fact to cause the Senior Debentures to be
assigned, transferred and exchanged.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Senior Debentures
tendered hereby and to acquire Exchange Debentures issuable upon the exchange of
such tendered Senior Debentures, and that the Issuers will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim when the same are accepted
by the Issuers. The undersigned hereby further represents that (A) any Exchange
Debentures acquired pursuant to the Exchange Offer are being acquired in the
ordinary course of business of the person receiving such Exchange Debentures,
whether or not such person is the holder; (B) it is not an "affiliate" of the
Issuers as defined in Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act"); (C) it is not participating in, and does not intend to
participate in, and has no arrangement or understanding with any Person to
participate in, a distribution of the Senior Debentures or the Exchange
Debentures; and (D) if such holder is a broker or dealer registered under the
Exchange Act, it will receive the Exchange Debentures for its own account in
exchange for Senior Debentures that were acquired as a result of market-making
activities or other trading activities. Each broker-dealer referred to in clause
(D) of the preceding sentence must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Debentures. The undersigned also
warrants that acceptance of any tendered Senior Debentures by the Issuers and
the issuance of Exchange Debentures in exchange therefor shall constitute
performance in full by the Issuers of certain of its obligations under the
Registration Rights Agreement.
The undersigned also acknowledges that this Exchange Offer is being made in
reliance on interpretations by the staff of the Securities and Exchange
Commission (the "SEC"), as set forth in no-action letters issued to third
parties, that the Exchange Debentures issued in exchange for the Senior
Debentures pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof (other than (i) any such holder that is
an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act and (ii) any broker-dealer that purchases Debentures from the
Issuers to resell pursuant to Rule 144A under the Securities Act ("Rule 144A")
or any other available exemption), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Debentures are acquired in the ordinary course of such holders'
business and such holders have no arrangement with any person to participate in
the distribution of such Exchange Debentures and are not participating in, and
do not intend to participate in, the distribution of the Exchange Debentures.
However, the Issuers do not intend to request the SEC to consider, and the SEC
has not considered the Exchange Offer in the context of a no-action letter and
there can be no assurance that the staff of the SEC would make a similar
determination with respect to the Exchange Offer as in other circumstances. The
undersigned acknowledges that any holder that is an affiliate of the Company, or
is participating in or intends to participate in or has any arrangement or
understanding with respect to the distribution of the Exchange Debentures to be
acquired pursuant to the Exchange Offer, (i) could not rely on the applicable
interpretations of the staff of the SEC and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaging in, and does
not intend to engage in, a distribution of Exchange Debentures. If the
undersigned is a broker-dealer that will receive Exchange Debentures for its own
account in exchange for Senior Debentures, it represents that the Senior
Debentures to be exchanged for the Exchange Debentures were acquired by it as a
result of market-making or other trading activities and acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange
Debentures; however, by so acknowledging and by delivering a prospectus, the
<PAGE>
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned, if a California resident, hereby further represents and
warrants that the undersigned (or the beneficial owner of the Senior Debentures
tendered hereby, if not the undersigned) (i) is a bank, savings and loan
association, trust company, insurance company, investment company registered
under the Investment Company Act of 1940, pension or profit-sharing trust (other
than a pension or profit-sharing trust of the Company, a self-employed
individual retirement plan, or individual retirement account), or a corporation
which has a net worth on a consolidated basis according to its most recent
audited financial statement of not less than $14,000,000, and (ii) is acquiring
the Exchange Debentures for its own account for investment purposes (or for the
account of the beneficial owner of such Exchange Debentures for investment
purposes).
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Issuers to be necessary or desirable to complete the
sale, assignment and transfer of the Senior Debentures tendered hereby. All
authority conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the successors,
assigns, heirs, executors, administrators, trustees in bankruptcy and legal
representatives of the undersigned and shall not be affected by, and shall
survive, the death or incapacity of the undersigned. This tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal Rights" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please deliver the Exchange Debentures (and, if applicable,
substitute certificates representing Senior Debentures for any Senior Debentures
not exchanged) in the name of the undersigned or, in the case of a book-entry
delivery of Senior Debentures, please credit the account indicated above
maintained at the Book Entry Transfer Facility. Similarly, unless otherwise
indicated under the box entitled "Special Delivery Instructions" below, please
send the Exchange Debentures (and, if applicable, substitute certificates
representing Senior Debentures for any Senior Debentures not exchanged) to the
undersigned at the address shown above in the box entitled "Description of
Senior Debentures."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF SENIOR
DEBENTURES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
SENIOR DEBENTURES AS SET FORTH IN SUCH BOX ABOVE.
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Senior Debentures not exchanged
and/or Exchange Debentures are to be issued in the name of and sent to someone
other than the person or persons whose signature(s) appear(s) on this Letter
above, or if Senior Debentures delivered by book-entry transfer which are not
accepted for exchange are to be returned by credit to an account maintained at
the Book-Entry Transfer Facility other than the account indicated above.
Issue: Exchange Debentures and/or Senior
Debentures to:
Name(s) ________________________________________________________________________
(Please Type or Print)
________________________________________________________________________________
(Please Type or Print)
Address ________________________________________________________________________
________________________________________________________________________________
(Zip Code)
________________________________________________________________________________
Taxpayer Identification or Social Security Number
(Complete Substitute Form W-9)
* Credit unexchanged Senior Debentures delivered by book-entry transfer to the
Book-Entry Transfer Facility account set forth below.
________________________________________________________________________________
(Book-Entry Transfer Facility)
Account Number, if applicable
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Senior Debentures not exchanged
and/or Exchange Debentures are to be sent to someone other than the person or
persons whose signature(s) appear(s) on this Letter above or to such person or
persons at an address other than shown in the box entitled "Description of
Senior Debentures" on this Letter above.
Mail: Exchange Debentures and/or Senior
Debentures to:
Name(s) ________________________________________________________________________
(Please Type or Print)
________________________________________________________________________________
(Please Type or Print)
Address ________________________________________________________________________
________________________________________________________________________________
(Zip Code)
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
HEREOF (TOGETHER WITH THE CERTIFICATES FOR SENIOR DEBENTURES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
<PAGE>
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9 ON REVERSE SIDE)
x _______________________________ ______________________________, 1999
x _______________________________ ______________________________, 1999
SIGNATURE(S) OF OWNER DATE
Area Code and Telephone Number _______________________________________________
If a holder is tendering any Senior Debentures, this Letter must be signed
by the registered holder(s) as the name(s) appear(s) on the certificate(s) for
the Senior Debentures or by any person(s) authorized to become registered
holder(s) by endorsements and documents transmitted herewith. If signature is by
a trustee, executor, administrator, guardian, officer or other person acting in
a fiduciary ir representative capacity, please set forth full title. See
Instruction 3.
Name(s): _______________________________________________________________________
________________________________________________________________________________
(PLEASE TYPE OR PRINT)
Capacity: ______________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(INCLUDING ZIP CODE)
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution: _______________________________________________________
(AUTHORIZED SIGNATURE)
________________________________________________________________________________
(TITLE)
________________________________________________________________________________
(NAME AND FIRM)
Dated: , 1999
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER TO EXCHANGE THEIR
14 1/2% SENIOR DEBENTURES DUE 2010, WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT, FOR ANY AND ALL OUTSTANDING 14 1/2% SENIOR DEBENTURES
DUE 2010 OF GROVE INVESTORS LLC AND GROVE INVESTORS CAPITAL, INC.
1. DELIVERY OF THIS LETTER AND DEBENTURES; GUARANTEED DELIVERY PROCEDURES.
This letter is to be completed by note holders either if certificates are to
be forwarded herewith or if tenders are to be made pursuant to the procedures
for delivery by book-entry transfer set forth in "The Exchange Offer--Procedures
for Tendering Senior Debentures" section of the Prospectus and an Agent's
Message is not delivered. Certificates for all physically tendered Senior
Debentures, or Book-Entry Confirmation, as the case may be, as well as a
properly completed and duly executed Letter (or manually signed facsimile
hereof) and any other documents required by this Letter, must be received by the
Exchange Agent at the address set forth herein on or prior to the Expiration
Date, or the tendering holder must comply with the guaranteed delivery
procedures set forth below. Senior Debentures tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
The term "Agent's Message" means a message, transmitted by The Depository Trust
Company (the "Book-Entry Transfer Facility") and received by the Exchange Agent
and forming a part of the Book-Entry Confirmation, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from a
participant tendering Senior Debentures which are subject to the Book-Entry
Confirmation and that such participant has received and agrees to be bound by
this Letter and that the Issuers may enforce this Letter against such
participant.
Noteholders whose certificates for Senior Debentures are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Senior Debentures pursuant to the guaranteed delivery procedures
set forth in "The Exchange Offer--Procedures for Tendering Senior Debentures"
section of the Prospectus. Pursuant to such procedures, (i) such tender must be
made through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent must receive from such Eligible Institution a properly completed
and duly executed Letter (or a facsimile thereof or an Agent's Message in lieu
hereof) and Notice of Guaranteed Delivery, substantially in the form provided by
the Issuers (by telegram, telex, facsimile transmission, mail or hand delivery),
setting forth the name and address of the holder of Senior Debentures and the
amount of Senior Debentures tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Senior Debentures, or a Book-Entry
Confirmation, and any other documents required by the Letter will be deposited
by the Eligible Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Senior Debentures, in proper form for transfer, or
Book-Entry Confirmation, as the case may be, and all other documents required by
this Letter, are received by the Exchange Agent within three NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Senior Debentures and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Senior Debentures are sent by mail, it is suggested that the
mailing be made sufficiently in advance of the Expiration Date to permit
delivery to the Exchange Agent prior to 5:00 p.m., New York City time, on the
Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. PARTIAL TENDERS (NOT APPLICABLE TO NOTEHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Senior Debentures evidenced by a submitted
certificate are to be tendered, the tendering holder(s) should fill in the
aggregate principal amount of Senior Debentures to be tendered in
<PAGE>
the box above entitled "Description of Senior Debentures--Principal Amount
Tendered." A reissued certificate representing the balance of nontendered Senior
Debentures will be sent to such tendering holder, unless otherwise provided in
the appropriate box on this Letter, promptly after the Expiration Date. All of
the Senior Debentures delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter is signed by the registered holder of the Senior Debentures
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates without any change whatsoever.
If any tendered Senior Debentures are owned of record by two or more joint
owners, all of such owners must sign this Letter.
If any tendered Senior Debentures are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter as there are different registrations of
certificates.
When this Letter is signed by the registered holder or holders of the Senior
Debentures specified herein and tendered hereby, no endorsements of certificates
or separate bond powers are required. If, however, the Exchange Debentures are
to be issued, or any untendered Senior Debentures are to be reissued, to a
person other than the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate bond powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s) and signatures on such certificate(s) must be guaranteed by
an Eligible Institution.
If this Letter or any certificates or bond powers 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 Issuers,
proper evidence satisfactory to the Issuers of their authority to so act must be
submitted.
Endorsements on certificates for Senior Debentures or signatures on bond
powers required by this Instruction 3 must be guaranteed by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc., or a clearing agency, insured credit
union, a savings association or a commercial bank or trust company having an
office or correspondent in the United States (each an "Eligible Institution").
Signatures on this Letter need not be guaranteed by an Eligible Institution,
provided the Senior Debentures are tendered: (i) by a registered holder of
Senior Debentures (which term, for purposes of the Exchange Offer, includes any
participant in the Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Senior Debentures) who has not
completed the box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on this Letter, or (ii) for the account of an Eligible
Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS.
Tendering holders of Senior Debentures should indicate in the applicable box
the name and address to which Exchange Debentures issued pursuant to the
Exchange Offer and/or substitute certificates evidencing Senior Debentures not
exchanged are to be issued or sent, if different from the name or address of the
person signing this Letter. In the case of issuance in a different name, the
employer identification or social security number of the person named must also
be indicated. Holders tendering Senior Debentures by book-entry transfer may
request that Senior Debentures not exchanged be credited to such account
maintained at the Book-Entry Transfer Facility as such noteholder may designate
hereon. If no such
<PAGE>
instructions are given, such Senior Debentures not exchanged will be returned to
the name or address of the person signing this Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose
Senior Debentures are accepted for exchange must provide the Issuers (as payor)
with such holder's correct Taxpayer Identification Number ("TIN") on Substitute
Form W-9 below, which in the case of a tendering holder who is an individual, is
his or her social security number. If the Issuers are not provided with the
current TIN or an adequate basis for an exemption, such tendering holder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
delivery to such tendering holder of Exchange Debentures may be subject to
backup withholding in an amount equal to 31% of all reportable payments made
after the exchange. If withholding results in an overpayment of taxes, a refund
may be obtained.
Exempt holders of Senior Debentures (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. See the enclosed Guidelines of
Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9
Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder of Senior Debentures
must provide its correct TIN by completing the Substitute Form W-9 set forth
below, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN) and that (i) the holder is exempt from backup withholding, or
(ii) the holder has not been notified by the Internal Revenue Service that such
holder is subject to backup withholding as a result of a failure to report all
interest or dividends or (iii) the Internal Revenue Service has notified the
holder that such holder is no longer subject to backup withholding. If the
tendering holder of Senior Debentures is a nonresident alien or foreign entity
not subject to backup withholding, such holder must give the Issuers a completed
Form W-8, Certificate of Foreign Status. These forms may be obtained from the
Exchange Agent. If the Senior Debentures are in more than one name or are not in
the name of the actual owner, such holder should consult the W-9 Guidelines for
information on which TIN to report. If such holder does not have a TIN, such
holder should consult the W-9 Guidelines for instructions on applying for a TIN,
check the box in Part 2 of the Substitute Form W-9 and write "applied for" in
lieu of its TIN. Note: Checking this box and writing "applied for" on the form
means that such holder has already applied for a TIN or that such holder intends
to apply for one in the near future. If such holder does not provide its TIN to
the Issuers within 60 days, backup withholding will begin and continue until
such holder furnishes its TIN to the Issuers.
6. TRANSFER TAXES.
The Issuers will pay all transfer taxes, if any, applicable to the transfer
of Senior Debentures to it or its order pursuant to the Exchange Offer. If,
however, Exchange Debentures and/or substitute Senior Debentures not exchanged
are to be delivered to, or are to be registered or issued in the name of, any
person other than the registered holder of the Senior Debentures tendered
hereby, or if tendered Senior Debentures are registered in the name of any
person other than the person signing this Letter, or if a transfer tax is
imposed for any reason other than the transfer of Senior Debentures to the
Issuers or its order pursuant to the Exchange Offer, 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 not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Senior Debentures specified in this
Letter.
7. WAIVER OF CONDITIONS.
The Issuers reserve the absolute right to waive satisfaction of any or all
conditions enumerated in the Prospectus.
<PAGE>
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders of Senior Debentures, by execution of this
Letter, shall waive any right to receive notice of the acceptance of their
Senior Debentures for exchange.
Neither the Issuers, the Exchange Agent nor any other person is obligated to
give notice of any defect or irregularity with respect to any tender of Senior
Debentures nor shall any of them incur any liability for failure to give any
such notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED SENIOR DEBENTURES.
Any holder whose Senior Debentures have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering, as well as requests for
additional copies of the Prospectus and this Letter, may be directed to the
Exchange Agent, at the address and telephone number indicated above.
11. INCORPORATION OF LETTER OF TRANSMITTAL.
This Letter shall be deemed to be incorporated in and acknowledged and
accepted by any tender through the Book-Entry Transfer Facility's ATOP
procedures by any participant on behalf of itself and the beneficial owners of
any Senior Debentures so tendered.
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
<TABLE>
<S> <C> <C>
PAYOR'S NAME: GROVE INVESTORS LLC
SUBSTITUTE PART I* TAXPAYER IDENTIFICATION NUMBER
FORM Enter your taxpayer identification number in Social Security Number
W-9 the appropriate box. For most individuals, OR
Department of the Treasury this is your Social Security number. If you
Internal Revenue Service do not have a number, see how to obtain a Employer Identification Number
"TIN" in the enclosed Guidelines.
NOTE: If the account is in more than one
name, see the chart on page 2 of the enclosed
Guidelines to determine what number to give.
PART II--TIN Applied For / /
PAYOR'S REQUEST FOR CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
TAXPAYER IDENTIFICATION (1) The number shown on this form is my correct Taxpayer Identification Number (or
NUMBER ("TIN") AND I am waiting for a number to be issued to me).
CERTIFICATION (2) I am not subject to backup withholding either because I have not been notified
by the Internal Revenue Service (the "IRS") that I am subject to backup withholding
as a result of a failure to report all interest or dividends or the IRS has
notified me that I am no longer subject to backup withholding.
(3) Any other information provided on this form is true and correct.
SIGNATURE DATE
CERTIFICATION GUIDELINES* You must cross out item (2) of the above certification if you have been notified by
the IRS that you are subject to backup withholding because of underreporting of interest or dividends on your
tax return and you have not been notified by the IRS that you are no longer subject to backup withholding.
</TABLE>
<TABLE>
<S> <C> <C>
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 if I do not provide a taxpayer identification number by the
time of the exchange, 31 percent of all reportable payments made to me thereafter will be withheld until I
provide a number.
Signature Date
</TABLE>
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
OFFER TO EXCHANGE THEIR
14 1/2% SENIOR DEBENTURES DUE 2010, WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF THEIR
OUTSTANDING 14 1/2% SENIOR DEBENTURES DUE 2010
OF
GROVE INVESTORS LLC
GROVE INVESTORS CAPITAL, INC.
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Grove Investors LLC, a Delaware limited liability company (the
"Company" or "Grove"), and Grove Investors Capital, Inc., a Delaware corporation
and a wholly owned subsidiary of the Company ("Grove Capital" and, together with
the Company, the "Issuers"), made pursuant to the Prospectus dated ,
1999 (the "Prospectus"), if certificates for the outstanding 14 1/2% Senior
Debentures due 2010 of the Issuers (the "Senior Debentures") are not immediately
available or if the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the Issuers
prior to 5:00 p.m., New York City time, on the Expiration Date of the Exchange
Offer. Such form may be delivered or transmitted by telegram, telex, facsimile
transmission, mail or hand delivery to United States Trust Company of New York
(the "Exchange Agent") as set forth below. In addition, in order to utilize the
guaranteed delivery procedure to tender Senior Debentures pursuant to the
Exchange Offer, a completed, signed and dated Letter of Transmittal (or
facsimile thereof) must also be received by the Exchange Agent prior to 5:00
p.m., New York City time, on the Expiration Date. Capitalized terms not defined
herein are defined in the Prospectus.
DELIVERY TO:
UNITED STATES TRUST COMPANY OF NEW YORK,
EXCHANGE AGENT
<TABLE>
<S> <C>
BY HAND UP TO 4:30 PM: United States Trust Company of New York
111 Broadway
Lower Level
New York, New York 10006
Attention: Corporate Trust Services
Telephone: 1(800) 548-6565
Facsimile: (212) 780-0592
BY OVERNIGHT COURIER AND BY HAND AFTER 4:30 United States Trust Company of New York
PM ON THE EXPIRATION DATE ONLY: 770 Broadway, 13th Floor
New York, New York 10003
Attention: Corporate Trust Services
Telephone: 1(800) 548-6565
Facsimile: (212) 780-0592
BY REGISTERED OR CERTIFIED MAIL: United States Trust Company of New York
Post Office Box 844
New York, New York 10276-0844
Attention: Corporate Trust Services,
Cooper Station
Telephone: 1(800) 548-6565
Facsimile: (212) 780-0592
</TABLE>
<PAGE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL
NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the Prospectus and the
accompanying Letter of Transmittal, the undersigned hereby tenders to the
Issuers the principal amount of Senior Debentures set forth below, pursuant to
the guaranteed delivery procedure described in "The Exchange Offer-Procedures
for Tendering Senior Debentures" section of the Prospectus.
Principal Amount of Senior Debentures Tendered:*
<TABLE>
<S> <C>
If Senior Debentures will be delivered by
$ -------------- book-entry transfer to The Depository Trust
Certificate Nos. (if available): Company, provide account number.
Account Number --------------
- --------------
Total Principal Amount Represented by Senior
Debentures Certificate(s):
$ --------------
</TABLE>
- --------------------------------------------------------------------------------
ANY AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE
DEATH OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE
UNDERSIGNED HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL
REPRESENTATIVES, SUCCESSORS AND ASSIGNS OF THE UNDERSIGNED.
- ------------------------
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof.
2
<PAGE>
PLEASE SIGN HERE
<TABLE>
<S> <C>
X -------------------------------------------------------
-------------------------------
Date
X -------------------------------------------------------
Signature(s) of Owner(s) or Authorized Signatory
Area Code and Telephone Number: ------------------------
</TABLE>
Must be signed by the holder(s) of Senior Debentures as their name(s)
appear(s) on certificate(s) for Senior Debentures or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed
Delivery. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title
below.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
<TABLE>
<S> <C>
NAME(S): ------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
CAPACITY:
------------------------------------------------------------------------------------------------
ADDRESS(ES):
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
GUARANTEE
The undersigned, a member of a registered national securities exchange, or a
member of the National Association of Securities Dealers, Inc., or a clearing
agency, insured credit union, a savings association or a commercial bank or
trust company having an office or correspondent in the United States, hereby
guarantees that the certificates representing the principal amount of Senior
Debentures tendered hereby in proper form for transfer, or timely confirmation
of the book-entry transfer of such Senior Debentures into the Exchange Agent's
account at The Depository Trust Company pursuant to the procedures set forth in
"The Exchange Offer-Procedures for Tendering Senior Debentures" section of the
Prospectus, together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required signature
guarantee and any other documents required by the Letter of Transmittal, will be
received by the Exchange Agent at the address set forth above, no later than
three New York Stock Exchange trading days after the date of execution hereof.
<TABLE>
<S> <C>
--------------------------------------------------- ---------------------------------------------------
Name of Firm Authorized Signature
--------------------------------------------------- ---------------------------------------------------
Address Title
--------------------------------------------------- Name: ------------------------------------------
Zip Code (Please Type or Print)
Area Code and Tel. No. --------------------------- Dated: ------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SENIOR DEBENTURES WITH THIS FORM.
CERTIFICATES FOR SENIOR DEBENTURES SHOULD ONLY BE SENT WITH YOUR LETTER OF
TRANSMITTAL.]
4
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
GIVE THE TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF-
- ---------------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first
individual on the
account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the minor(1)
6. Account in the name of The ward, minor, or
the guardian or committee incompetent person(3)
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust
account that is not a The actual owner(1)
legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
- ---------------------------------------------------------------
<CAPTION>
GIVE THE TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF-
<S> <C> <C>
- ---------------------------------------------------------------
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated
in the account title).(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State
or local government,
school district, or
prison) that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(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 your individual name. You may also enter your business name. You may
use either your Social Security number or your Employer Identification
number.
(5) List first and circle the name of the legal trust, estate, or pension trust
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number, at
the local office of the Social Security Administration or the Internal Revenue
Service (the "IRS") and apply for a number.
PAYEE EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments including
the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under Section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan or a
custodial account under Section 403(b)(7) of the Code, if the account
satisfies the requirements of Section 401(f)(2) of the Code.
- - 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., the
District of Columbia or a possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under Section 584(a) of the Code.
- - An exempt charitable remainder trust, or a trust described in Section 4947 of
the Code.
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- - A foreign central bank of issue.
Payment of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- - Payment of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payment of tax-exempt interest (including exempt interest dividends under
Section 852 of the Code).
- - Payment described in Section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under Section 1451 of the Code.
- - Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH THE PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
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 Sections 6041, 6041A(a), 6042, 6044, 6045, 6049,
and 6050A and 6050N of the Code and the regulations promulgated thereunder.
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 the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividends, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) 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.-- Willfully 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>
EXHIBIT 99.4
GROVE INVESTORS LLC
GROVE INVESTORS CAPITAL, INC.
OFFER TO EXCHANGE THEIR
14 1/2% SENIOR DEBENTURES DUE 2010, WHICH HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF THEIR
OUTSTANDING
14 1/2% SENIOR DEBENTURES DUE 2010
To Securities Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated , 1999 (as
the same may be amended or supplemented from time to time, the "Prospectus") and
a form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Grove Investors LLC, a Delaware limited
liability company (the "Company" or "Grove"), and Grove Investors Capital, Inc.,
a Delaware corporation and a wholly owned subsidiary of the Company ("Grove
Capital" and, together with the Company, the "Issuers") to exchange up to
$56,652,000 in aggregate principal amount of their 14 1/2% Senior Debentures due
2010 (the "Exchange Debentures") for up to $56,652,000 in aggregate principal
amount of their outstanding 14 1/2% Senior Debentures due 2010 of the Issuers
(the "Senior Debentures") that were issued and sold in a transaction exempt from
registration under the Securities Act of 1933, as amended.
We are asking you to contact your clients for whom you hold Senior
Debentures registered in your name or in the name of your nominee. In addition,
we ask you to contact your clients who, to your knowledge, hold Senior
Debentures registered in their old name. The Issuers will not pay any fees or
commissions to any broker, dealer or other person in connection with the
solicitation of tenders pursuant to the Exchange Offer. You will, however, be
reimbursed by the Issuers for customary mailing and handling expenses incurred
by you to forwarding any of the enclosed materials to your clients. The Issuers
will pay all transfer taxes, if any, applicable to the tender of Senior
Debentures to it or its order, except as otherwise provided in the Prospectus
and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. the Prospectus;
2. a Letter of Transmittal for your use in connection with the exchange
of Senior Debentures and for the information of your clients (facsimile
copies of the Letter of Transmittal may be used to exchange Senior
Debentures);
3. a form of letter that may be sent to your clients for whose accounts
you hold Senior Debentures registered in your name or the name of your
nominee, with space provided for obtaining the clients' instructions with
regard to the Exchange Offer;
4. a Notice of Guaranteed Delivery;
5. guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9; and
6. a return envelope addressed to the United States Trust Company of New
York.
YOUR PROMPT ACTION IS REQUESTED. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME ON , 1999, UNLESS EXTENDED (THE "EXPIRATION
DATE"). SENIOR DEBENTURES TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE
WITHDRAWN, SUBJECT TO THE PROCEDURES DESCRIBED IN THE PROSPECTUS, AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
To tender Senior Debentures, certificates for Senior Debentures or a
Book-Entry Confirmation (as defined in the Letter of Transmittal), a duly
executed and properly completed Letter of Transmittal or a
<PAGE>
facsimile thereof, and any other required documents, must be received by the
Exchange Agent as provided in the Prospectus and the Letter of Transmittal.
If a holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or Senior Debenture to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected by delivery of a Notice of Guaranteed
Delivery by an Eligible Institution (as defined in the Letter of Transmittal).
Any inquiries you may have with respect to the Exchange Offer or requests
for additional copies of the enclosed material may be directed to the Exchange
Agent at its address or telephone number set forth in the Prospectus.
Very truly yours,
GROVE INVESTORS LLC and
GROVE INVESTORS CAPITAL, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF THE ISSUERS OR THE EXCHANGE AGENT, OR ANY AFFILIATE
THEREOF, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR
THE ENCLOSED DOCUMENTS AND THE STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND
THE LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 99.5
GROVE INVESTORS LLC
GROVE INVESTORS CAPITAL, INC.
OFFER TO EXCHANGE THEIR
14 1/2% SENIOR DEBENTURES DUE 2010,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, FOR ANY AND ALL OF THEIR
OUTSTANDING 14 1/2% SENIOR DEBENTURES DUE 2010
To Our Clients:
Enclosed for your consideration is a Prospectus dated , 1999 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Grove Investors LLC, a Delaware limited
liability company (the "Company" or "Grove"), and Grove Investors Capital, Inc.,
a Delaware corporation and a wholly owned subsidiary of the Company ("Grove
Capital" and, together with the Company, the "Issuers"), to exchange up to
$56,652,000 in aggregate principal amount at of their 14 1/2% Senior Debentures
due 2010 (the "Exchange Debentures") for a like principal amount at maturity of
their outstanding 14 1/2% Senior Debentures due 2010 of the Issuers (the "Senior
Debentures") that were issued and sold in a transaction exempt from registration
under the Securities Act of 1933, as amended (the "Securities Act").
The material is being forwarded to you as the beneficial owner of Senior
Debentures carried by us for your account or benefit but not registered in your
name. A tender of any Senior Debentures may be made only by us as the registered
holder and pursuant to your instructions. Therefore, the Issuers urge beneficial
owners of Senior Debentures registered in the name of a broker, dealer,
commercial bank, trust company or other nominee to contact such registered
holder promptly if they wish to tender Senior Debentures in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender any
or all of the Senior Debentures held by us for your account, pursuant to the
terms and conditions set forth in the Prospectus and Letter of Transmittal. We
urge you to read carefully the Prospectus and Letter of Transmittal before
instructing us to tender your Senior Debentures.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to tender Senior Debentures on your behalf in accordance with the
provisions of the Exchange Offer. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999, UNLESS EXTENDED (THE "EXPIRATION DATE").
Senior Debentures tendered pursuant to the Exchange Offer may be withdrawn,
subject to the procedures described in the Prospectus, at any time prior to the
Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for the exchange of $1,000 principal amount at
maturity of the Exchange Debentures for each $1,000 principal amount at
maturity of the Senior Debentures. $56,652,000 aggregate principal amount at
of the Senior Debentures was outstanding as of , 1999. The terms of
the Exchange Debentures are substantially identical (including principal
amount, interest rate, maturity and ranking) to the terms of the Senior
Debentures, except that the Exchange Debentures (i) are not subject to
certain restrictions on transfer applicable to the Senior Debentures and
(ii) are not entitled to certain registration rights which are applicable to
the Senior Debentures under a registration rights agreement (the
"Registration Rights Agreement") among the Issuers and Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ").
2. THE EXCHANGE OFFER IS SUBJECT TO CERTAIN CONDITIONS, SEE "THE
EXCHANGE OFFER--CERTAIN CONDITIONS TO THE EXCHANGE OFFER" IN THE PROSPECTUS.
<PAGE>
3. The Exchange Offer and withdrawal rights will expire at 5:00 p.m.,
New York City time, on , 1999, unless extended.
4. The Issuers have agreed to pay the expenses of the Exchange Offer
except as provided in the Prospectus and the Letter of Transmittal.
5. Any transfer taxes incident to the transfer of Senior Debentures from
the tendering Holder to the Issuers will be paid by the Issuers, except as
provided in the Prospectus and the Letter of Transmittal.
The Exchange Offer is not being made to nor will exchange be accepted from
or on behalf of holders of Senior Debentures in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction.
If you wish to have us tender any or all of your Senior Debentures held by
us for your account or benefit, please so instruct us by completing, executing
and returning to us the instruction form that appears below. THE ACCOMPANYING
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATIONAL PURPOSES ONLY AND
MAY NOT BE USED BY YOU TO TENDER SENIOR DEBENTURES HELD BY US AND REGISTERED IN
OUR NAME FOR YOUR ACCOUNT OR BENEFIT.
2
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein in connection with the Exchange Offer of the
Issuers relating to the Senior Debentures, including the Prospectus and the
Letter of Transmittal.
This form will instruct you to exchange the aggregate principal amount of
Senior Debentures indicated below (or, if no aggregate principal amount is
indicated below, all Senior Debentures) held by you for the account or benefit
of the undersigned, pursuant to the terms and conditions set forth in the
Prospectus and Letter of Transmittal.
Aggregate Principal Amount of Senior Debentures
to be exchanged
$
------------------------*
<TABLE>
<S> <C>
*I (we) understand that if I (we) sign these -------------------------------------------
instruction forms without indicating -------------------------------------------
an aggregate principal amount of Signature(s)
Senior Debenture(s) in the space -------------------------------------------
above, all Senior Debentures held by Capacity (full title), if signing in a
you for my (our) account will be fiduciary or representative capacity
exchanged. -------------------------------------------
-------------------------------------------
-------------------------------------------
Name(s) and address, including zip code
Date:
-------------------------------------------
Area Code and Telephone Number
-------------------------------------------
Taxpayer Identification or Social Security
Number
</TABLE>
