SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1994 Commission File Number: 1-5646
CLARK EQUIPMENT COMPANY
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of 38-0425350
incorporation or organization) (IRS Employer Identification No.)
100 North Michigan Street 46634
P.O. Box 7008 (Zip Code)
South Bend, Indiana
(Address of Principal (219) 239-0100
Executive Offices) (Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $7.50 Par Value New York Stock Exchange, Inc.
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by a check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
As of March 13, 1995, the aggregate market value of the voting stock held
by nonaffiliates of the Registrant was $857,428,172, based on the closing
price of the stock as reported on the Composite Transaction Reporting
System by the New York Stock Exchange on March 13, 1995. (Number includes
the shares held by the Registrant's Leveraged Employee Stock Ownership
Plan.)
As of March 13, 1995, there were 17,132,696 shares of Registrant's $7.50
Par Value Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Annual Report to Stockholders for the fiscal year
ended December 31, 1994 ("Annual Report") are incorporated by reference in
Parts I and II of this Form 10-K.
Portions of Registrant's Proxy Statement for the 1995 Annual Meeting of
Stockholders ("Proxy Statement") are incorporated by reference into Part
III of this Form 10-K.
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PART I
ITEM 1. BUSINESS
Clark Equipment Company, a Delaware corporation, is the successor
to certain corporations the first of which was organized on December 24,
1902. Unless the context otherwise indicates, the terms "Registrant",
"Clark" and "Company" when used in this Form 10-K refer to Clark Equipment
Company and its consolidated subsidiaries.
Description of Business
Clark's business is the design, manufacture and sale of compact
construction machinery, asphalt paving equipment, axles and transmissions
for off-highway equipment and golf cars and utility vehicles.
Skid steer loaders, compact excavators and a limited line of
agricultural equipment are manufactured by Clark's Melroe Company Business
Unit ("Melroe") which is headquartered in Fargo, North Dakota. Off-highway
axles and transmissions are manufactured by the Company's Clark Hurth
Components Company Business Unit ("Clark Hurth") which is headquartered in
Statesville, North Carolina. Asphalt paving equipment is manufactured by
the Company's subsidiary Blaw-Knox Construction Equipment Corporation
("Blaw-Knox") which is headquartered in Mattoon, Illinois. Golf cars and
utility vehicles are manufactured by the Company's subsidiary, Club Car,
Inc. ("Club Car") which is headquartered in Martinez, Georgia.
On March 13, 1995, the Company acquired 9,461,810 shares of Club
Car, representing approximately 99% of the outstanding shares, for a cash
price of $25 per share pursuant to a tender offer initiated by the Company
on February 8, 1995. Club Car is one of the largest manufacturers of golf
cars and light utility vehicles in the world and had sales in its fiscal
year ending on September 25, 1994 of approximately $186 million. On March
17, 1995, the Company completed a merger of Club Car with another wholly-owned
subsidiary of the Company. Upon consummation of the merger, Club Car
became a wholly-owned subsidiary of the Company, and the shareholders of
Club Car who did not tender their shares became entitled to receive $25 per
share. The total purchase price for Club Car was approximately $242.6
million, after taking into account amounts paid with respect to certain
outstanding stock options, tax benefits related to these stock options and
certain transaction expenses. The financial statements which are included
in this Form 10-K do not include Club Car.
The Company acquired Blaw-Knox on May 13, 1994 from White
Consolidated Industries, Inc. for a purchase price of approximately $145
million. The Balance Sheet and results of operations of Blaw-Knox are
included in the consolidated accounts of the Company subsequent to the
acquisition date.
On May 13, 1994, the Company completed the initial public offering
of the stock of Clark Automotive Products Corporation ("CAPCO"). CAPCO was
engaged in the business of manufacturing transmissions, primarily for
on-highway applications, for sale in Brazil and North America. The Company
sold approximately 91 percent of its interest in CAPCO and received net
proceeds of approximately $103 million, resulting in a gain of
approximately $33 million. The results of CAPCO have been deconsolidated
to reflect the operations of this segment on a discontinued basis in the
Statements of Income contained in this Form 10-K for all periods presented.
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VME Group N.V. ("VME") is a joint venture owned 50% by the Company
and 50% by A.B. Volvo of Sweden ("Volvo"). It is engaged in the
manufacture and sale of construction and earthmoving equipment. On
March 5, 1995, the Company entered into an agreement to sell all of its
shares of VME to Volvo for a cash purchase price of $560 million. In
addition, immediately prior to the sale, VME will pay a cash dividend to
the Company of $13 million. The sale of the Company's VME shares to Volvo
is expected to close early in April of 1995. VME is reflected as a
discontinued operation in the Statements of Income which are included in
this Form 10-K for all periods presented.
On July 31, 1992, the Company sold all of the outstanding stock of
Clark Material Handling Company ("CMHC"), and certain other subsidiaries
which comprised its material handling equipment business, to Terex
Corporation ("Terex") for approximately $91 million. A gain of $8.5
million was recognized on the sale which has been included in discontinued
operations. CMHC is reflected as a discontinued operation in the
Statements of Income which are filed as a part of this Form 10-K. As a
part of the sale, Terex and CMHC assumed substantially all of the
obligations of the Company relating to the CMHC operation. In the event
that Terex and CMHC fail to perform or are unable to discharge any of the
assumed obligations, the Company could be required to discharge such
obligations. This issue is discussed in more detail in the footnote
captioned "Contingencies" in that portion of the Company's Annual Report to
Stockholders which is attached hereto as Exhibit 13.
Backlog Orders
The approximate dollar backlog of orders believed to be firm was
$221 million (which includes $20 million for Blaw-Knox but does not include
Club Car) at December 31, 1994 and $125 million at December 31, 1993.
Generally, Clark's customers may cancel their orders without incurring
significant cancellation charges, and, therefore, Clark's backlog is
essentially a report of the recorded intentions to purchase its products,
which could change before the sales are completed. The backlog figures
stated above are based on orders to Clark's factories or warehouses from
Clark's independent dealers and other customers who buy directly from
Clark's factories or warehouses.
Manufacturing
Melroe products are manufactured in the United States for sale
throughout the world to a wide variety of users and industries, including
the construction and agricultural industries. These products are
distributed under the trademarks "Melroe" and "Bobcat". In addition,
Melroe products are manufactured by a licensee in Australia.
Clark Hurth products are manufactured in the United States,
Belgium and Italy for sale throughout the world primarily to the
construction, mining and material handling equipment industries. In
addition, Clark Hurth products are manufactured by licensees in South
Africa and Brazil.
Blaw-Knox products are manufactured in the United States and
England for sale throughout the world primarily to the highway construction
and asphalt paving industries.
Club Car products are manufactured in the United States for sale
throughout the world in the golf, recreational, commercial and industrial
markets.
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Distribution
Clark Hurth products are sold directly to customers by employee
sales representatives and through manufacturers representatives and
independent distributors. Melroe and Blaw-Knox products are sold primarily
through independent dealers. Club Car products are sold directly to
customers by employee sales representatives and through independent
distributors and dealers. Clark maintains a large modern central parts
warehouse in Chicago, which, in conjunction with a communications network
and electronic data processing equipment, provide expeditious shipment of
customers' and dealers' orders for repair and replacement parts for Melroe
and VME products. Clark Hurth, Blaw-Knox and Club Car parts are
distributed from their respective manufacturing facilities.
Operations Outside the United States
Operations outside the United States are subject to, among other
things, the laws and regulations of foreign governments relating to
investments, operations and currency restrictions, import and export duties
and revaluations and fluctuations of currencies. Operations outside the
United States are also subject to changes in governments and economic
policies.
License fees from licensees outside the United States and Canada,
other than from consolidated subsidiaries, and dividends from associated
companies aggregated approximately $0.8 million in 1994, approximately $0.3
million in 1993 and approximately $0.4 million in 1992.
Raw Materials and Components
The principal raw materials and components purchased by the
Company are steel; castings; engines and accessories; hydraulic motors,
pumps, valves and cylinders; fabricated metal parts; fabricated plastic
parts; tires and tubes; electrical equipment; drive train components;
brakes and brake components; bearings; forgings; fasteners; bushings;
electric motors; gears and gear blanks; screw machine products; seals;
clutch plates; torque convertors; synchronizer rings; steering arms; CV
joints; cardan shafts; seats; paint; sealants and adhesives; antifreeze;
batteries; radiators; oil coolers; springs; shocks; chain; sprockets;
glass; filters; fabricated plastic parts; injection molded plastics;
control cables; aluminum extrusions; and rotational and vacuum formed
plastics.
The items described above are purchased from a number of different
suppliers, both on an individual purchase commitment basis and on a
one-year blanket order basis. Multiple sources for most items are available,
but substitution of engines and accessories, hydraulic motors, electrical
equipment, brake assemblies, pumps, and valves, in the event they were to
become unavailable from the usual sources, would in some instances require
engineering modifications to the product in which they are used.
Energy
Clark's manufacturing operations and those of its suppliers depend
to a substantial extent upon the availability of natural gas, fuel oil,
propane, electricity, coal, uranium and generating capacity. Clark
presently expects that its plants will be able to operate with little or no
interruption resulting out of scarcity of energy through 1995.
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Engineering and Product Development
An engineering staff is maintained at each of the principal
manufacturing facilities of Clark. These staffs are supplemented by
laboratories which provide technical support for product testing, materials
research and process development. Approximately 225 engineering employees
(engineers, designers, draftsmen and technicians) are presently engaged
full time in engineering and product development activities. Approximately
$15.6 million in 1994, $17.0 million in 1993 and $14.7 million in 1992 was
spent on Company-sponsored activities relating to the development of new
products and the improvement of existing products for Clark's continuing
operations.
Approximately 47 employees of Club Car are presently engaged full
time in engineering and product development activities. Club Car spent
approximately $2.2 million, $2 million and $1.9 million on Company-
sponsored engineering and product development activities during its fiscal
years ending on September 25, 1994, September 26, 1993 and September 27,
1992 respectively.
Although Clark owns numerous patents and has patent applications
pending, its business is not materially dependent upon patent protection.
Competition
Clark conducts its domestic and foreign operations under highly
competitive conditions and its business is subject to cyclical influences
and other factors. The customers for most of Clark's products are
commercial, industrial or farm users who use the products in business for
profit. Product performance and parts and service availability are primary
considerations for these customers in the choice among competing products.
Availability of rental and financing programs and warranty policies are
also important considerations. In making a purchase decision, the above
factors, plus the initial selling price, the date on which delivery can be
made, and the general product reputation will be considered by the
purchaser, and the order will normally be placed with the seller who comes
closest to satisfying the purchaser's particular requirements of all of
these factors.
Melroe is the leading producer of skid steer loaders in the United
States and has approximately 9 significant competitors worldwide. Melroe
also has approximately 6 significant competitors in its excavator line and
3 significant competitors in its agricultural spraying equipment product
line.
Clark Hurth has approximately 19 significant competitors and is
also subject to potential competition from its customers.
Blaw-Knox is the leading producer of asphalt paving equipment in
the United States and has approximately 5 significant competitors in North
America and 18 significant competitors in the rest of the world.
Club Car is one of the two largest manufacturers of golf cars and
utility vehicles in the world and has approximately 5 significant
competitors in each product line.
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Customers
The Company is not dependent upon a single customer or a few
customers, the loss of any one or more of which would have a material
adverse effect on its operations.
Seasonality
Although Clark experiences slight seasonal variations in its sales
of Melroe, Clark Hurth and Blaw-Knox products, Clark does not consider any
material part of those businesses to be seasonal.
Club Car's peak sales of golf cars occur during the months of
February through June when units are shipped to golf clubs at the beginning
of their golf season. Warm weather states, such as California and Florida,
have golf seasons beginning in the fall which stimulate fleet and retail
sales during the fall. Sales of Club Car's utility vehicle products occur
year-round but are heavier in the spring.
Environmental Compliance
Clark's facilities are subject to environmental regulation by
federal, state and local authorities. In 1994, the Company spent
approximately $2.1 million in connection with environmental compliance and
cleanup activities. Capital expenditures for environmental control
activities are not expected to be material for the remainder of 1995 and
1996. Clark is also involved in environmental cleanup activities or
litigation in connection with former waste disposal sites and current and
former plant locations. The Company has and will continue to make
provisions for these cleanup costs as necessary and when the Company's
liability can be reasonably estimated. As of December 31, 1994, the
Company had reserves of $16 million for potential future environmental
cleanup costs. Although the Company cannot determine whether or not a
material effect on future operations is reasonably likely to occur, it
believes that the recorded reserve levels are appropriate estimates of its
potential liability for environmental cleanup costs. The Company further
believes that the additional maximum exposure level in excess of the
recorded reserve level would not be material to the financial condition of
the Company. Although settlement of the reserves will cause future cash
outlays, it is not expected that such outlays will materially impact the
Company's liquidity position.
Employees
As of December 31, 1994, Clark employed 2,919 persons in North
America and 1,491 persons outside North America. A portion of Clark's
production, maintenance and warehouse employees in the United States are
represented by local unions affiliated with the International Brotherhood
of Teamsters, the United Automobile, Aerospace and Agricultural Implement
Workers of America and the United Paperworkers International Union, which
are affiliated with the AFL-CIO.
At the end of its fiscal year ending on September 25, 1994, Club
Car had 683 full time and 160 temporary employees, none of whom were
covered by a collective bargaining agreement.
Industry Segment and Geographic Area Discussion
Incorporated by reference to pages 38 and 39 of that portion of the
Company's Annual Report which is attached hereto as Exhibit 13.
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ITEM 2. PROPERTIES
Clark or a subsidiary of Clark owns the following principal
facilities in fee, except where a lease is indicated:
Total Floor Space Leased Floor Space
Principal Products Approximate Sq.Ft. Approximate Sq. Ft.
Manufactured Plant Office Plant Office
(in thousands) (in thousands)
Melroe
Bismarck, ND 375 48 - -
Gwinner, ND 420 99 - 54
Fargo, ND - 22 - 22
Lot, Belgium 144 38 - -
Other Melroe - 4 - 4
Clark Hurth
Bruges, Belgium 312 19 - -
Statesville, NC 423 60 18 -
Buchanan, MI 52 10 13 -
Arco, Italy 199 78 - -
Valsugana, Italy 83 7 - -
Rovereto, Italy 35 3 35 3
Blaw-Knox
Mattoon, IL 347 47 - -
Rochester, England 216 47 - -
Manchester, England 7 - - -
Coatbridge, Scotland 6 - - -
Club Car
Martinez, GA 273 60 - -
Other - 86 - 86
Other Business Locations
Corporate Headquarters- - 36 - 36
South Bend, IN
Records Retention- - 15 - 15
South Bend, IN
Clark Distribution Services-
Chicago, IL 507 58 - -
Bedford Park, IL 91 2 91 2
3,490 739 157 222
Clark owns the production equipment and machines at its plants,
except for an insignificant number of items which are leased. All of
Clark's principal plants and warehouse facilities are in good operating
condition. In 1994, Clark sold idle facilities in Georgetown, Kentucky,
Atlanta, Georgia and South Bend, Indiana.
In 1994 Clark's manufacturing plants (not including Club Car)
operated at approximately 91% of capacity.
ITEM 3. LEGAL PROCEEDINGS
In the Matter of Industrial Pretreatment Violations at Melroe Company,
Gwinner, North Dakota
On October 5, 1992, the United States Environmental Protection
Agency ("EPA") issued a Finding of Violation and Order for Compliance
("Order") which alleges that the Company has failed to comply with the
pretreatment regulations promulgated pursuant to Section 306 and 307 of the
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Clean Water Act. The Order alleges that certain metal finishing
wastewaters generated at the Company's Melroe facility in Gwinner, North
Dakota were discharged into the Publicly Owned Treatment Works operated by
the City of Gwinner in violation of the applicable pretreatment
regulations. The Order also alleges that the Company failed to comply with
certain reporting requirements set forth in the pretreatment regulations.
The Order requires the Company to comply with the discharge limitations for
metal finishing wastewater and all related reporting requirements. The
Company has taken all actions required of it under the Order.
On April 29, 1994, the U.S. filed suit against the Company in the
United States District Court for the District of North Dakota. The
complaint seeks (i) to permanently enjoin the Company to comply fully with
all applicable requirements of the Act and Regulations and (ii) civil
penalties against the Company of up to $25,000 per day for each violation
for (a) alleged discharges of pollutants in violation of the effluent
limitations contained in the pretreatment regulations, (b) failure to
submit timely and complete reports and (c) a failure to sample and analyze
its regulated wastewater prior to discharge into the POTW. This case is
now in the discovery phase.
The Company believes that its liability, if any, in connection
with this lawsuit is adequately covered by its reserve for environmental
liabilities. The Company does not expect that this lawsuit will have a
material adverse effect on the Company's financial condition, results of
operations or liquidity position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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EXECUTIVE OFFICERS OF THE REGISTRANT
Name of Officer and Age as of Principal Occupation
Positions/Offices March 1, Date First and Employment During
Presently Held 1995 Elected Past Five Years
Leo J. McKernan* 57 5/22/86 Chairman, President and
Chairman, President Chief Executive Officer of
and Chief Executive Clark Equipment Company.
Officer
Frank M. Sims* 62 3/17/87 Senior Vice President of
Senior Vice President Clark Equipment Company.
Paul R. Bowles 57 9/22/89 Vice President - Corporate
Vice President Development of Clark
Equipment Company.
Thomas L. Doepker 51 7/13/84 Vice President and
Vice President and Treasurer of Clark
Treasurer Equipment Company.
William N. Harper 50 12/09/86 Vice President and
Vice President and Controller of Clark
Controller Equipment Company.
Bernard D. Henely 51 7/13/84 Vice President and
Vice President, General Counsel of
General Counsel and Clark Equipment Company.
Secretary
David D. Hunter 54 10/24/94 President of Blaw-Knox
Vice President Construction Equipment
Corporation, a Business
Unit of Clark Equipment
Company. Prior to
October 1994, Managing
Director of European
Operations of Clark Hurth
Components Company.
Prior to April 1992,
Executive Vice President
of Talley Industries Inc.
James D. Kertz 58 2/9/93 President of Melroe Company,
Vice President a Business Unit of Clark
Equipment Company. Prior
to September 1992,
Executive Vice President of
Melroe Company.
John J. Reynolds 61 8/13/91 President of Clark Hurth
Vice President Components Company, a
Business Unit of Clark
Equipment Company. Prior
to April 1991, President of
Cherry-Burrell Corporation-
automatic packaging and
processing equipment.
* Member of the Board of Directors of the Company.
Each officer's term expires at the annual meeting of the Board of Directors
on May 9, 1995.
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<PAGE> PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
Incorporated by reference to page 41 of that portion of the
Company's Annual Report which is attached hereto as Exhibit 13.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference to page 45 of that portion of the
Company's Annual Report which is attached hereto as Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Incorporated by reference to pages 1 through 11 of that portion of
the Company's Annual Report which is attached hereto as Exhibit
13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference to pages 12 through 38, 40 and 41 of
that portion of the Company's Annual Report which is attached
hereto as Exhibit 13.
Also see Index to Financial Statements on page 13 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the directors of the Registrant is
incorporated by reference to the section in the Company's Proxy
Statement which is captioned "Identification of Nominees for
Director". Information regarding the executive officers of the
Registrant is set forth in Part I of this report under the
caption "Executive Officers of the Registrant".
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ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference to the sections in the Company's Proxy
Statement which are captioned "Executive Compensation", "Stock
Option/SAR Tables", "Executive Employment Contracts", "Retirement
Program", "Director Compensation Arrangements", and "Stock
Acquisition Plan for Non-Employee Directors".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to the section in the Company's Proxy
Statement which is captioned "Security Ownership of Certain
Beneficial Owners and Management".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements:
Incorporated by reference to pages 12 through 45 of that
portion of the Company's Annual Report which is attached
hereto as Exhibit 13.
2. Financial Statement Schedule (see index on page 13 of this
report).
3. Exhibits:
See Exhibit List and Index attached. Exhibits numbered
(10)(a) through (10)(aa) are management contracts and
compensatory plans or arrangements.
(b) Reports on Form 8-K:
1. The Registrant filed a Form 8-K dated October 26, 1994
reporting on Item 5, OTHER EVENTS, and Item 7, FINANCIAL
STATEMENTS AND EXHIBITS.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on the
31st day of March 1995.
CLARK EQUIPMENT COMPANY
By /s/ Leo J. McKernan
Leo J. McKernan
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated. Each person whose
signature appears below hereby authorizes B. D. Henely and John J. Moran,
Jr. and each of them severally, with full power in each to act without the
other and with full power of substitution and resubstitution, to execute in
the name of each such person, and to file any amendments to this report as
the registrant deems appropriate, and appoints such persons as
attorneys-in-fact to sign on his behalf individually, and in each capacity
stated below, and file all amendments to this report.
SIGNATURE TITLE DATE
/s/ Leo J. McKernan Chairman, President, Chief March 31, 1995
Leo J. McKernan Executive Officer and Director
(Principal Executive Officer)
/s/ William N. Harper Vice President and Controller March 31, 1995
William N. Harper (Principal Financial Officer and
Principal Accounting Officer)
Directors
/s/ James C. Chapman
James C. Chapman Director )
/s/ Donald N. Frey
Donald N. Frey Director )
/s/ James A.D. Geier
James A.D. Geier Director )
/s/ Gaynor N. Kelley
Gaynor N. Kelley Director ) March 31, 1995
/s/ Ray B. Mundt
Ray B. Mundt Director )
/s/ Frank M. Sims
Frank M. Sims Director )
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CLARK EQUIPMENT COMPANY
INDEX TO FINANCIAL STATEMENTS
The financial statements of Clark Equipment Company and its
consolidated subsidiaries, together with the report thereon of Price
Waterhouse LLP dated March 6, 1995, appearing on pages 12 through 45 of
that portion of the Company's 1994 Annual Report which is attached hereto
as Exhibit 13, are incorporated by reference in this Form 10-K Annual
Report. The following additional financial data should be read in
conjunction with such financial statements. Schedules not included with
this additional financial data have been omitted because they are not
applicable or the required information is shown in the financial statements
or notes thereto.
The consolidated financial statements of VME Group N.V. (VME) and its
subsidiaries have been incorporated beginning on page 16 of this report.
VME, at December 31, 1994, was a joint venture owned 50 percent each by
Clark Equipment Company and A.B. Volvo of Sweden. The Company has agreed
to sell its shares of VME to A.B. Volvo and the sale is expected to close
in early April 1995.
Financial statements of other unconsolidated majority owned
subsidiaries and 50% or less owned persons have been omitted because the
proportionate share of the pre-tax income and total assets of each such
company is less than 20% of the respective amounts for the registrant and
its consolidated subsidiaries, and the investment in and advances to each
company is less than 20% of total assets of the registrant and its
consolidated subsidiaries.
Additional Information:
Page
Report of Independent Accountants on Financial
Statement Schedule 14
Clark Equipment Company and Consolidated Subsidiaries-
Schedule II 15
VME Group N.V. and its subsidiaries
Consolidated Financial Statements and Notes
to Consolidated Financial Statements 16 through 43
Report of KPMG Bohlins AB on the
Financial Statements of VME Holding Sweden AB 44 AND 45
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REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
Board of Directors
Clark Equipment Company
South Bend, Indiana
Our audits of the consolidated financial statements referred to in our
report dated March 6, 1995 appearing in the 1994 Annual Report to
Stockholders of Clark Equipment Company (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the Financial Statement Schedule
listed in Item 14(a) of this Form 10-K. In our opinion, the Financial
Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
consolidated financial statements.
/s/ Price Waterhouse
Price Waterhouse
South Bend, Indiana
March 6, 1995
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<TABLE>
CLARK EQUIPMENT COMPANY
AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Amounts in Thousands)
<CAPTION>
Effect of
Balance at Charged to Exchange Balance at
Beginning of Costs and 1/ Rate End of
Period Expenses Deductions Changes Period
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994
Allowance for Doubtful Accounts $ 5,485 $ 1,463 $ (1,122) $ 189 $ 6,015
Year Ended December 31, 1993
Allowance for Doubtful Accounts $ 4,735 $ 905 $ 23 $ (178) $ 5,485
Year Ended December 31, 1992
Allowance for Doubtful Accounts $ 8,671 $ 1,028 $ (4,754) $ (210) $ 4,735
<FN>
1/ Represents losses incurred on write-offs less amounts recovered. The 1992 amount includes
reductions of $3,472 due to the sale of Clark Material Handling Company to the Terex
Corporation on July 31, 1992.
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VME GROUP N.V.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
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VME GROUP N.V.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
* Report of Independent Accountants.
* Consolidated Balance Sheet as of December 31, 1994 and 1993.
* Consolidated Statement of Operations for each of the years
in the three year period ended December 31, 1994.
* Consolidated Statement of Cash Flows for each of the years
in the three year period ended December 31, 1994.
* Notes to Consolidated Financial Statements.
SUPPLEMENTAL SCHEDULE
II Valuation and Qualifying Accounts
SCHEDULES OMITTED
* Other schedules required by Regulation S-X are omitted because of
absence of the conditions under which they are required or because
information called for is shown in the financial statements and
notes thereto.
-17-
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<PAGE>
BP America Building Telephone 216 781 3700
200 Public Square
27th Floor
Cleveland, Ohio 44114-2301
Price Waterhouse LLP
Report of Independent Accountants
To the Board of Directors and
Shareholders of VME Group N.V.
In our opinion, based upon our audits and the report of other auditors, the
accompanying consolidated balance sheet and the related consolidated
statements of operations and of cash flows present fairly, in all material
respects, the financial position of VME Group N.V. and its subsidiaries at
December 31, 1994 and 1993, and the results of their operations and their
cash flows for each of the three years in the period ended December 31,
1994, in conformity with generally accepted accounting principles in the
United States. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of certain subsidiaries, which statements reflect total assets
of $489,725,000 and $412,300,000 at December 31, 1994 and 1993,
respectively, and total revenues of $648,270,000, $511,000,000 and
$586,800,000 for the three years in the period ended December 31, 1994,
respectively. Those statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion expressed herein, insofar
as it relates to the amounts included for these subsidiaries, is based
solely on the report of the other auditors. We conducted our audits of
these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a
reasonable basis for the opinion expressed above.
As discussed in Notes 3 and 19, the Company changed its method of
accounting for income taxes and postretirement benefits effective January
1, 1993.
/s/ Price Waterhouse LLP
Cleveland, Ohio
February 27, 1995, except
as to Note 24, which is
as of March 6, 1995
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<PAGE>
VME GROUP N.V.
CONSOLIDATED BALANCE SHEET
(Amounts in millions, except share and per share amounts)
December 31,
1994 1993
ASSETS
Current assets:
Cash and cash equivalents $ 58.9 $ 36.2
Receivables 213.0 167.9
Inventories 319.7 271.2
Other assets 68.8 48.0
Total current assets 660.4 523.3
Long-term assets:
Property, plant and equipment, net 158.9 152.8
Other assets 13.8 17.9
Goodwill 120.0 84.3
Total assets $ 953.1 $ 778.3
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 142.2 $ 90.3
Short-term debt 16.5 52.2
Current portion of long-term debt 8.3 4.3
Other liabilities 242.1 152.1
Total current liabilities 409.1 298.9
Long-term liabilities:
Debt 54.5 127.1
Shareholders' loans 70.0 70.0
Pension liability 58.6 80.9
Other 40.4 23.0
Total liabilities 632.6 599.9
Commitments and contingencies
Minority interests 10.1 20.0
Shareholders' equity:
Common stock: $516 par value - 129.0 129.0
authorized 600,000 shares;
issued and outstanding
250,000 shares
Paid in capital 80.9 80.9
Retained earnings (deficit) 97.9 (34.2)
Cumulative translation adjustments 26.1 7.0
Pension adjustments (23.5) (24.3)
Total shareholders' equity 310.4 158.4
________ ________
Total liabilities and
shareholders' equity $ 953.1 $ 778.3
======== ========
The accompanying notes are an integral part of these financial statements.
-19-<PAGE>
<PAGE>
VME GROUP N.V.
CONSOLIDATED STATEMENT OF OPERATIONS
(Amounts in millions, except per share amounts)
Year Ended December 31,
1994 1993 1992
Sales $1,566.0 $1,239.3 $1,357.3
Cost of sales (1,141.8) (958.0) (1,169.3)
Gross profit 424.2 281.3 188.0
Selling, general and
administrative expense (226.8) (211.3) (237.4)
Restructuring cost - - (18.7)
Other income (expense) 12.6 (5.3) (6.6)
Operating income (loss) 210.0 64.7 (74.7)
Financial income and expense :
Interest income 7.7 5.8 8.4
Interest expense (18.0) (32.2) (47.0)
Interest expense, net (10.3) (26.4) (38.6)
Income (loss) before income taxes,
minority interests and effect
of change in accounting 199.7 38.3 (113.3)
Benefit (provision) for income taxes (66.5) (17.9) 23.4
Income (loss) before
minority interests and effect
of change in accounting 133.2 20.4 (89.9)
Minority interests (1.1) (2.7) (3.7)
Income (loss) before effect
of change in accounting 132.1 17.7 (93.6)
Effect of change in accounting for
income taxes - 12.3 -
Net income (loss) $ 132.1 $ 30.0 $ (93.6)
======== ======== ========
Per share information :
Income (loss) before effect of
change in accounting $ 528.40 $ 70.95 $(374.47)
Effect of change in accounting
for income taxes - 49.14 -
Net income (loss) $ 528.40 $120.09 $(374.47)
========= ========= =========
The accompanying notes are an integral part of these financial statements.
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<PAGE>
VME GROUP N.V.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Amounts in millions)
Year Ended December 31,
1994 1993 1992
Cash flows from operating activities:
Net income (loss) $ 132.1 $ 30.0 $ (93.6)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 31.0 31.5 42.5
Effect of change in accounting for
income taxes - (12.3) -
(Gain) loss on sale of fixed assets
and subsidiaries (1.1) 0.3 (5.3)
Minority interest in net income 1.1 2.7 3.7
Undistributed losses
of affiliates - 0.3 0.2
Increase (decrease) in cash flow
from changes in:
Receivables (12.7) (32.9) 10.0
Inventories (23.3) 21.0 75.8
Accounts payable 16.2 25.6 23.5
Accrued expenses 80.9 16.8 (11.4)
Pension liability (27.9) 5.6 9.8
Deferred taxes 5.4 3.7 (36.1)
Other (9.5) (6.8) 0.7
Net cash provided by
operating activities 192.2 85.5 19.8
Cash flows from investing activities:
Proceeds from sale of fixed assets 2.6 14.1 19.2
Capital expenditures (24.7) (21.3) (29.8)
Contribution received for
joint venture interest 3.2 6.0 -
Sale of subsidiaries - - 2.6
Purchase of minority interest
in Zettelmeyer (39.9) - -
Decrease (increase) in other assets 5.2 7.4 (16.9)
Net cash provided by (used in)
investing activities (53.6) 6.2 (24.9)
Cash flows from financing activities:
Net payments on line of
credit borrowings (39.8) (178.7) (21.5)
Proceeds from issuance of debt 0.1 73.0 -
Debt repayment (80.9) (46.2) (59.5)
Proceeds from financing arrangements - - 59.1
Proceeds from shareholders' loans - - 70.0
Capital contribution - - 30.0
Net cash provided by (used in)
financing activities (120.6) (151.9) 78.1
Effect of exchange rate changes on cash 4.7 (4.9) (4.9)
Net increase (decrease) in cash and
cash equivalents 22.7 (65.1) 68.1
Cash and cash equivalents,
beginning of year 36.2 101.3 33.2
Cash and cash equivalents, end of year $ 58.9 $ 36.2 $ 101.3
======= ======= =======
The accompanying notes are an integral part of these financial statements.
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<PAGE> Page 1
VME GROUP N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in millions)
Note 1 - Basis of Presentation and Principles of Consolidation
VME Group N.V. (the Company, VME) is a Netherlands holding company formed on
March 28, 1985 to hold, together with Clark Equipment Company (Clark) and AB
Volvo, the common stock of its two significant operating subsidiaries, VME
Americas Inc. (VMEA), a Delaware Corporation, and VME Holding Sweden AB
(VMEHS), a Swedish corporation. AB Volvo and Clark until December 22, 1993,
held equal cross-ownership positions in VMEA and VMEHS. On December 22, 1993,
Clark and AB Volvo contributed their respective ownership interests in VMEA
and VMEHS to VME Group N.V., which resulted in VMEA and VMEHS becoming
wholly-owned subsidiaries of the Company. Such contributions were accounted
for as transactions between entities under common control. Accordingly,
financial statements of the Company have been prepared on a historical cost
basis and reflect such contributions on a retroactive basis for all periods
presented.
Investments and results of operations of companies in which the Company holds
more than 50% of the issued capital stock, are included in the consolidated
accounts. Companies in which the Company holds investments between 20% and
50% are accounted for utilizing the equity method of accounting and investments
below 20% are accounted for at cost. All material balances and transactions
between the entities comprising the Company have been eliminated.
Note 2 - Description of Business
The Company is engaged in the design, manufacture and marketing of
off-highway construction and earth-moving equipment in most world markets. This
equipment is comprised of wheel loaders, articulated and rigid haulers and
hydraulic excavators. The majority of sales are made to end users through a
worldwide network of affiliated and independent distributors. The Company
does not have significant exposure to any individual customer or distributor.
The sale of replacement parts is an important component of the Company's
business.
Note 3 - Summary of Significant Accounting Policies
Revenue Recognition
Revenues are recognized upon shipment of units and service parts. A provision
is made for discounts, returns and recourse obligations under dealer financing
arrangements.
Inventories
Inventories of non-U.S. operations are valued at the lower of cost utilizing
the first-in, first-out (FIFO) method or market. Substantially all U.S.
owned inventories are valued at the lower of cost utilizing the last-in,
first-out (LIFO) method or market.
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Page 2
Note 3 - Summary of Significant Accounting Policies (cont'd)
Properties and Depreciation
Property, plant and equipment are carried at cost. Expenditures for
maintenance and repairs are charged to income as incurred and expenditures for
major renewals and betterments are capitalized. Depreciation is provided
over the useful lives of the assets using primarily the straight-line method.
Properties retired or sold are removed from the property accounts with gains
or losses on disposal included in income.
The useful lives of the assets are primarily as follows :
Years
Buildings 25 - 50
Machinery and equipment 5 - 10
Motor vehicles 5
Furniture and fixtures 3
Goodwill
Goodwill represents the excess of the total costs of businesses acquired over
the fair market value of their net assets. Goodwill is being amortized on the
straight-line method over a period of 40 years. Accumulated amortization
expense was $10.4 in 1994 and $6.3 in 1993.
Management periodically assesses the need to record provisions for the
impairment of long-lived assets by comparing their best estimate of
undiscounted future cash flows before interest payments to the net book value
of significant assets or businesses, including goodwill. Management considers
current business plans, the cyclical nature of the global earth-moving and
construction equipment industry and other factors. If projected cash flows
are less than the assets' recorded value, impairment would be recorded using
a fair value concept. Fair value is computed utilizing a discounted cash flow
model.
Management also periodically considers the appropriateness of the remaining
economic life of goodwill.
Warranties
Provision is made currently for estimated future costs that are expected to
be incurred under product warranties presently in force.
Pension Plans
The Company accrues the cost of pension and retirement plans which cover
substantially all employees. Benefits are based on employees' years of
service and compensation. Pension costs, for defined benefit plans, are
primarily computed using the unit credit method. Non-U.S. plans are funded in
accordance with local laws and income tax regulations. The board of directors
adopted a plan in 1994 to substantially decrease its underfunded U.S. pension
status by 1996. U.S. plans' assets are invested primarily in listed stocks,
guaranteed investment contracts and corporate bonds.
Product Liability
The Company accrues its best estimate of the most likely amount of settlement
or claim liability for all asserted claims. For unasserted claims, the
Company records an estimate of liability for incurred but not reported claims
based on historical amounts of claims and settlements and reporting lag time.
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<PAGE> Page 3
Note 3 - Summary of Significant Accounting Policies (cont'd)
Income Taxes
In January 1993, the Company adopted Statement of Financial Accounting
Standard No. 109 (FAS 109) "Accounting for Income Taxes". The adoption of FAS
109 changes the method of accounting for income taxes from the deferred
method (APB 11) to an asset and liability approach. Previously, the Company
deferred the past tax effects of timing differences between financial
reporting and taxable income. The asset and liability approach requires the
recognition of deferred tax liabilities and assets for the expected future
tax consequences or temporary differences between the carrying amount and the
tax bases of assets and liabilities. The adoption resulted in the recognition
of a net tax benefit of $12.3. No provision for income taxes is made on
$160.4 of undistributed earnings from consolidated subsidiaries, which have
been or will be reinvested, and it is not practicable to quantify the amount
of such taxes if remitted.
Derivative Financial Instruments
The Company attempts to limit its financial exposure to the effects of
potential currency exchange rate fluctuations on balance sheet positions and
cash flows corresponding to expected cross border transactions. The Company
utilizes currency swap contracts to hedge balance sheet positions, and
forward exchange and purchased option contracts to hedge future cash flows
and avoid speculative positions which may impact expected profitability. The
Company limits its use of financial instruments so that it is reasonably
assured that the transactions it intends to protect will occur. Because the
Company bases its hedging on expected net currency cash flows and does not
designate its currency contracts as hedges of specific balance sheet items or
firm currency commitments, it does not achieve hedge accounting treatment.
Accordingly, all exchange contracts are marked to market each period end and
recognized as Other income (expense).
Fair Value of Financial Instruments
Pursuant to Financial Accounting Standard No. 107, "Disclosures about Fair
Value of Financial Instruments", the carrying amount of cash, trade receivables
and payables approximates fair value because of the short maturity of
those instruments. The carrying value of the Company's long-term debt is
considered to approximate the fair value of these instruments based on the
borrowing rates currently available to the Company for loans with similar
terms and maturities.
The fair value of derivatives, which is equal to their carrying amount,
generally reflects the estimated amounts that the Company would receive or
pay to terminate the contracts at year end, thereby taking into account the
current unrealized gains or losses of open contracts. Market quotes are
available for all of the Company's derivative financial instruments.
-24-<PAGE>
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Page 4
Note 3 - Summary of Significant Accounting Policies (cont'd)
Foreign Currency Translation
Foreign currency translation of substantially all assets and liabilities of
non-U.S. affiliates is computed using period end currency exchange rates;
equity is translated utilizing historical rates. Income and expenses are
tranlated using average exchange rates for the period. For subsidiaries whose
business activities are based mainly on the U.S. dollar or who operate in a
"highly inflationary economy", the financial statements are remeasured into
U.S. dollars using: (1) current exchange rates at the balance sheet date for
all liabilities and current assets except inventories and prepaid expenses,
(2) exchange rates at the time of acquisition for prepaid expenses, inven-
tories and properties, and (3) weighted average monthly exchange rates for
the year for income and expense amounts, except depreciation and cost of
goods sold. The resulting translation gains and losses are included in
income.
The dollar is the functional currency for the U.S., Canadian and Brazilian
subsidiaries. For all other subsidiaries, the local currency of the country
in which the subsidiary operates and transacts its principal business is the
relevant functional currency. Such countries include Sweden, Germany, Great
Britain, France and Spain.
Exchange (gains) and losses included in the Consolidated Statement of
Operations were $(3.0), $18.8 and $15.9 in 1994, 1993 and 1992, respectively.
Reclassifications
Certain reclassifications have been made for all years presented in the
Consolidated Financial Statements to conform to the classifications adopted
in 1994.
Note 4 - Acquisitions and Dispositions
On January 1, 1994, the Company increased its holding in Zettelmeyer
Baumaschinen GmbH (Zettelmeyer) to 100% by acquiring the remaining 30%
minority interest for $39.9. The fair value of the assets acquired and
obligations assumed approximated their net book values; accordingly, the
additional purchase consideration was charged principally to goodwill.
During 1993, the Company contributed stock and the book value of specific
assets and liabilities in return for an 80.5% ownership interest in a company
established as a joint venture with Hitachi Construction Machinery Company,
Ltd (HCMC). HCMC contributed cash equal to 19.5% of the total net assets. The
joint venture company, Euclid-Hitachi Heavy Equipment, Inc (Euclid-Hitachi),
is consolidated in the Company's financial statements. HCMC will increase its
ownership interest in Euclid-Hitachi by purchasing additional shares from the
Company and subscribing for new shares of Euclid-Hitachi prior to December
31, 1996. The terms of the joint venture agreement limit HCMC to an ownership
interest of less than 50% in Euclid-Hitachi.
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Page 5
Note 5 - Statement of Cash Flows
VME considers all highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents.
The following payments were made for:
Year Ended December 31,
1994 1993 1992
Interest $ 18.4 $ 35.2 $ 63.7
Income taxes 9.1 6.3 6.4
Note 6 - Supplementary Information to Statement of Operations
Costs and expenses include :
Year Ended December 31,
1994 1993 1992
Research and development $ 49.3 $ 38.5 $ 59.9
Maintenance and repairs 26.3 21.8 28.0
Other Income (expense) includes :
1994 1993 1992
Exchange gains (losses) $ 10.0 $ (0.9) $ (11.3)
Gain (loss) on sales of assets 1.1 (0.3) 5.3
Other 1.5 (4.1) (0.6)
$ 12.6 $ (5.3) $ (6.6)
====== ====== =======
A charge in 1992 for restructuring costs of $18.7 has been made in costs and
expenses relating to the decision to restructure the Group's distribution
organization and production facilities in North America, to improve cost
efficiency and increase the manufacturing productivity and to relocate the
German distribution company. The remaining restructuring reserve relating to
these activities was $4.3 and $5.9 at year end 1994 and 1993, respectively. The
restructuring reserve relating to Akermans Verkstad AB aggregated $1.3 and $1.4
at year end 1994 and 1993, respectively.
Note 7 - Distributor Financing Arrangements
As a service to distributors in selected geographic areas, the Company
has financing agreements with certain financial institutions to assist in the
financing of distributor inventory. In general, these agreements require the
Company to make monthly interest payments to the financial institutions for a
predetermined period or until the inventory is sold by the distributor,
whichever occurs first.
Financing expenses incurred in conjunction with the above agreements were $8.7,
$5.7 and $5.5 in 1994, 1993 and 1992, respectively, and were reflected in
selling expenses. The interest rates charged on the above agreements are
adjusted based on changes in the prime rate. The financial institutions'
aggregate distributor receivable balances were $182.8 and $142.2 at December 31,
1994 and 1993, respectively. The Company's credit risk with respect to these
receivable balances is not significant.
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<PAGE> Page 6
Note 8 - Income Taxes
The provision for income taxes is based on separate tax computations for each
entity. Income (loss) before income taxes and minority interests is reported
below:
Year Ended December 31,
1994 1993 1992
Netherlands $ 0.9 $ 0.1 $ 0.7
U.S. 15.4 4.1 (16.0)
Other, principally Sweden 183.4 34.1 (98.0)
$ 199.7 $ 38.3 $(113.3)
======= ======= =======
The provision (benefit) for income taxes consists of the following:
Year Ended December 31,
Current tax expense: 1994 1993 1992
Netherlands - - -
U.S. 3.8 7.9 -
Other, principally Sweden 56.1 8.2 13.2
59.9 16.1 13.2
Deferred tax expense (benefit):
Netherlands - - -
U.S. 4.6 (1.5) -
Other, principally Sweden 2.0 3.3 (36.6)
6.6 1.8 (36.6)
_______ _______ _______
Total income tax expense (benefit) $ 66.5 $ 17.9 $ (23.4)
======= ======= =======
Tax legislation in Sweden and certain other countries allows companies to
reduce their current taxable income through allocations to untaxed reserves
at which time, deferred tax provisions are recorded. Reversal of such
reserves generates current taxable income and a reduction of the deferred tax
liabilities. Deferred income taxes apply to temporary differences primarily
resulting from allocations to untaxed reserves (principally inventory and
fixed assets related) and other differences between income before income
taxes for financial reporting and tax purposes. Deferred tax benefits in 1992
are mainly comprised of the reversal of untaxed reserves of $21.6 and sale
and lease-back of property in the amount of $13.3.
Following is a reconciliation of income tax expense (benefit) from the U.S.
statutory rate to the effective tax rate (the U.S. statutory rate is utilized
as the Netherlands holding company does not generate significant taxable
income) :
Year Ended December 31,
1994 1993 1992
Provision (benefit) for taxes at
US statutory rate $ 69.9 $ 13.1 $ (38.5)
Effect of permanent differences
between tax and financial income (1.6) 2.0 (0.5)
Losses with no available tax benefits 1.2 2.0 17.6
Earnings taxed at other than U.S. rate (11.1) 0.1 (6.1)
Change in valuation allowance resulting
from utilization of net operating
loss carryforwards (2.2) (7.5) -
Accrual for potential disallowances 11.0 8.3 1.1
Other (0.7) (0.1) 3.0
Provision (benefit) for taxes at
effective tax rate $ 66.5 $ 17.9 $ (23.4)
======== ======== =======
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Page 7
Note 8 - Income Taxes (continued)
Deferred tax assets and liabilities are comprised of the following:
1994 1993
Deferred tax assets relating to :
Accounts receivable $ 0.5 $ 0.3
Inventories 6.7 6.0
Fixed assets 8.3 8.0
Pension and postretirement benefits 11.1 14.7
Expense accruals and reserves 13.7 11.5
Net operating loss and credit carryforwards 14.4 17.0
Other 6.1 5.0
Total deferred tax assets before
valuation allowance 60.8 62.5
Deferred tax assets valuation allowance (27.2) (31.0)
Net tax asset $ 33.6 $ 31.5
====== ======
Deferred tax liabilties relating to :
Accounts receivable $ 0.1 $ -
Inventories 7.7 8.0
Fixed assets 13.0 12.7
Pensions 7.6 5.2
Other 11.9 5.2
Gross deferred tax liabilities $ 40.3 $ 31.1
====== ======
Euclid-Hitachi's Canadian subsidiary has $16 of loss carryforwards, which
expire in 1998, available to reduce future taxable income. In addition, for
Canadian income tax purposes, this subsidiary has available certain
depreciation allowances aggregating $5.7, which may be utilized to reduce future
taxable income in succeeding years. The amount of such depreciation allowance
that may be deducted in any one specific year is subject to certain limitations.
The Company's Brazilian subsidiary has $1.9 in tax credits that can be offset
against future income up to 1998.
Other subsidiaries in the Company have $6.9 of operating loss carryforwards
available to offset future taxable income, most of which expire in the years
1996 through 1998.
Note 9 - Receivables
December 31,
Receivables consist of the following: 1994 1993
Notes receivable - trade $ 24.5 $ 12.4
Trade receivables 196.2 158.8
Other receivables 6.1 6.9
Less: Allowance for doubtful accounts (13.8) (10.2)
$ 213.0 $ 167.9
======= =======
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Page 8
Note 10 - Inventories
December 31,
Inventories consist of the following: 1994 1993
Sales products $ 198.9 $ 187.3
Work in process 80.7 57.4
Raw materials 73.0 59.5
Reserves (32.9) (33.0)
$ 319.7 $ 271.2
======= =======
FIFO values of U.S. inventories exceeded LIFO values by $6.8 in 1994 and $6.9
in 1993. Inventories valued using the LIFO method comprised 20% and 17% of
consolidated inventories in 1994 and 1993, respectively.
Note 11 - Property, Plant and Equipment
Property, plant and equipment consist of the following:
December 31, 1994
Accumulated Net
Cost Depreciation Book Value
Land and land improvements $ 16.1 $ 4.8 $ 11.3
Buildings 120.3 48.5 71.8
Machinery and equipment 260.4 184.6 75.8
$ 396.8 $ 237.9 $ 158.9
======= ======= =======
December 31, 1993
Accumulated Net
Cost Depreciation Book Value
Land and land improvements $ 14.6 $ 4.1 $ 10.5
Buildings 110.7 41.2 69.5
Machinery and equipment 234.7 161.9 72.8
$ 360.0 $ 207.2 $ 152.8
======= ======= =======
Depreciation expense, including amortization on capitalized leases, was
$27.8, $29.1 and $39.6 for the years 1994, 1993 and 1992, respectively.
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Page 9
Note 12 - Short-term Debt
Short-term debt consists of the following:
December 31, 1994
Line of
Interest Credit Amount
Currencies Rate * Available Outstanding
North America - $ 2.5 $ -
Europe USD,FRF,ESP,DEM 7.37% 103.3 8.2
Brazil USD 11.88% 28.0 8.3
Australia - 5.5 -
$ 139.3 $ 16.5
======= =======
December 31, 1993
Line of
Interest Credit Amount
Currencies Rate * Available Outstanding
Europe DEM,USD,ESP,FRF 6.84% $ 83.1 $ 43.6
Brazil USD 8.06% 21.7 5.1
Australia AUD 5.85% 5.5 3.5
$ 110.3 $ 52.2
======= =======
* Represents weighted average year-end rates.
The line of credit arrangements require payment of variable interest rates and
commitment fees ranging from zero to 0.75% per year of the individual line of
credit.
Note 13 - Other Current Liabilities
Other current liabilities consist of the December 31,
following: 1994 1993
Salaries, wages and other employee costs $ 67.1 $ 50.7
Warranty obligations 35.1 28.7
Dealer discounts 5.8 5.4
Income taxes 71.1 18.1
Accrued expenses and deferred income 40.7 21.9
Other 22.3 27.3
$ 242.1 $ 152.1
======= =======
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Page 10
Note 14 - Long-Term Debt
December 31,
The following is a summary of long-term debt: 1994 1993
Swedish Kronor Bank notes with fixed and
variable interest rates ranging
from 6.8% to 13.2% payable in annual
installments over a ten-year period $ 5.0 $ 5.6
Revolving Multi Currency Credit Agreement
of $250.0 with variable interest rates
ranging from 6.1% to 8.9% and for
a term of three years - 44.1
Credit Facility Agreement with a German
bank of DEM 45.0 with an interest
rate of 10.6% and for a term of
three years - 26.0
Capital lease obligations in various
currencies with fixed and variable
interest rates ranging from 6.8%
to 11.8% payable through 2035 14.9 14.4
Financing obligation in Swedish Kronor
under sale leaseback transaction to be
repaid over 20 years ending August, 2012
bearing interest fixed at 10.05%
through 1998 42.9 41.3
Total 62.8 131.4
Less: Current portion of long-term debt (8.3) (4.3)
Total long-term debt $ 54.5 $ 127.1
======= =======
The Company leases buildings, land and equipment under capital lease and
financing arrangements. The related net assets of $27.4 and $26.6 in 1994 and
1993, respectively, are recorded in property, plant and equipment.
Long-term debt at December 31, 1994 matures as follows:
1995 $ 8.3
1996 4.9
1997 5.0
1998 5.0
1999 5.1
Thereafter 34.5
$ 62.8
=======
On December 22, 1994, the Company signed an unsecured $150 multicurrency
revolving credit agreement with a group of banks for a term of five years.
Borrowings on this facility will bear interest in a range from LIBOR +0.5% to
LIBOR +0.9%. The Company is subject to leverage and cash flow covenants under
this facility. In addtion, the Company is obligated to pay a commitment fee
ranging from 0.25% to 0.45% on the undrawn and uncancelled amount of the
facility. Concurrently, the Company cancelled the $250 revolving credit facility
signed on February 22, 1993 and received release of assets pledged as security
to this agreement.
On December 30, 1994, the Company paid and cancelled the DEM 45 credit facility
agreement and thereby obtained release of the pledged shares in Zettelmeyer
Baumaschinen GmbH.
-31-<PAGE>
<PAGE>
Page 11
Note 15 - Shareholders' loans
Shareholders' loans totalling $70.0 with a term of three years were made by the
shareholders to the Company at the end of 1992. The loans were subordinated to
the $250.0 Revolving Credit Facility agreement and the DEM 45.0 Credit Facility
agreement until 1994, at which time they were no longer subordinated. The loans
bear interest of LIBOR plus 1.3% per annum and are due January 31, 1996.
Note 16 - Leases and Commitments
The Company incurred rent expense of $ 20.1, $17.0 and $22.7 in 1994, 1993 and
1992, respectively. Future minimum rental commitments under noncancellable
operating leases at December 31, 1994 are as follows:
1995 $ 20.4
1996 16.5
1997 13.0
1998 6.5
1999 5.9
Thereafter 36.8
The Company rents equipment to others under operating lease agreements. In
1994, 1993 and 1992, the Company received rental income of $14.1, $11.9 and
$9.5, respectively. The net book value of property leased to others aggregated
$17.6 and $15.4 at December 31, 1994 and December 31, 1993, respectively.
Future minimum rental income under noncancellable operating leases at December
31, 1994 is as follows:
1995 $ 10.0
1996 1.4
1997 0.8
1998 0.5
1999 0.3
Thereafter 3.3
Note 17 - Derivative Financial Instruments and Risk Management
The Company operates internationally, giving rise to significant exposure to
fluctuations in currency exchange rates. Derivative financial instruments are
utilized by the Company to reduce those risks. The Company does not hold or
issue financial instruments for trading purposes.
Counterparty credit risk
The risk associated with counterparty default on financial instruments is
measured as the cost of replacing, at prevailing market prices, those contracts
with a fair value in excess of their contractual amount at period end. The
counterparties to the financial instruments listed below are major international
financial institutions with high credit ratings. Accordingly, the Company
believes its credit risk exposure to be insignificant.
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<PAGE>
Page 12
Note 17 - Derivative Financial Instruments and Risk Management (cont'd)
Currency risk management
The Company enters into various types of financial instruments in managing its
currency exchange risk, as indicated in the following table :
December 31, 1994 December 31, 1993
Contract Fair Contract Fair
Amount Value Amount Value
Forward exchange contracts $ 232.6 $ 3.6 $ 205.0 $ 2.0
Currency options 305.5 10.3 56.0 -
Currency swap contracts 135.6 (2.0) 53.4 0.9
See Note 3, "Summary of Significant Accounting Policies - Fair Value of
Financial Instruments" for definition of fair value. Positive carrying amounts
represent assets which are recorded in other current assets. Negative carrying
amounts represent liabilities which are recorded in other current liabilities.
There are no deferred gains or losses on the contracts, all of which expire in
the next year. The net unrealized currency gain recognized was $1.8 and $2.9 in
1994 and 1993, respectively.
Note 18 - Pensions
The total pension expense charged to operations for 1994, 1993 and 1992 was
$38.0, $33.8 and $47.8, respectively.
In Sweden, most of the plans are administered by governmental or
quasi-governmental organizations. Such plans are accounted for in accordance
with Financial Accounting Standard No. 87 (FAS 87). In Sweden, the Company
accrues pension costs, but is only required to fund a portion of these costs.
Annual pension costs include an interest factor on the unfunded obligations.
Actuarial information, as supplied by the governmental agency for the plans
they administer, indicates that the accrued pension costs approximate the
actuarially computed value of vested and non-vested plan benefits.
Pension expense for the defined contribution plans, principally Swedish, was
$28.1, $24.9 and $37.3 in 1994, 1993 and 1992, respectively. Certain employees
are also covered by insured plans which supplement the benefits received from
the defined contribution plans.
In the United States, Canada and for certain employee groups in Europe,
principally Sweden, employees are covered by defined benefit plans.
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<PAGE>
Page 13
Note 18 - Pensions (continued)
U.S. and European (Principally Swedish) Plans
Net periodic pension cost on defined benefit plans consists of the following:
Year ended December 31,
1994 1993 1992
Europe U.S. Europe U.S. Europe U.S.
Service cost - benefits earned
during the period $ 1.1 $ 0.9 $ 0.8 $ 1.0 $ 1.1 $ 0.9
Interest cost on projected
benefit obligation 4.4 8.1 5.3 8.3 6.6 8.3
Actual return on plan assets - 0.6 - (5.0) - (3.2)
Net amortization and deferral (0.7) (4.3) (0.6) (0.1) (0.7) (2.0)
$ 4.8 $ 5.3 $ 5.5 $ 4.2 $ 7.0 $ 4.0
===== ====== ====== ===== ====== ======
Assumptions used to develop the net periodic pension cost at the beginning of
each year were as follows:
Year ended December 31,
1994 1993 1992
Europe U.S. Europe U.S. Europe U.S.
Discount rate 10.0% 7.5% 10.0% 8.5% 10.0% 8.5%
Long term rate
of return on plan assets - 9.1 - 9.1 - 9.1
Rate of increase in compensation
levels 4.5 4.0 4.5 4.0 6.0 5.5
The following table sets forth the discount rates and funded
status of these plans at:
Year ended December 31,
1994 1993
Europe U.S. Europe U.S.
Weighted average discount rate used in
determining the
benefit obligations below : 8.5% 8.7% 10.0% 7.5%
==== ==== ===== ====
Actuarial present value of accumulated
benefit obligation:
Vested benefits $ 43.8 $ 94.7 $ 47.0 $ 99.8
Non-vested benefits - 3.7 - 5.3
Accumulated benefit obligation $ 43.8 $ 98.4 $ 47.0 $105.1
====== ====== ====== ======
Projected benefit obligation $(47.2)$(101.1) $(47.4)$(109.1)
Plan assets at fair value - 75.8 - 69.7
Projected benefit obligation in
excess of plan assets (47.2) (25.3) (47.4) (39.4)
Unrecognized net loss from actuarial
experiences - 26.7 - 29.0
Unrecognized prior service cost - 0.1 - 0.1
Unamortized net(asset) liability existing
at date of adoption of FAS 87 (5.5) 5.0 (5.5) 5.5
Liabilities for other plans (2.3) - (3.8) -
Adjustment required to recognize
minimum liability - (29.1) - (30.6)
Total pension liability (55.0) (22.6) (56.7) (35.4)
Less: current portion - 19.0 - 11.2
Total long-term pension liability $(55.0) $ (3.6) $(56.7) $(24.2)
====== ======= ======= =======
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<PAGE>
<PAGE>
Page 14
Note 18 - Pensions (continued)
Canadian Plans
Net periodic pension income included the following :
Year ended December 31,
1994 1993 1992
Service cost - benefits earned during
the period $ 0.3 $ 0.2 $ 0.3
Interest cost on projected benefit
obligation 0.5 0.3 1.0
Actual return on plan assets (0.8) (1.1) (1.5)
Net amortization and deferral (0.2) (0.2) (0.3)
Net periodic pension income $ (0.2) $ (0.8) $ (0.5)
======= ======= =======
Assumptions used to develop the net periodic pension income at the beginning of
each year were as follows :
1994 1993 1992
Discount rate 7.5% 9.5% 9.5%
Long-term rate of return on plan assets 7.5% 9.5% 9.5%
Rate of increase in compensation levels 4.0% 5.5% 5.5%
The following table sets forth the Plans' funded status at:
December 31,
Actuarial present value of accumulated 1994 1993
benefit obligation :
Vested benefits $ 5.3 $ 4.4
Non-vested benefits 0.4 0.3
Accumulated benefit obligation $ 5.7 $ 4.7
====== ======
Projected benefit obligation $ (6.0) $ (4.9)
Plan assets at fair value 10.7 8.2
Plan assets in excess of projected
benefit obligation 4.7 3.3
Unrecognized net gain from actuarial
experiences (2.3) (1.7)
Unrecognized prior service cost 0.9 0.7
Unamortized net asset existing at date
of adoption of FAS 87 (0.9) (0.8)
Prepaid pension asset $ 2.4 $ 1.5
====== ======
Other Plans
Certain subsidiaries' pension plans and postretirement benefits are funded by
a government-administered program. Contributions to the defined contribution
pension plans are based on payroll costs and have been fully provided for
through December 31, 1994.
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<PAGE>
<PAGE> Page 15
Note 19 - Postretirement and Postemployment Benefits
The Company adopted Statement of Financial Accounting Standard No. 106
"Employers Accounting for Postretirement Benefits Other Than Pensions" effective
January 1, 1993. This statement requires the Company to recognize, during the
working career of those employees who could become eligible for such benefits,
the estimated cost of providing certain postretirement benefit costs (other than
pensions) for those employees when they retire.
The Company and its subsidiaries provide certain health care and life insurance
benefits for its U.S. retired employees. Substantially all of the Company's U.S.
employees may become eligible for those benefits if they reach normal retirement
age while still working for the Company. Those benefits and similar benefits for
active employees are provided through an insurance company whose premiums are
based on the benefits paid during the year. The total postretirement health care
and life insurance expense charged to income was $11.7, $12.1 and $6.7 in 1994,
1993 and 1992, respectively.
Annual net postretirement benefit costs under the Company's benefit plan are
determined on an actuarial basis. The Company's current policy is to pay these
benefits as they become due. The Company has elected to recognize the transition
obligation of $84.9 over a 20-year period.
Net periodic postretirement benefit cost consists
of the following :
1994 1993
Service cost $ 0.7 $ 0.7
Interest cost on projected benefit obligations 6.8 7.1
Amortization of transition obligation 4.2 4.3
Total net periodic pension cost $ 11.7 $ 12.1
======= =======
The accumulated postretirement benefit obligation
is comprised as follows:
Retired participants $ 70.3 $ 79.3
Fully eligible active plan participants 4.9 6.5
Other active plan participants 7.5 11.6
Total accumulated postretirement benefit
obligation $ 82.7 $ 97.4
Unrecognized gain (loss) 5.1 (11.2)
Unrecognized transition obligation (76.4) (80.6)
Accrued postretirement benefit cost other
than pensions $ 11.4 $ 5.6
====== =======
The discount rate used in determining the accumulated benefit obligation was
8.8%. The assumed health care cost trend rates result in per capita net incurred
medical claims increasing 11% under age 65 and 9% over age 65. These rates
decrease to 7% for both over and under age 65 by the year 2005. If the assumed
health care cost trend rate were increased by 1%, the accumulated postretirement
benefit obligation as of December 31, 1994, would increase $10.4.
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<PAGE>
Page 16
Note 19 - Postretirement and Postemployment Benefits (continued)
In November 1992, the Financial Accounting Standards Board issued Statement of
Financial Accouting Standard No. 112 "Employers' Accounting for Postemployment
Benefits". This statement establishes accounting standards for employers who
provide benefits such as supplemental unemployment compensation, severance
benefits, salary continuation and other benefits to former or inactive employees
after employment but before retirement.
The Company adopted this statement effective January 1, 1994 and recognized a
liability of $0.5 for the year ended December 31, 1994.
Note 20 - Shareholders' Equity
VME Group N.V. acquired from AB Volvo and Clark Equipment Company all
outstanding shares in VMEA and VMEHS on December 22, 1993 in exchange for newly
issued shares in VME Group N.V. Shares of common stock in the amount of 250,000
were reflected as if outstanding for all periods reported.
Dividends are declared and paid in Dutch guilders. With the approval of the
Supervisory Board, the Managing Board may determine that distributions be made
payable in another currency.
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<PAGE>
Page 17
Note 20 - Shareholders' Equity (continued)
<TABLE>
Changes in Shareholders' equity are as follows:
<CAPTION>
Retained Cumulative
Common Paid-In Earnings Tranlation Pension
Stock Capital (Deficit) Adjustments Adjustments Total
<S> <C> <C> <C> <C> <C> <C>
January 1, 1992 $129.0 $ 50.9 $ 29.4 $ 48.4 $ (4.6) $253.1
Capital contribution - 30.0 - - - 30.0
Pension liability
in excess of
unrecognized prior
service cost - - - - (7.4) (7.4)
Net loss - - (93.6) - - (93.6)
Cumulative
Translation
Adjustment - - - (27.3) - (27.3)
December 31, 1992 $129.0 $ 80.9 $(64.2) $ 21.1 $(12.0) $154.8
Pension liability
in excess of
unrecognized prior
service cost - - - - (12.3) (12.3)
Net income - - 30.0 - - 30.0
Cumulative
Translation
Adjustment - - - (14.1) - (14.1)
December 31, 1993 $129.0 $ 80.9 $(34.2) $ 7.0 $(24.3) $158.4
Pension liability
in excess of
unrecognized prior
service cost - - - - 0.8 0.8
Net income - - 132.1 - - 132.1
Cumulative
Translation
Adjustment - - - 19.1 - 19.1
December 31, 1994 $129.0 $ 80.9 $ 97.9 $ 26.1 $(23.5) $310.4
====== ====== ====== ====== ====== ======
<FN>
The capital contribution in 1992 of $30.0 was equally contributed by the two shareholders.
-38-
/TABLE
<PAGE>
<PAGE>
Page 18
Note 21 - Contingencies
The Company is engaged in a number of legal preceedings arising in the ordinary
course of business. Of these claims and lawsuits, some involve claims for
damages for injury, death or property damage arising from alleged defects in
products of the Company or products of Clark Equipment Company or its
subsidiaries for which the Company assumed responsibility at the time of its
formation. Most of the product-related cases are in varying stages of pretrial
completion.
The ultimate results of these claims and lawsuits at December 31, 1994, is not
determinable, but in the opinion of the management any ultimate loss resulting
therefrom will not materially affect the financial position or results of
operations of the Company.
The U.S. Internal Revenue Service (IRS) has completed its examination of VMEA's
federal income tax returns for the years 1988-1991. An examination report which
proposed substantial adjustments was issued by IRS in April 1994. During 1994,
the Company submitted its protest in challenge to the IRS report. Issues which
may give rise to examination adjustments include a worthless stock deduction,
acquired inventories and imputed interest on advances to subsidiaries. In addi-
tion, the Company has received notice of proposed tax adjustments from the
Belgian and Swedish tax authorities. If all of the proposed adjustments were
resolved unfavorably to the Company, the Company has estimated its total
liability with interest and penalties would be approximately $50. Management
believes that the ultimate outcome of those proposed adjustments will not have
a material adverse effect on the financial position or results of operations of
the Company.
The Company has agreements with selected distributors and customers to
repurchase a limited volume of parts at pre-established prices and conditions.
The liability for parts return was $6.9 and $5.6 at December 31, 1994 and 1993,
respectively, and is included in other current liabilities. The Company is also
obligated, under certain conditions, to repurchase some dealer or customer
inventory and rental assets funded by financial institutions aggregating $12.0
at December 31, 1994. In the opinion of management, adequate provisions have
been made for costs which might be incurred in connection with the agreements.
The Company has guaranteed secured obligations of others and discounted notes
with recourse in an aggregate amount of $65.6 at December 31, 1994.
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<PAGE>
<PAGE>
Page 19
Note 22 - Segment Information
The Company operates in one industry segment, the manufacturing and marketing
of construction equipment and related parts. Intersegment geographic sales to
affiliated companies are invoiced at prices estimated to represent fair
market value to the affiliated company performing further manufacturing or
distribution activities. Following is financial information by geographic
segment:
North
Europe America Other Elimin. Total
Sales
Year ended December 31, 1994
Sales to unaffiliated
customers $1,001.2 $ 429.8 $ 135.0$ - $1,566.0
Intersegment sales 300.9 49.0 0.7 (350.6) -
$1,302.1 $ 478.8 $ 135.7$(350.6) $1,566.0
======== ======= ====== ======= ========
Year ended December 31, 1993
Sales to unaffiliated
customers $ 807.2 $ 327.6 $ 104.5$ - $1,239.3
Intersegment sales 185.9 61.1 0.5 (247.5) -
$ 993.1 $ 388.7 $ 105.0$(247.5) $1,239.3
======= ======= ====== ======= ========
Year ended December 31, 1992
Sales to unaffiliated
customers $ 936.4 $ 330.4 $ 90.5$ - $1,357.3
Intersegment sales 127.3 56.7 4.1 (188.1) -
$1,063.7 $ 387.1 $ 94.6$(188.1) $1,357.3
======== ======= ====== ======= ========
North
Europe America Other Total
Income before taxes and effect
of change in accounting
Year ended December 31, 1994 $ 169.8 $ 17.5 $ 11.3 $ 198.6
Year ended December 31, 1993 29.5 8.7 (2.6) 35.6
Year ended December 31, 1992 (68.3) (37.0) (11.7) (117.0)
North
Europe America Other Elimin. Total
Identifiable assets
Year ended December 31, 1994 $1,177.2 $ 212.6 $ 65.1$(501.8) $953.1
Year ended December 31, 1993 990.5 196.6 50.1 (458.9) 778.3
Year ended December 31, 1992 1,042.8 209.4 58.4 (340.7) 969.9
-40-
<PAGE>
<PAGE> Page 20
Note 23 - Related Party Transactions
The following is a summary of related party transactions:
AB Volvo and Clark and
Subsidiaries Subsidiaries
1994 VME Transactions
Sales $ 30 $ -
Purchased materials 62 10
Parts distribution service fee - 8
Other expense 7 1
Interest expense 2 2
1994 VME Balances
Accounts receivable 5 -
Accounts payable 6 -
1993 VME Transactions
Sales $ 20 $ -
Purchased materials 39 19
Parts distribution service fee - 7
Other expense 10 1
Interest expense 2 2
1993 VME Balances
Accounts receivable 6 1
Accounts payable 2 -
1992 VME Transactions
Sales $ 18 $ 2
Purchased materials 51 23
Parts distribution service fee - 9
Other expense 13 -
1992 VME Balances
Accounts receivable 2 1
Accounts payable 2 2
Note 24 - Subsequent events
On March 6, 1995, AB Volvo and Clark Equipment Company announced an agreement
whereby Volvo will purchase Clark's 50 percent shareholding in the Company.
Approval from the EU commission and Canadian authorities are a prerequisite
for the acquisition and the objective is that the acquisition will become
effective on March 31, 1995. The Company will thereafter be a fully owned
subsidiary of Volvo.
-41-
<PAGE>
<PAGE>
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors
of VME Group N.V.
Our audits of the consolidated financial statements referred to in our
report dated February 27, 1995, except as to Note 24, which is as of
March 6, 1995 appearing in the 1994 consolidated financial statements of
VME Group N.V. (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included
an audit of the Financial Statement Schedule listed in Item 14(a) of this
Form 10-K. In our opinion, this Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Cleveland, Ohio
February 27, 1995, except
as to Note 24, which is as of
March 6, 1995
-42-
<PAGE>
<PAGE>
<TABLE>
SCHEDULE II
VME GROUP N.V.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<CAPTION>
Balance at Charged to
Beginning of Cost and Other Balance at
Description Period Expenses Add (Deduct) End of Period
Year ended December 31, 1994:
<S> <C> <C> <C> <C>
Allowance for doubtful accounts $ 10.2 $ 4.1 $ 0.9 * $ 13.8
(1.4) **
Year ended December 31, 1993:
Allowance for doubtful accounts $ 12.2 $ 2.4 $ (1.4) * $ 10.2
(3.0) **
Year ended December 31, 1992:
Allowance for doutbful accounts $ 15.4 $ (0.3) $ (2.3) * $ 12.2
(0.6) **
<FN>
* Primarily represents translation adjustments
** Write-offs and disposals
-43-
</TABLE>
<PAGE>
<PAGE>
KPMG Bohlins
KPMG Bohlins AB Mail Address Telephone +46(31)614800
Norra Hamngatan 22 P.O. Box 11908 Telefax +46(31)152655
Gothenburg S-404 39 Gothenburg Telex 21762BJGS
Sweden Sweden Corporate identity number
556043-4465
Independent Auditor's Report
To the Board of Directors of VME Holding Sweden AB:
We have audited the consolidated balance sheets of VME Holding Sweden AB
and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of income (loss) and cash flows for each of the
years in the three year period ended December 31, 1994 (expressed in U.S.
dollars and not presented separately herein). In connection with our audit
of the aforementioned consolidated financial statements, we also audited
the related consolidated financial statement schedule II, (expressed in
U.S. dollars and not presented separately herein). These consolidated
financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in Sweden which are similar in all material respects with
auditing standards in the United States. 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
included 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.
The consolidated financial statements and financial statement schedule have
been translated in accordance with the standards set forth in Statement of
Financial Accounting Standards No. 52 from Swedish Kronor (the currency of
the country where VME Holding Sweden AB is incorporated and in which it
operates) into U.S. dollars for purposes of inclusion in the consolidated
financial statements of VME Group N.V.
In our opinion, for purposes of inclusion in the consolidated financial
statements of VME Group N.V., the translated financial statements present
fairly, in all material respects, the consolidated financial position of
VME Holding Sweden AB and subsidiaries at December 31, 1994 and 1993 and
the consolidated results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1994 in conformity
with generally accepted accounting principles in the United States. Also,
-44-<PAGE>
<PAGE>
in our opinion, the related consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements,
presents fairly in all material respects the information shown therein.
Gothenburg, Sweden
February 27, 1995
/s/ KPMG Bohlins AB
KPMG Bohlins AB
Head Office Mail address Tel +46+8+7239100
Member Firm of Tegelbacken 4, P.O. Box 16106 Fax +46+8+105258
Klynveld Peat Marwick Stockholm S-103 23 Stockholm
Goerdeler Sweden Sweden
-45-<PAGE>
<PAGE>
EXHIBIT LIST AND INDEX
Filed Herewith Unless
Exhibit Description Otherwise Indicated
(2)(a) Underwriting Agreement Incorporated by reference
dated May 6, 1994 among to Exhibit (2)(a) to
Automotive Products Company, Registrant's Form 8-K
Clark Automotive Products filed on May 27, 1994
Corporation, and Clark with respect to
Equipment Company and CS Registrant's disposition
First Boston Corporation of Clark Automotive
and Merrill, Lynch, Pierce, Products Corporation
Fenner & Smith Incorporated
as representatives of the
Underwriters
(2)(b) Subscription Agreement dated Incorporated by reference
May 6, 1994 among Automotive to Exhibit (2)(b) to
Products Company, Clark Registrant's Form 8-K
Automotive Products Corporation, filed on May 27, 1994
Clark Equipment Company, CS with respect to
First Boston Limited, Merrill Registrant's disposition
Lynch International Limited, ABN of Clark Automotive
AMRO Bank N.V., Banque Bruxelles Products Corporation
Lambert S.A., Cazenove & Co.,
Dresdner Bank Aktiengesellschaft
and UBS Limited
(2)(c) Agreement of Purchase and Sale Incorporated by reference
dated April 20, 1994 between to Exhibit (2) to
Clark Equipment Company and Registrant's Form 8-K
White Consolidated Industries filed on May 27, 1994
Inc. with respect to
Registrant's acquisition
of Blaw-Knox Construction
Equipment Corporation
(2)(d) Agreement and Plan of Merger Incorporated by reference
dated as of February 3, 1995 by and to Exhibit (c)(1) to the
among Clark Equipment Company, Clark Registrant's Schedule
Acquisition Sub, Inc. and Club Car, 14D-1 and Schedule 13D
Inc. dated February 8, 1995
(2)(e) Stock Purchase Agreement dated as ---
of March 5, 1995 by and among
Aktiebolaget Volvo, Clark Equipment
Company and Clark Hurth Components
Marketing Company
(3)(a) Restated Certificate of Incorporated by reference
Incorporation to Exhibit (3)(a) to
Registrant's Form 10-K
for the year 1992
-46-
<PAGE>
<PAGE>
Filed Herewith Unless
Exhibit Description Otherwise Indicated
(3)(b) By-laws, as amended ---
(3)(c) Amended and Restated Rights Incorporated by reference
Agreement, dated as of to Exhibit (3)(c) to
August 14, 1990 between Registrant's Form 10-Q
Clark Equipment Company and for the period ended
Harris Trust and Savings Bank September 30, 1990
(4)(a) Indenture dated as of August 1, Incorporated by reference
1983 between Clark Equipment to Exhibit (4)(a) to
Company and Harris Trust and Registrant's Form 10-K
Savings Bank as trustee, as to for the year 1992
which Pittsburgh National Bank
is successor trustee, as
supplemented by a First
Supplemental Indenture dated as
of February 1, 1991 and a
Second Supplemental Indenture
dated as of April 1, 1993
(4)(b) Specimen form of 9-3/4% Note Incorporated by reference
issued pursuant to Exhibit to Exhibit (4)(b) to
(4)(a) Registrant's Form 10-K
for the year 1992
(4)(c) Master Credit Agreement with ---
Chemical Bank, as Agent,
dated as of April 6, 1994
(4)(d) Amendment No. 1 dated ---
February 21, 1995 to Master
Credit Agreement with
Chemical Bank, as Agent,
dated as of April 6, 1994
(4)(e) Registrant is a party to several Pursuant to paragraph
other long term debt agreements (4)(iii)(A) of Item
under which, in each case, the 601(b) of Regulation
total amount of securities S-K, Registrant agrees
authorized does not exceed 10% to furnish a copy of
of the assets of Registrant and these instruments to
its consolidated subsidiaries the Securities and
Exchange Commission
upon request
(10)(a) Employment contract with Leo Incorporated by reference
J. McKernan, Chairman, President to Exhibit (10)(a) to
and Chief Executive Officer, Registrant's Form 10-K
dated November 12, 1992 for the year 1992
(10)(b) Employment contract with Frank ---
M. Sims, Director and Senior
Vice President, dated
February 15, 1995
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<PAGE>
<PAGE>
Filed Herewith Unless
Exhibit Description Otherwise Indicated
(10)(c) Employment contract with Thomas Incorporated by reference
L. Doepker, Vice President and to Exhibit (10)(d) to
Treasurer, dated November 12, Registrant's Form 10-K
1992 for the year 1992
(10)(d) Employment contract with Bernard Incorporated by reference
D. Henely, Vice President and to Exhibit (10)(e) to
General Counsel, dated Registrant's Form 10-K
November 12, 1992 for the year 1992
(10)(e) Employment contract with William Incorporated by reference
N. Harper, Vice President and to Exhibit (10)(f) to
Controller, dated November 12, Registrant's Form 10-K
1992 for the year 1992
(10)(f) Employment contract with Paul Incorporated by reference
R. Bowles, Vice President, to Exhibit (10)(i) to
dated March 13, 1992 Registrant's Form 10-K
for the year 1991
(10)(g) Employment contract with John Incorporated by reference
J. Reynolds, Vice President, to Exhibit 10(i) to
dated November 14, 1991 Registrant's Form 10-K
for the year 1992
(10)(h) 1985 Stock Option Plan Incorporated by reference
to Exhibit 10(j) to
Registrant's Form 10-K
for the year 1991
(10)(i) Stock Purchase Program (adopted Incorporated by reference
as of May 10, 1994) to Exhibit (10)(a) to
Registrant's Form 10-Q
for the period ended
June 30, 1994
(10)(j) Stock Acquisition Plan for Incorporated by reference
Non-Employee Directors to Exhibit A to
Registrant's Proxy
Statement for the Annual
Meeting of Stockholders
held on May 10, 1994
(10)(k) 1994 Long Term Incentive Plan Incorporated by reference
to Exhibit B to
Registrant's Proxy
Statement for the Annual
Meeting of Stockholders
held on May 10, 1994
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<PAGE>
Filed Herewith Unless
Exhibit Description Otherwise Indicated
(10)(l) Incentive Compensation Plan ---
for Corporate Office Management
(amended and restated effective
as of January 1, 1994)
(10)(m) Incentive Compensation Plan ---
for Business Unit Management
(amended and restated effective
as of January 1, 1994)
(10)(n) Performance Unit Plan Incorporated by reference
(effective November 9, 1992) to Exhibit (10)(s) to
Registrant's Form 10-K
for the year 1992
(10)(o) Form of Grant Letter used to Incorporated by reference
award Performance Units to Exhibit (10)(t) to
pursuant to the Performance Registrant's Form 10-K
Unit Plan (effective for the year 1992
November 9, 1992)
(10)(p) Form of Grant Letter used to Incorporated by reference
award Performance Units in to Exhibit (10)(u) to
1991 Registrant's Form 10-K
for the year 1992
(10)(q) Clark Equipment Company ---
Deferred Benefit Trust
(10)(r) Clark Equipment Company ---
Supplemental Retirement Income
Plan for Certain Executives
(10)(s) Amendment No. 1 to Clark ---
Equipment Company Supplemental
Retirement Income Plan for
Certain Executives
(10)(t) Amendment No. 2 to Clark ---
Equipment Company Supplemental
Retirement Income Plan for
Certain Executives
(10)(u) Clark Equipment Company ---
Supplemental Executive
Retirement Trust
(10)(v) Clark Equipment Company ---
Supplemental Executive
Retirement Plan
(10)(w) Amendment No. 1 to Clark ---
Equipment Company Supplemental
Executive Retirement Plan
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<PAGE>
Filed Herewith Unless
Exhibit Description Otherwise Indicated
(10)(x) Amendment No. 2 to Clark ---
Equipment Company Supplemental
Executive Retirement Plan
(10)(y) Form of Participation Agreement ---
for Clark Equipment Company
Supplemental Retirement Income
Plan for Certain Executives
(10)(z) Form of Participation Agreement ---
for Clark Equipment Company
Supplemental Executive Retirement
Plan
(10)(aa) Retirement Plan for Outside ---
Directors
(13) Portions of Clark Equipment ---
Company 1994 Annual Report
to Stockholders which are
incorporated by reference
into this Form 10-K
(22) Subsidiaries of Clark Equipment ---
Company
(23)(a) Consent of Independent Accountants- ---
Price Waterhouse LLP
(23)(b) Consent of Independent Accountants- ---
KPMG Bohlins AB
(27) Financial Data Schedules ---
(99) Computation of Ratio of Earnings to ---
Fixed Charges for the twelve
months ended December 31, 1994
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<PAGE>
Exhibit 2(e)
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of March 5,
1995 by and among Aktiebolaget Volvo ("Purchaser"), a Swedish corporation,
and Clark Equipment Company ("Clark"), a Delaware corporation, and
Clark-Hurth Components Marketing Company ("Seller"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, Clark, Purchaser and VME Group N.V. (formerly named "VBM
(Construction and Mining Equipment) International, N.V.") are parties to
that certain Agreement Regarding Exchange of Shares and Relationships
Between Shareholders (the "Agreement Between Shareholders"), dated as of
March 27, 1985, as amended, relating to the ownership of interests in VME
Group N.V. (the "Company");
WHEREAS, Seller is the owner of 125,000 shares (the "Stock") of
capital stock of the Company representing one-half of the total issued and
outstanding shares of the Company; and
WHEREAS, Seller desires to sell, and Purchaser desires to
purchase, the Stock pursuant to this Agreement.
NOW, THEREFORE, IT IS AGREED:
ARTICLE I
REPRESENTATIONS OF CLARK AND SELLER
Section 1. Representations of Clark and Seller. Clark and Seller
jointly and severally represent and warrant to Purchaser as follows:
Section 1.1. Ownership of Stock. Seller is the lawful owner of
the Stock, free and clear of all liens and encumbrances. Seller has not
issued any options, warrants or exchangeable securities, or entered into
any other agreements, which currently or upon the payment of money, the
passage of time or the occurrence of any other event require or may require
Seller to transfer any of the Stock to any person other than Purchaser.
When the Stock is transferred to Purchaser at the Closing as contemplated
by this Agreement, Purchaser will become the owner of the Stock, free and
clear of any liens or encumbrances, other than liens or encumbrances
resulting solely from actions of Purchaser.
Section 1.2. Existence and Good Standing of Seller and Clark.
Seller and Clark each is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
Section 1.3. Authority of Seller. Seller has full corporate
power and authority to execute and deliver this Agreement and to sell,
assign, transfer and convey the Stock to Purchaser pursuant to this
Agreement, to perform its obligations hereunder and to consummate the
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<PAGE>
transactions contemplated hereby. The execution, delivery and performance
of this Agreement by Seller, and the consummation by it of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
action on the part of Seller, including approval by Clark Business Services
Corporation, as the sole shareholder of Seller, and by Clark, as the sole
shareholder of Clark Business Services Corporation. This Agreement has
been duly and validly executed and delivered by Seller and, assuming due
execution and delivery by Purchaser, constitutes a valid and binding
agreement of Seller enforceable against Seller in accordance with its
terms.
Section 1.4. Authority of Clark. Clark has full corporate power
and authority to approve the sale, assignment, transfer and conveyance of
the Stock by Seller to Purchaser in accordance with this Agreement and to
cause Seller to consummate that transaction. The transactions contemplated
by this Agreement, including but not limited to, the approval by Clark of
the execution, delivery and performance of this Agreement by Seller and of
the consummation by Seller of the transactions contemplated hereby, have
been duly authorized by all necessary corporate action on the part of
Clark, including, if necessary, approval by the stockholders of Clark.
Section 1.5. No Violations. The execution and delivery of this
Agreement by Seller and the consummation of the transactions contemplated
hereby (a) will not violate any provision of the Certificate of
Incorporation or By-Laws of Seller or of Clark, (b) will not violate any
statute, rule, regulation, order or decree of any public body or authority
by which Seller, Clark, any other subsidiary of Clark, or any of their
respective properties or assets, is bound and (c) will not result in a
violation or breach of, or constitute a default under, any license,
franchise, permit, indenture, agreement or other instrument to which
Seller, Clark or any other subsidiary of Clark is a party, or by which
Seller, Clark or any other subsidiary of Clark, or any of their respective
assets or properties is bound.
Section 1.6. Governmental Authorization. Except for such, if
any, filings and approvals as are required under the Competition Act
(Canada) or the European Community Merger Control Regulation, no licenses
or permits from, approvals of or filings with any governmental agencies are
required to enable Seller to sell the Stock to Purchaser in accordance with
this Agreement.
ARTICLE II
REPRESENTATIONS OF PURCHASER
Section 2. Representations of Purchaser. Purchaser represents and
warrants to Clark and Seller as follows:
Section 2.1. Existence and Good Standing of Purchaser.
Purchaser is a corporation duly organized and validly existing under the
laws of the Kingdom of Sweden.
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<PAGE>
Section 2.2. Authority of Purchaser. Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
purchase the Stock pursuant to this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Purchaser, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of Purchaser.
This Agreement has been duly and validly executed and delivered by
Purchaser and, assuming due execution and delivery by Seller, constitutes a
valid and binding agreement of Purchaser enforceable against Purchaser in
accordance with its terms.
Section 2.3. No Violations. The execution and delivery of this
Agreement by Purchaser and the consummation of the transactions
contemplated hereby (a) will not violate any provision of the Articles of
Incorporation of Purchaser, (b) will not violate any statute, rule,
regulation, order or decree of any public body or authority by which
Purchaser, any of its subsidiaries, or any of their respective properties
or assets is bound and (c) will not result in a violation or breach of, or
constitute a default under, any license, franchise, permit, indenture,
agreement or other instrument to which Purchaser or any of its subsidiaries
is a party, or by which Purchaser or any of its subsidiaries, or any of
their respective assets or properties is bound.
Section 2.4. Governmental Authorization. Except for such, if
any, filings and approvals as are required under the Competition Act
(Canada) or the European Community Merger Control Regulation, no licenses
or permits from, approvals by, or filings with any governmental agencies
are required to enable Purchaser to purchase the Stock from Seller in
accordance with this Agreement.
Section 2.5. Purchase for Investment. Purchaser will acquire
the Stock for its own account for investment and not with a view toward any
resale or distribution thereof.
Section 2.6. Financing. Purchaser has sufficient funds
available to it to purchase all of the Stock pursuant to this Agreement.
ARTICLE III
SALE OF STOCK
Section 3.1. Sale of Stock. Subject to the terms and conditions
herein stated, Seller agrees to sell, assign, transfer and deliver to
Purchaser on the Closing Date (as defined in Section 3.3 below), and
Purchaser agrees to purchase from Seller on the Closing Date, the Stock.
Section 3.2. Price. Purchaser shall pay as the purchase price
for the Stock (the "Purchase Price") an aggregate of (i) U.S.$560 million,
plus (ii) if the Closing (as defined in Section 3.3 below) does not occur
by March 31, 1995, an amount equal to interest on U.S.$573 million from
April 1, 1995 to the Closing Date at the rate of 8.5% per annum. The
Purchase Price will be paid in full to Seller at the Closing by wire
transfer in immediately available funds to an account designated by Seller
prior to Closing.
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Section 3.3. Closing. The closing of the sale referred to in
Section 3.1 (the "Closing") shall take place at 10:00 A.M. at the offices
of White & Case, 1155 Avenue of the Americas, New York, New York, on the
later of (i) March 17, 1995, or (ii) the second business day following the
earlier of either (A) the day on which the required waiting periods, if
any, under the Competition Act (Canada) have expired or been terminated
without action having been taken by the Canadian authorities to prevent
completion of the transactions contemplated by this Agreement or (B) the
day Purchaser receives an Advance Ruling Certificate with regard to the
transactions contemplated by this Agreement from the Director of
Investigation under the Competition Act (Canada) or (iii) the second
business day after the earliest of (A) the day on which the European
Commission issues a decision under Article 6(1)(a) or (b) of Council
Regulation No. 4064/89 with regard to the transactions contemplated by this
Agreement, (B) the day when the time period under Article 10(1) of that
Council Regulation expires with regard to the transactions contemplated by
this Agreement or (C) the day which is one month after the effective date
of the notification with regard to the transactions contemplated by this
Agreement (computed as provided in Articles 6(1) and 7(1) of Council
Regulation 2367/90) if the Commission does not initiate proceedings with
respect to those transactions, or at such other time, date and place as
Clark and Purchaser shall by written instrument designate. Such time and
date are herein referred to as the "Closing Date."
Section 3.4. Occurrences at Closing. At the Closing, (a) Seller
will deliver or cause to be delivered to Purchaser a notarial deed executed
by a civil law notary in the Netherlands transferring the Stock, and shall
take such action as is necessary to cause a notation to be made in the
Company's Shareholder register crediting the Stock to Purchaser's account,
(b) Clark will deliver a cancelled Promissory Note, dated December 23,
1992, from the Company to Clark in the principal amount of $35,000,000 (the
"Promissory Note"), (c) Purchaser will deliver to Seller evidence of wire
transfers, in payment of the Purchase Price described in Section 3.2 and
(d) Purchaser will deliver or cause to be delivered by the Company evidence
of wire transfers, in the aggregate amount of $35,000,000 (plus any accrued
and unpaid interest due on the Promissory Note), in satisfaction of the
Company's obligation to pay all principal (plus accrued and unpaid
interest) on the Promissory Note, or as a purchase price for the Promissory
Note.
ARTICLE IV
BEST EFFORTS
Section 4.1. Best Efforts. Clark and Seller each will use its
best efforts to cause all the conditions described in Article V to be
fulfilled on or before the Closing Date and Purchaser will use its best
efforts to cause all the conditions described in Article VI to be fulfilled
on or before the Closing Date. Each of the parties agrees to use its best
efforts to take, or cause to be taken, all action to do, or cause to be
done, and to assist and cooperate with the other party hereto in doing, all
things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner possible, the transaction contemplated by this
Agreement, including, but not limited to (a) the obtaining of any necessary
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<PAGE>
waivers, consents or approvals from governmental or regulatory agencies or
authorities and the making of any necessary registrations or filings
(including, but not limited to, filings with governmental or regulatory
agencies or authorities, if any) and the taking of all reasonable steps as
may be necessary or advisable to obtain any approval or waiver from, or to
avoid any action or proceeding by, any governmental agency or authority,
(b) the obtaining of all necessary consents, approvals or waivers from
third parties and (c) the defending of any lawsuits or any other legal
proceedings whether judicial or administrative, challenging this Agreement
or the consummation of the transactions contemplated hereby including,
without limitation, seeking to have any temporary restraining order entered
by any court or administrative authority vacated or reversed.
ARTICLE V
CONDITIONS TO PURCHASER'S OBLIGATIONS
Section 5. Conditions to Purchaser's Obligations. The obligation of
the Purchaser to purchase the Stock from Seller on the Closing Date is
conditioned on the satisfaction at or prior to the Closing, or waiver by
Purchaser, of the following conditions:
Section 5.1. Truth of Representation and Warranties. The
representations and warranties of Clark and Seller contained in this
Agreement shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on such date, and Purchaser will have received a
certificate signed by the President or a Vice President of Clark to that
effect.
Section 5.2. Fulfillment of Obligations. Seller will have
fulfilled all its obligations under this Agreement required to have been
fulfilled at or before the Closing.
Section 5.3. No Injunction. No court or other governmental
(including European Union) body or public authority shall have issued an
order which shall then be in effect and unstayed restraining or prohibiting
Purchaser from completing the transactions contemplated hereby.
Section 5.4. Governmental Approvals. All governmental
(including European Union) consents and approvals, if any, necessary to
permit the consummation of the transactions contemplated by this Agreement
shall have been received.
Section 5.5. Closing Date. The Closing Date will be not later
than July 31, 1995.
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ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
Section 6. Conditions to Seller's Obligations. The obligation of
Seller to sell the Stock to Purchaser on the Closing Date is conditioned on
satisfaction at or prior to the Closing, or waiver by Clark, of the
following conditions:
Section 6.1. Truth of Representations and Warranties. The
representations and warranties of Purchaser contained in this Agreement
shall be true and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and warranties had
been made on such date, and Seller will have received a certificate signed
by the President or a Vice President of Purchaser (or an attorney-in-fact
for one of them), to that effect.
Section 6.2. Fulfillment of Obligations. Purchaser will have
fulfilled all its obligations under this Agreement required to have been
fulfilled at or before the Closing.
Section 6.3. No Injunction. No court or other governmental
(including European Union) body or public authority shall have issued an
order which shall then be in effect and unstayed restraining or prohibiting
Seller or Clark from completing the transactions contemplated hereby.
Section 6.4. Governmental Approvals. All governmental
(including European Union) consents and approvals, if any, necessary to
permit the consummation of the transactions contemplated by this Agreement
shall have been received.
Section 6.5. Payment of Dividend. The dividend referred to in
Article VII shall have been declared and paid.
Section 6.6. Repayment of Shareholder Loan. Clark's loan to the
Company in the aggregate principal amount of $35,000,000, plus accrued and
unpaid interest thereon, evidenced by the Promissory Note shall have been
repaid by or on behalf of the Company.
Section 6.7. Closing Date. The Closing Date will be not later
than July 31, 1995.
ARTICLE VII
ACTIONS PRIOR TO THE CLOSING
Section 7.1. Special Dividend. Clark and Volvo shall cause the
Company to declare and pay on or prior to the Closing Date, a special
dividend in the amount of $26,000,000; $13,000,000 to each of Seller and
Purchaser.
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Section 7.2. Repayment of Shareholder Loan. On or prior to the
Closing Date, Clark and Purchaser shall cause the Company to repay to
Clark, the full amount outstanding, plus any accrued and unpaid interest,
on the Promissory Note, or the Purchaser shall purchase the Promissory Note
for that amount (including an amount equal to the accrued but unpaid
interest).
ARTICLE VIII
TERMINATION AND CONTINUATION OF AGREEMENTS
Section 8.1. Continuation of Certain Agreements. From and after
the Closing Date, the provisions of Section 8.2 of an Amendment Agreement
dated June 23, 1992, between Purchaser and Clark will remain in effect, and
each of the agreements between the Company or any of its subsidiaries, on
the one hand, and Clark or its subsidiaries, on the other hand, referred to
in Section 8.2 of the Amendment Agreement, will remain in effect on the
terms and conditions, and for the periods, provided in Section 8.2 of the
Amendment Agreement.
Section 8.2. Termination of Agreement Between Shareholders.
Except as provided in Section 8.1, Clark and Purchaser hereby agree that
the Agreement Between Shareholders shall terminate on the Closing Date, and
none of Purchaser, Clark, Seller, the Company or any other person will have
any rights or obligations under the Agreement Between Shareholders after
the Closing Date.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Expenses. Each of the parties hereto shall pay all
of its own expenses relating to the transactions contemplated by this
Agreement, including, but not limited to, the fees and expenses of their
respective counsel and financial advisers. All stamp, transfer, notarial,
documentary, sales, use, capital, registration and other similar taxes and
fees incurred in connection with the execution or delivery of this
Agreement or the consummation of the transactions contemplated hereby
(collectively, "Transfer Taxes") due to any governmental authority in the
United States shall be paid by Seller. All Transfer Taxes due to any
governmental authority in Sweden shall be paid by Purchaser. Seller and
Purchaser will each pay 50% of any Transfer Taxes due to any governmental
authority in the Netherlands. Notwithstanding anything in the foregoing to
the contrary, Seller and Purchaser will share equally the expense incurred
by either of them of any civil law notary in the Netherlands required to
effectuate the transfer of the Stock as contemplated by this Agreement.
Section 9.2. Brokers. Each of Clark and Purchaser represents as
to itself, and Clark represents as to Seller, that no person has acted as a
broker, a finder or in any similar capacity in connection with the
transactions which are the subject of this Agreement, except that (i) Clark
represents and agrees that CS First Boston acted as a financial adviser to
Clark and Seller, and all compensation of CS First Boston for acting in
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that capacity will be paid by Clark or Seller, and (ii) Purchaser
represents and agrees that Merrill Lynch International acted as financial
adviser to Purchaser, and all compensation of Merrill Lynch International
for acting in that capacity will be paid by Purchaser. Each of Clark, the
Seller and the Purchaser acknowledges that Goldman, Sachs & Co. was jointly
retained by Clark and Purchaser to render its opinion as to the standing
and record of the Company and was paid a fee by Clark and Purchaser in
consideration of rendering such opinion. Clark indemnifies Purchaser
against and agrees to hold Purchaser harmless from, and Purchaser
indemnifies Clark and Seller against and agrees to hold Clark and Seller
harmless from, any liabilities, costs or expenses arising from any claim
against the indemnified party relating to services as a broker, a finder or
in a similar capacity allegedly rendered to the indemnifying party.
Section 9.3. Governing Law. The interpretation and construction
of this Agreement, and all matters relating hereto, shall be governed by
the laws of the State of New York in the United States of America
applicable to contracts made and to be performed entirely within the State
of New York.
Section 9.4. "Person" Defined. "Person" shall mean and include
an individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or other department or agency
thereof.
Section 9.5. Captions. The Article and Section captions used
herein are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 9.6. Publicity. Except as otherwise required in order
to comply with any law or regulation, or with any rule of a stock exchange
on which shares of Clark or Purchaser are listed, none of the parties
hereto shall issue any press release or make any other public statement
regarding this Agreement or the transactions which are the subject of this
Agreement, without submitting the text of the release or public statement
to the other party for its advance review.
Section 9.7. Notices. Any notice or other communication
required or permitted hereunder shall be deemed given on the day when
delivered in person or sent by facsimile transmission (with confirmation of
receipt at the number to which sent), or on the second business day after
the day on which sent by means of any overnight courier service or on the
fifth business day after the day on which sent by air mail, postage
prepaid, addressed as follows:
If to Purchaser:
AB Volvo
S-405 08
Goteborg, Sweden
Attention: General Counsel
Facsimile No.: 46-31-537984
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<PAGE>
with a copy to:
David W. Bernstein, Esq.
Rogers & Wells
200 Park Avenue
New York, New York 10166
U.S.A.
Facsimile No.: 1-212-878-8375
If to Clark Equipment Company or Seller:
General Counsel
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana 46634
Facsimile No.: 219-239-0237
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: William F. Wynne, Jr., Esq.
Facsimile No.: 212-354-8113
or to such other address or number as shall be furnished in writing by any
such party to the other party or parties in the manner provided in this
Section.
Section 9.8. Parties in Interest. This Agreement may not be
transferred, assigned, pledged or hypothecated by either party hereto,
other than by operation of law. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 9.9. Counterparts. This Agreement may be executed in
two or more counterparts, each of which will be an original, but all of
which taken together shall constitute one instrument.
Section 9.10. Entire Agreement. This Agreement contains the
entire agreement of the parties hereto with respect to the subject matter
contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
Section 9.11. Amendments. This Agreement may not be changed
orally, but only by an agreement in writing signed by Clark and by
Purchaser. Any provision of this Agreement can be waived, amended,
supplemented or modified by written agreement of the parties hereto.
Section 9.12. No Survival of Representations. The
representations and warranties of Clark, Seller and Purchaser contained in
this Agreement shall not survive the purchase and sale of the Stock
contemplated hereby, except that the representations and warranties in
Sections 1.1, 1.3, 1.4 and 2.2 will survive for eighteen months after the
Closing Date.
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ARTICLE X
GUARANTY
Section 10.1. Guaranty of Seller's Obligations. Clark
unconditionally guarantees the performance of the obligations of Seller
under this Agreement.
IN WITNESS WHEREOF, Purchaser, Clark and Seller have each caused
its corporate name to be hereunto subscribed by an officer thereunto duly
authorized, all as of the day and year first above written.
AKTIEBOLAGET VOLVO
By: /s/ Sten Langenius
Name: Sten Langenius
Title: Executive Vice President
By: /s/ Fred Bodin
Name: Fred Bodin
Title: Senior Vice President
CLARK EQUIPMENT COMPANY
By: /s/ William Harper
Name: William N. Harper
Title: Vice President
CLARK-HURTH COMPONENTS MARKETING
COMPANY
By: /S/ Bernard Henely
Name: Bernard D. Henely
Title: Vice President
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EXHIBIT 3(b)
BY-LAWS
OF
CLARK EQUIPMENT COMPANY
A Delaware Corporation
ARTICLE I
Offices
Section 1. Location of Offices. The location of the principal office
of the Corporation shall be in the City of South Bend, Indiana. The
Corporation may have such other offices as the business of the Corporation
may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of the stockholders may be
held at the principal office of the Corporation or at such other place
either within or without the State of Delaware, as may be designated by the
Board of Directors or the officer calling said meetings.
Section 2. Annual Meeting. In the absence of the designation by the
Board of Directors of another date and time, the annual meeting of
stockholders shall be held in each year on the Friday immediately following
the second Monday in May (unless such Friday shall be a legal holiday at
the place of meeting, in which event such meeting shall be held on the
first business day preceding) at the hour of 10:00 in the morning, local
time, for the purpose of electing directors and transacting such other
business as may come before the meeting. If the annual meeting for
election of directors is not held on the date designated therefor, the
Board of Directors shall cause the meeting to be held as soon thereafter as
convenient.
Section 3. Special Meetings. Special meetings of the stockholders
may be called by the holders of a majority of the outstanding shares of the
Corporation, by a majority of the members of the Board of Directors, or by
the Chief Executive Officer, at any time.
Section 4. Notice of Meetings. The Secretary shall mail written or
printed notice of the time and place of every meeting of stockholders to
each stockholder entitled to vote thereat, at his last address of record as
it appears on the records of the Corporation not less than ten nor more
than sixty days before the date of every such meeting. In the case of
special meetings, the notice shall state the purpose or purposes thereof.
Any meeting may be held without notice if all stockholders entitled to vote
are present in person or by proxy, or if notice is waived in writing,
either before or after the meeting, by those not present.
Section 5. Chairman of Meetings. The Chairman of the Board shall act
as chairman of every meeting of stockholders unless otherwise legally
determined at such meeting. Subject to the foregoing, the Chairman may
designate the President to conduct all or any part of such meeting. In the
absence of the Chairman the President shall preside.
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Section 6. Voting of Shares. When a quorum is present at any
meeting, the vote of the holders of a majority of the stock having voting
power present in person or represented by proxy shall decide any question
brought before such meeting, unless the question is one upon which by
express provision of the statutes or of the Certificate of Incorporation, a
different vote is required, in which case such express provision shall
govern and control the decision of such question.
Each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be
voted or acted upon after three years from its date, unless the proxy
provides for a longer period.
At all elections of directors, the voting shall be by ballot or in
such other manner as may be determined by the stockholders present in
person or by proxy entitled to vote at such election. With respect to any
other matter presented to the stockholders for their consideration at a
meeting, any stockholder entitled to vote may, on any question, demand a
vote by ballot.
Section 7. Voting Lists. A complete list of the stockholders
entitled to vote at each such meeting, arranged in alphabetical order, with
the address of each, and the number of shares held by each, shall be
prepared by the Secretary and shall be open to the examination of any
stockholder, 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.
Section 8. Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled 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 for the purpose of any other lawful action, the Board of Directors
may fix, in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than sixty
days prior to any other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
Section 9. Quorum. Unless otherwise provided by law or in the
Certificate of Incorporation, a majority of the outstanding shares, present
in person or by proxy, shall constitute a quorum for the transaction of
business at any meeting of stockholders, but the stockholders present at
any meeting, in person or by proxy, though less than a quorum, may adjourn
the meeting to some other day.
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Section 10. Business at Meetings of Stockholders. (a) At any annual
or special meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (i) by or at the
direction of the Board of Directors or (ii) by any stockholder of the
Corporation who is entitled to vote with respect thereto and who complies
with the notice procedures set forth in this Section 10(a). For business
to be properly brought before an annual or special meeting by a
stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered or mailed to and received by the Secretary of the
Corporation at the principal executive offices of the Corporation not later
than the close of business on the 10th day following the day on which
notice of the date of the annual or special meeting was mailed. A
stockholder's notice to the Secretary shall set forth as to each matter
such stockholder proposes to bring before the annual or special meeting (x)
a brief description of the business desired to be brought before the
meeting, (y) the name and address, as they appear on the Corporation's
books, of the stockholder proposing such business and (z) the class and
number of shares of the Corporation's capital stock that are owned of
record and, if different, beneficially by such stockholder. Notwithstanding
anything in these by-laws to the contrary, no business shall be brought
before or conducted at an annual or special meeting except in accordance
with the provisions of this Section 10(a). The officer of the Corporation
or other person presiding over the annual or special meeting shall, if the
facts so warrant, determine that business was not properly brought before
the meeting in accordance with the provisions of this Section 10(a) and, if
he should so determine, shall so declare to the meeting, and any such
business so determined to be not properly brought before the meeting shall
not be transacted.
(b) Only persons who are nominated in accordance with the procedures
set forth in these By-Laws shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders at which directors are
to be elected only (i) by or at the direction of the Board of Directors or
(ii) by any stockholder of the Corporation entitled to vote for the
election of directors at the meeting who complies with the notice
procedures set forth in this Section 10(b). Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
by timely notice in writing to the Secretary of the Corporation. To be
timely, a stockholder's notice shall be delivered or mailed to and received
at the principal executive offices of the Corporation by the Secretary of
the Corporation not later than the close of business on the 10th day
following the day on which notice of the date of the meeting was mailed.
Such stockholder's notice shall set forth (x) as to each person whom such
stockholder proposes to nominate for election or re-election as a director,
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or as otherwise
required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including such person's written consent
to being named in a proxy statement as a nominee and to serving as a
director if elected); and (y) as to the stockholder giving notice (a) the
name and address, as they appear on the Corporation's books, of such
stockholder and (b) the class and number of shares of the Corporation's
capital stock that are owned of record and, if different, beneficially by
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such stockholder. At the request of the Board of Directors, any person
nominated by the Board of Directors for election as a director shall
furnish to the Secretary of the Corporation that information required to be
set forth in a stockholder's notice of nomination which pertains to the
nominee. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the provisions of this
Section 10(b). The officer of the Corporation or other person presiding at
the meeting shall, if the facts so warrant, determine that a nomination was
not made in accordance with such provisions and, if he should so determine,
shall so declare to the meeting, and the defective nomination shall be
disregarded.
ARTICLE III
Directors
Section 1. Number, Tenure and Qualifications. The business and
affairs of the Corporation shall be managed by the Board of Directors. The
number of directors shall be not less than seven nor more than twelve, as
determined by resolution adopted by a majority of the whole Board. No more
than one-third of the directors may be employees of the Corporation. The
directors shall be elected at the annual meeting of the stockholders,
except as provided in Section 5 of this Article. Each director elected
shall hold office until his successor is elected and qualified or until his
earlier resignation or removal.
Section 2. Regular Meetings. A regular annual meeting of the Board
of Directors shall be held immediately after the adjournment of each annual
meeting of stockholders, and other regular meetings of the Board of
Directors may be held at such times as the Board shall by resolution
appoint, and a written or printed notice specifying the time and place of
each such regular meeting shall be given to each director at his last
address of record as it appears on the records in the office of the
Corporation, at least five days before the date of such regular meeting.
Section 3. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board, or the President or
Secretary or by five or more members of the Board by written or printed
notice thereof to each director at his last address of record as it appears
on the records in the office of the Corporation, at least three days before
the date of such proposed meeting. Such notice shall state the time, place
and purpose or purposes of every such meeting. When, in the opinion of the
Chief Executive Officer, circumstances exist which justify accelerated
action, a special meeting of the Board of Directors may be called by the
Chief Executive Officer or Secretary by sending notice thereof by telegram,
radiogram or cablegram to each director at his last address of record as it
appears on the records in the office of the Corporation, at least 24 hours
before the date of such proposed meeting. Such notice shall state the
time, place and purpose or purposes of every such meeting.
Section 4. Quorum. Except as provided in Sections 1 and 6 of this
Article, a majority of the Board of Directors shall be necessary to
constitute a quorum for the transaction of business, and the acts of a
majority of the directors present at a meeting at which a quorum is present
shall be the acts of the Board of Directors. The directors present at any
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meeting, though less than a quorum, may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 5. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be
filled by a majority of the directors then in office, though less than a
quorum, and the directors so chosen shall hold office until the next annual
election of directors and until their successors shall be elected and
qualified.
Section 6. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board, designate such committees as the
Board may desire, 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 the committee. Any such committee,
to the extent provided in the resolutions designating it, may have and may
exercise the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, but no committee
shall have the power or authority in reference to amending the Certificate
of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommending to
the stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the by-laws of the Corporation; and, unless the
resolution designating such committee shall expressly so provide, no
committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock (other than stock issued pursuant to a
stock option plan adopted by the Corporation). To the extent provided in
the resolutions designating it, any such committee may authorize the seal
of the Corporation to be affixed to all papers which may require it. In
the absence or disqualification of any member of any committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or she or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in
the place of any such absent or disqualified member. Each committee shall
keep regular minutes of its meetings and make a report of its proceedings
and actions to the Board of Directors when required. A majority of a
quorum of any such committee may determine its action and fix the time and
place of its meetings, unless the Board of Directors shall otherwise
provide. The Board shall have power at any time, by resolution passed by a
majority of the whole Board, to change the membership of any such
committee, to fill vacancies in it, or to dissolve it.
Section 7. Action by Consent. 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 of Directors, or of any
committee thereof designated pursuant to Section 6 of this Article, may be
taken without a meeting, if all members of the Board or committee, as the
case may be, consent thereto in writing and such writing or writings are
filed with the minutes of proceedings of the Board or committee.
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Section 8. Telephonic Meetings. Members of the Board of Directors or
any committee thereof designated pursuant to Section 6 of this Article may
participate in a meeting of such Board or 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 participation in a
meeting pursuant to this Section shall constitute presence in person at
such meeting.
Section 9. Meetings, Place. Meetings of the Board of Directors shall
be held at such place either within or without the State of Delaware, as
shall be stated in the notice thereof.
Section 10. Compensation of Directors and Committees. No director
shall receive any salary or compensation for his services as a director or
member of any committee of the Board designated pursuant to Section 6 of
this Article except that directors' fees in such amounts as shall be
determined by the Board of Directors from time to time may be paid to each
director for (a) attendance at any regular or special meeting of the Board
of Directors or of any such committee, and (b) services as a director
performed between meetings. In addition, the Board may adopt and implement
a retirement plan for those members of the Board who are not employees of
the Corporation that will provide for the payment of monthly benefits to
such directors upon their retirement from service on the Board.
Section 11. Resignation. A director may resign at any time by giving
written notice to the Chairman of the Board of Directors, to the President,
or to the Secretary. Unless otherwise stated in such notice of resignation
the acceptance thereof shall not be necessary to make it effective; and
such resignation shall take effect at the time specified therein, or in the
absence of such specification, it shall take effect upon the receipt
thereof.
ARTICLE IV
Officers
Section 1. Regular Officers. The Board of Directors shall elect a
President and may elect a Chairman of the Board, one of whom shall be
elected Chief Executive Officer. The Board of Directors shall also elect
one or more Vice Presidents, a Secretary, a Treasurer, and a Controller.
In addition, the Board of Directors may elect one or more Assistant
Secretaries, one or more Assistant Treasurers and may elect such other
officers and appoint such agents as the Board may determine. None of said
officers, except the Chief Executive Officer, Chairman of the Board, and
the President, need be a director. Any combination of offices may be held
by the same person, except that the office of Vice President may not be
held in combination with the office of Chairman or the office of President.
One or more Vice Presidents may be given additional designations, such as
Executive Vice President, Senior Vice President, Group Vice President, and
the like. The Chief Executive Officer may add to the title of any officer
additional words indicating the officer's duties. Subject to the above
restrictions, for any reason that the Board of Directors may deem
sufficient, whether occasioned by absence or otherwise, the Board may
delegate all or any of the powers or duties of any officer to any other
officer or director.
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Section 2. Compensation. The compensation of all officers of the
Corporation shall be fixed by the Board of Directors or such committee of
the Board as the Board of Directors may designate by resolution passed by a
majority of the whole Board. No officer shall be disqualified from
receiving such compensation by reason of the fact that he is also a
director of the Corporation.
Section 3. Term of Office and Removal. Each officer shall hold
office for the term for which he was elected, or until his successor is
elected and qualified, or until his death, resignation, or removal in the
manner herein provided. Any officer or agent selected by the Board of
Directors may be removed with or without cause by the Board of Directors
or, with the approval of the Governance Committee, by the Chief Executive
Officer, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed.
Section 4. Vacancies. A vacancy in any office by reason of death,
resignation, removal, disqualification or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term.
Section 5. Resignation. Any officer may resign at any time upon
written notice to the Corporation. Unless otherwise stated in such notice
of resignation, the acceptance thereof shall not be necessary to make it
effective; and such resignation shall take effect at the time specified
therein, or in the absence of such specification, it shall take effect upon
the receipt thereof.
ARTICLE V
Duties of Officers
Section 1. Chief Executive Officer. Either the Chairman of the Board,
or the President, as the Board of Directors shall determine, shall be the
Chief Executive Officer of the Corporation. The Chief Executive Officer
shall be the chief executive and administrative officer of the Corporation
and, subject to the control of the Board of Directors, shall have general
management and control of the affairs and business of the Corporation. The
officers of the Corporation shall be responsible to him for the proper and
faithful discharge of their duties and shall make such reports to him with
respect to the business of the Corporation under their charge as he may
from time to time require. He shall have such other powers and perform
such other duties as from time to time may be assigned to him by the Board
of Directors or an appropriate committee thereof authorized pursuant to
Section 6 of Article III.
It shall be the duty of the Chief Executive Officer to present to the
stockholders at least fifteen days before the annual stockholders' meeting,
a report showing the condition of the Corporation at the close of the
preceding year and a summary of its operations during that year.
It also shall be the duty of the Chief Executive Officer to present at
each annual meeting of the Board of Directors a complete report covering
the Corporation's operations for the preceding year and its condition at
the end of the year.
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Section 2. The Chairman of the Board. The Chairman of the Board shall,
unless he designates the President, preside over all meetings of the
stockholders and the Board of Directors. He shall have such other powers
and perform such other duties as from time to time may be assigned to him
by the Board of Directors or an appropriate committee authorized pursuant
to Section 6 of Article III.
Section 3. The President. In the absence of the Chairman, the
President shall exercise the powers and assume the duties of that office.
He shall have such other powers and perform such duties as from time to
time may be assigned to him by the Board of Directors or an appropriate
committee thereof authorized pursuant to Section 6 of Article III.
Section 4. The Vice President. There may be as many Vice Presidents
as the Board of Directors from time to time shall elect, and they shall
have such powers and duties as the Chief Executive Officer may from time to
time authorize.
Section 5. The Secretary. The Secretary shall record all the
proceedings of the meetings of stockholders and the Board of Directors in
books to be kept for that purpose, and perform such other duties as shall
be assigned to him by the Board of Directors, the Chairman or the
President. He shall, when required hereunder, give or cause to be given,
notice of all meetings of the stockholders and of the Board of Directors
and shall perform such other duties as may be prescribed by the Board of
Directors, Chairman or the President, under whose supervision he shall be.
He shall keep in safe custody the seal of the Corporation and may affix the
seal to any instrument requiring the same.
Section 6. The Assistant Secretary. The Assistant Secretary, or if
there be more than one, the Assistant Secretaries in the order determined
by the Board of Directors (or if there be no such determination, then in
the order of their election), shall, in the absence of the Secretary or in
the event of his inability or refusal to act, perform the duties and
exercise the powers of the Secretary and shall perform such other duties
and have such other powers as shall be assigned by the Board of Directors,
the Chairman or the President.
Section 7. The Treasurer. The Treasurer shall attend to the finances
of the Corporation and shall have the custody of its funds. He shall keep
full and accurate accounts of receipts and disbursements in books belonging
to the Corporation, and shall deposit or cause to be deposited all moneys,
and other valuable effects, in the name of and to the credit of the Corpo-
ration, in such depositaries as may be authorized or authorized to be
designated by the Board of Directors. If requested, the Treasurer shall
render to the Chairman, President and directors, at the annual meeting of
the Board of Directors, and at such other times as they may require it, an
account of all his transactions as Treasurer, and of the financial
condition of the Corporation. He shall be bonded in favor of the
Corporation in such amount and with such sureties as shall be determined by
the Board of Directors.
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Section 8. The Assistant Treasurer. The Assistant Treasurer, or if
there shall be more than one, the Assistant Treasurers in the order
determined by the Board of Directors (or if there be no such determination,
then in the order of their election), shall, in the absence of the
Treasurer or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the Treasurer and shall perform such
other duties and have such other powers as shall be assigned by the Board
of Directors, the Chairman or the President.
Section 9. The Controller. The Controller shall be in charge of the
accounts of the Corporation; shall have supervision over the corporate,
general and cost accounting activities; shall see that there is kept an
adequate set of books and records with respect to the earnings, expenses,
expenditures and business transactions relating to the Corporation's
accounts; shall verify the assets reported by the Treasurer and cause to be
examined the books and accounts kept by and under the supervision of the
Treasurer; shall, when requested, furnish the Board of Directors, the
Chairman, and the President with complete and accurate statements of
account showing the financial position of the Corporation, and shall
perform such other duties as the Board of Directors may from time to time
confer upon and prescribe to him.
Section 10. Bond May Be Required. In addition to the bonding
required by Section 6, the Board of Directors may, by resolution, require
any or all of the officers, employees or agents of the Corporation to be
bonded in favor of the Corporation in such amount and with such sureties as
shall be determined by the Board of Directors.
ARTICLE VI
Division Executives
Section 1. Appointment. The Chief Executive Officer may from time to
time appoint employees of the Corporation, who need not be officers of the
Corporation, as Division Executives of the administrative divisions of the
Corporation. Division Executives shall have any one of the titles of
"President," "Executive Vice President," or "Vice President" of the
administrative division concerned. The Chief Executive Officer may add to
the title additional words identifying the Division Executive's duties.
The Chief Executive Officer may terminate any such appointment at any time.
Section 2. Duties, Authority and Compensation. Division Executives
shall have such duties and authority and receive such compensation, not
inconsistent with these by-laws or any limitation or restrictions imposed
by the Board of Directors, as the Chief Executive Officer may from time to
time determine. Division Executives shall not be officers of the
Corporation for any purpose whatever by virtue of their appointment as
such.
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ARTICLE VII
Execution of Instruments
Section 1. Checks, Etc. All checks, drafts and orders for payment of
money shall be signed in the name of the Corporation by such officers or
agents as the Board of Directors shall from time to time designate or
authorize to be designated for that purpose.
Section 2. Contracts, Conveyances, Etc. The Board of Directors may
authorize any officer, or officers, agent or agents, to enter into any
contract, conveyance or other instrument, or execute and deliver any such
contract, conveyance, or other instrument in the name of and on behalf of
the Corporation, and such authority may be general or confined to specific
instances.
When the execution of any contract, conveyance, or other instrument
has been authorized by the Board of Directors without specification of the
executing officers or agents, the Chairman, if he is an employee of the
Corporation, the President or any Vice President may execute and deliver
the same in the name of and on behalf of the Corporation and may affix the
corporate seal thereto, and, if the transaction represented thereby is in
the ordinary course of business and does not exceed $250,000, the Chairman,
if he is an employee of the Corporation, the President or any Vice
President may designate any person to act as agent for the Corporation to
execute and deliver, in the name of and on behalf of the Corporation, any
and all contracts, conveyances, or other instruments in such transactions.
Any contract, conveyance or other instrument may be executed and
delivered in the name of and on behalf of the Corporation by the Chairman,
if he is an employee of the Corporation, the President or any Vice
President provided that the transaction represented thereby is in the
ordinary course of business of the Corporation.
Section 3. Attestation. The signature of any officer to any
contract, conveyance or other instrument may be attested by any other
officer of the Corporation and any officer may affix the corporate seal to
any contract, conveyance or other instrument.
ARTICLE VIII
Notices
Section 1. Method of Notice. Whenever, under the provisions of the
statutes or of the Certificate of Incorporation or of these by-laws, notice
is required to be given to any director or stockholder, such notice may be
given in person or in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and, when given by mail such
notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may also be given
by telegram, radiogram or cablegram.
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Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these by-laws, a waiver thereof in writing, signed by
the person or persons entitled to said notice, whether before or after the
time stated therein, shall be deemed equivalent thereto.
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.
ARTICLE IX
Fiscal Year and Corporate Seal
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
the calendar year.
Section 2. Corporate Seal. The seal of the Corporation shall be
circular in form and contain the name of the Corporation and state of its
incorporation. Such seal may be altered from time to time at the
discretion of the Board of Directors. The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE X
Certificates for Shares
Section 1. Certificates. The interest of each stockholder of the
Corporation shall be evidenced by certificates for shares of stock in such
form as the Board of Directors may from time to time prescribe. The
certificates of stock shall be signed by the Chairman of the Board, if he
is an employee of the Corporation, or the President or a Vice President and
by the Secretary, or the Treasurer, or an Assistant Secretary, or an
Assistant Treasurer, sealed with the seal of the Corporation or a facsimile
thereof, and countersigned and registered in such manner, if any, as the
Board of Directors may by resolution prescribe. Where any such certificate
is countersigned by a transfer agent other than the Corporation or its
employee, or registered by a registrar other than the Corporation or its
employee, any other signature on the certificate may be a facsimile. In
case any officer, transfer agent, or registrar who has signed, or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
Section 2. Transfer. The shares of stock of the Corporation shall be
transferred only upon the books of the Corporation by the holder thereof in
person or by his attorney, upon surrender for cancellation of certificates
for the same number of shares, with an assignment and power of transfer
endorsed thereon or attached thereto, duly executed, with such proof of the
authenticity of the signature as the Corporation or its agents may
reasonably require.
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Section 3. Registered Stockholders. The Corporation shall be
entitled to treat the registered holder of any share as the absolute owner
thereof for all purposes, and shall not be bound to recognize any equitable
or other claim to, or interest in, such share on the part of any other
person, whether or not the Corporation shall have express or other notice
thereof, save as may be otherwise provided by the statutes of the State of
Delaware.
Section 4. Lost Certificates. In the event that any certificate of
stock is lost, stolen, destroyed or mutilated, the Board of Directors may
authorize the issuance of a new certificate of the same tenor and for the
same number of shares in lieu thereof. The Board may in its discretion,
before the issuance of such new certificate, require the owner of the lost,
stolen, destroyed or mutilated certificate, or the legal representative of
the owner to make an affidavit or affirmation setting forth such facts as
to the loss, destruction or mutilation as it deems necessary, and to give
the Corporation a bond in such reasonable sum as it directs to indemnify
the Corporation.
ARTICLE XI
Indemnification of Directors, Officers and Others
Section 1. The Corporation shall, to the fullest extent permitted by
applicable law, indemnify any person (and the heirs, executors and
administrators thereof) who was or is made, or threatened to be made, a
party to an action, suit or proceeding, whether civil, criminal,
administrative or investigative, whether involving any actual or alleged
breach of duty, neglect or error, any accountability, or any actual or
alleged misstatement, misleading statement or other act or omission and
whether brought or threatened in any court or administrative or legislative
body or agency, including an action by or in the right of the Corporation
to procure a judgment in its favor and an action by or in the right of any
other corporation of any type or kind, domestic or foreign, or any
partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Corporation is serving or
served in any capacity at the request of the Corporation, by reason of the
fact that he, his testator or intestate is or was a director or officer of
the Corporation, or is serving or served such other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity, against judgments, fines, amounts paid in
settlement, and costs, charges and expenses, including attorneys' fees,
incurred therein or in any appeal thereof.
Section 2. The Corporation shall indemnify other persons and
reimburse the expenses thereof, to the extent required by applicable law,
and may indemnify any other person to whom the Corporation is permitted to
provide indemnification or the advancement of expenses, whether pursuant to
rights granted pursuant to, or provided by, the Delaware General
Corporation Law or otherwise.
Section 3. The Corporation shall, from time to time, reimburse or
advance to any person referred to in Section 1 of this Article the funds
necessary for payment of expenses, including attorneys' fees, incurred in
connection with any action, suit or proceeding referred to in Section 1 of
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this Article, upon receipt of a written undertaking by or on behalf of such
person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (1) his acts were
committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, (2) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled or (3) his conduct was
otherwise of a character such that Delaware law would require that such
amount(s) be repaid.
Section 4. Any director or officer of the Corporation serving
(1) another corporation, of which a majority of the shares entitled to vote
in the election of its directors is held by the Corporation, or (2) any
employee benefit plan of the Corporation or any corporation referred to in
clause (1), in any capacity shall be deemed to be doing so at the request
of the Corporation.
Section 5. Any person entitled to be indemnified or to the
reimbursement or advancement of expenses as a matter of right pursuant to
this Article may elect to have the right to indemnification (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
action, suit or proceeding, to the extent permitted by applicable law, or
on the basis of the applicable law in effect at the time indemnification is
sought.
Section 6. The right to be indemnified or to the reimbursement or
advancement of expenses pursuant to this Article (1) is a contract right
pursuant to which the person entitled thereto may bring suit as if the
provisions hereof were set forth in a separate written contract between the
Corporation and the director or officer, (2) is intended to be retroactive
and shall be available with respect to events occurring prior to the
adoption hereof, and (3) shall continue to exist after the rescission or
restrictive modification hereof with respect to events occurring prior
thereto.
Section 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the
Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against
the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled also to be
paid the expenses of prosecuting such claim. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) to have made a determination prior to the commencement
of such action that indemnification of or reimbursement or advancement of
expenses to the claimant is proper in the circumstances, nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant is not
entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
Section 8. The invalidity or unenforceability of any provision of
this Article shall not affect the validity or enforceability of the
remaining provisions of this Article.
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ARTICLE XII
Making, Altering or Repealing By-Laws
Any provision of these by-laws may be altered or repealed, and new
by-laws may be made: (1) by the stockholders or Board of Directors at any
meeting thereof if notice of such proposed alteration, repeal or new by-law
is contained in the notice of such meeting; provided, however, that such
notice may be waived as provided in Article VIII, Section 2, if the waiver
contains notice of such proposed alteration, repeal or new by-law, or (2)
by unanimous written consent of the directors which consent shall contain
such alteration, repeal or new by-law.
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Exhibit 4(c)
EXECUTION COPY
$100,000,000
MASTER CREDIT AGREEMENT
dated as of
April 6, 1994
among
CLARK EQUIPMENT COMPANY,
as Borrower
and
THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY HERETO,
as Lenders
and
CHEMICAL BANK,
as Agent
1<PAGE>
<PAGE>
MASTER CREDIT AGREEMENT
This MASTER CREDIT AGREEMENT, dated as of April 6, 1994, (this
"Agreement") is entered into among CLARK EQUIPMENT COMPANY, a Delaware
corporation, (the "Borrower"), the LENDERS listed on the signature pages
hereof or which may hereafter become a party hereto pursuant to Section
8.01 hereof (individually, a "Lender" and collectively, the "Lenders") and
CHEMICAL BANK, a New York banking corporation, as agent for the Lenders (in
such capacity, the "Agent").
The Borrower has requested the Lenders to extend credit to the
Borrower to enable the Borrower, on the terms and subject to the conditions
set forth in this Agreement, to borrow on a revolving basis, at any time
and from time to time from and including the Closing Date, an aggregate
principal amount at any time outstanding not in excess of the Aggregate
Commitments hereunder.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein,
have the following meanings:
"ABR Borrowing" means a Borrowing comprised of ABR Loans.
"ABR Loan" means a Loan as to which the Alternate Base Rate
applies.
"Adjusted CD Rate" means, with respect to any CD Loan, a rate per
annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the
sum of (a) the product of (i) the Fixed Certificate of Deposit Rate in
effect for the Interest Period applicable to such Loan and (ii) Statutory
Reserves and (b) the Assessment Rate. "Fixed Certificate of Deposit Rate"
means the arithmetic average (rounded upwards to the next 1/100 of 1% if
such average is not such a multiple) of the prevailing rates per annum bid
on or about 10:00 a.m., New York City time, to the Agent on the first
Business Day of the Interest Period applicable to such CD Loan by three New
York City negotiable certificate of deposit dealers of recognized standing
selected by the Agent for the purchase at face value of negotiable
certificates of deposit of major United States money center banks in an
amount approximately equal to the principal amount of the Agent's portion
of the Borrowing of which such CD Loan is a part, and with a maturity
comparable to such Interest Period.
"Administrative Questionnaire" means an Administrative
Questionnaire in the form of Exhibit D hereto.
2<PAGE>
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"Aggregate Commitments" means the aggregate amount of the
Commitments of all Lenders, which on the Closing Date is $100,000,000 and
which may be reduced from time to time pursuant to Section 2.09.
"Alternate Base Rate" means, for any day, a rate per annum
(rounded upwards if necessary, to the next 1/100 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%. "Prime Rate" means the rate of interest
per annum publicly announced from time to time by the Agent as its prime
rate in effect at its principal office in New York City; each change in the
Prime Rate shall be effective on the date such change is publicly
announced. "Base CD Rate" means, for any day, the sum of (a) the product
of (i) the Three-Month Secondary CD Rate and (ii) Statutory Reserves and
(b) the Assessment Rate. "Three-Month Secondary CD Rate" means, 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 Federal Reserve Board
through the public information telephone line of the Federal Reserve Bank
of New York, to 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 on 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 Agent from three
New York City negotiable certificate of deposit dealers of recognized
standing selected by it. "Federal Funds Effective Rate" means, 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 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 Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the Federal Funds
Effective Rate or both for any reason, including the inability or failure
of the Agent to obtain sufficient bids in accordance with the terms hereof,
the Alternate Base Rate shall be determined without regard to clause (b) or
(c), or both, of the first sentence of this definition, as appropriate,
until the circumstances giving rise to such inability no longer exist. Any
change in the Alternate 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 on the effective date of such change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
respectively. The Agent shall promptly notify the Borrower and the Lenders
if at any time the Alternate Base Rate is being determined pursuant to
clause (b) or (c) of the first sentence of this definition.
"Applicable CD Margin" means: (a) at any time that the Credit
Rating by Moody's is lower than Baa3 and the Credit Rating by S&P is lower
than BBB-, a rate per annum equal to 0.6875%; (b) at any time that the
Credit Rating by Moody's is Baa3 and the Credit Rating by S&P is BBB-, a
rate per annum equal to 0.50%; (c) at any time that the Credit Rating by
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Moody's is Baa2 and the Credit Rating by S&P is BBB, a rate per annum equal
to 0.425%; and (d) at any time that the Credit Rating by Moody's is Baa1 or
higher and the Credit Rating by S&P is BBB+ or higher, a rate per annum
equal to 0.375%. If at any time the Borrower has a Credit Rating split
between those set forth in clauses (a) - (d) above, then the Applicable CD
Margin shall be the rate per annum that would be applicable if the highest
of the applicable Credit Ratings is used. If at any time the Borrower has
a Credit Rating from only one of S&P and Moody's, then the Applicable CD
Margin shall be the rate per annum that would be applicable for such Credit
Rating. If at any time the Borrower does not have a Credit Rating from
either Moody's or S&P, then the Applicable CD Margin shall be the rate per
annum that would be applicable if the lowest of the Credit Ratings is used.
In this event, the Borrower shall diligently attempt to obtain from either
of the Rating Agencies a private letter rating of the Notes, which rating
shall then determine the meaning of "Applicable CD Margin" as if it were a
Credit Rating. Any change in the Applicable CD Margin shall be effective
as of the date on which any of the Rating Agencies announces a change in
the Borrower's Credit Rating (if applicable), the date on which the
Borrower has no Credit Rating or the date on which the Borrower obtains a
private letter rating of the Notes from any of the Rating Agencies.
"Applicable LIBOR Margin" means: (a) at any time that the Credit
Rating by Moody's is lower than Baa3 and the Credit Rating by S&P is lower
than BBB-, a rate per annum equal to 0.5625%; (b) at any time that the
Credit Rating by Moody's is Baa3 and the Credit Rating by S&P is BBB-, a
rate per annum equal to 0.375%; (c) at any time that the Credit Rating by
Moody's is Baa2 and the Credit Rating by S&P is BBB, a rate per annum equal
to 0.30%; and (d) at any time that the Credit Rating by Moody's is Baa1 or
higher and the Credit Rating by S&P is BBB+ or higher, a rate per annum
equal to 0.25%. If at any time the Borrower has a Credit Rating split
between those set forth in clauses (a) - (d) above, then the Applicable
LIBOR Margin shall be the rate per annum that would be applicable if the
highest of the applicable Credit Ratings is used. If at any time the
Borrower has a Credit Rating from only one of S&P and Moody's, then the
Applicable LIBOR Margin shall be the rate per annum that would be
applicable for such Credit Rating. If at any time the Borrower does not
have a Credit Rating from either Moody's or S&P, then the Applicable LIBOR
Margin shall be the rate per annum that would be applicable if the lowest
of the Credit Ratings is used. In this event, the Borrower shall
diligently attempt to obtain from either of the Rating Agencies a private
letter rating of the Notes, which rating shall then determine the meaning
of "Applicable LIBOR Margin" as if it were a Credit Rating. Any change in
the Applicable LIBOR Margin shall be effective as of the date on which any
of the Rating Agencies announces a change in the Borrower's Credit Rating
(if applicable), the date on which the Borrower has no Credit Rating or the
date on which the Borrower obtains a private letter rating of the Notes
from any of the Rating Agencies.
"Assessment Rate" means the net annual assessment rate (rounded
upwards, if necessary, to the next higher 1/100 of 1%) determined by the
Agent to be payable to the Federal Deposit Insurance Corporation or any
successor ("FDIC") for the insuring by the FDIC of time deposits made in
the United States as of the day two Business Days prior to the date of
determination.
4
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<PAGE>
"Borrower's 1993 Form 10-K" means the Borrower's annual report on
Form 10-K for 1993, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Borrowing" means one or more Loans of the same Type made by the
Lenders on a single date and as to which a single Interest Period is in
effect (or with respect to Competitive Loans, by each of the Lenders whose
offer to make Competitive Loans as part of such borrowing has been accepted
by the Borrower pursuant to Section 2.05).
"Borrowing Date" means any Business Day specified in a Notice of
Borrowing as a date on which the Borrower requests that either a Borrowing
of Syndicated Loans or a Borrowing of Competitive Loans be made hereunder.
"Business Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks
are open for business in Chicago and New York City; provided, however,
that, when used in connection with a LIBOR Loan, the term "Business Day"
shall also exclude any day on which banks are not open for dealings in
dollar deposits in the London interbank market.
"CD Borrowing" means a Borrowing comprised of CD Loans.
"CD Loan" means a Loan as to which the Adjusted CD Rate applies.
"Closing Date" means April 6, 1994.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment" means, with respect to each Lender, the amount set
forth opposite the name of such Lender on the signature pages hereof as the
same may be reduced from time to time pursuant to Section 2.09.
"Commitment Period" means the period from and including the
Closing Date to but not including the Termination Date or such earlier date
on which the Lenders' obligations to make Loans under this Agreement shall
terminate as provided herein.
"Competitive Bid" means an offer by a Lender to make a
Competitive Loan pursuant to Section 2.05.
"Competitive Bid Rate" means, as to any Competitive Bid made by a
Lender pursuant to Section 2.05(b), (i) in the case of a LIBOR Competitive
Loan, the Margin, and (ii) in the case of a Fixed Rate Loan, the fixed rate
of interest offered by the Lender making such Competitive Bid.
"Competitive Bid Request" means a request by the Borrower made
pursuant to Section 2.05 in the form of Exhibit A-1 hereto.
"Competitive Loan" means a Loan from a Lender pursuant to the
bidding procedure described in Section 2.05.
"Competitive Notes" means promissory notes of the Borrower in the
form of Exhibit B hereto, evidencing the obligations of the Borrower to
repay the Competitive Loans.
5
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<PAGE>
"Consolidated Net Worth" means at any date the consolidated
stockholders' equity of the Borrower and its Consolidated Subsidiaries plus
the FASB 106 Adjustment minus the FASB 109 Adjustment plus the Terex
Adjustment plus the Non-Cash Benefit Plan Adjustment.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Borrower in its consolidated financial statements as of such date.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Borrower, are treated as a
single employer under Section 414(b) or 414(c) of the Code.
"Credit Rating" means the publicly announced rating on public
senior unsecured long-term debt of the Borrower given by a Rating Agency.
"Debt" of any Person means at any date, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such
Person as lessee under capital leases, (v) all debt described in items (i)-(iv)
above of others secured by a Lien on any asset of such Person, whether
or not such debt described in items (i)-(iv) above is assumed by such
Person, and (vi) all debt described in items (i)-(iv) above of others
Guaranteed by such Person; provided, however, that "Debt" shall not include
(a) any obligation of such Person to reimburse commercial banks for
payments under letters of credit opened by such banks in connection with
transactions arising in the ordinary course of such Person's business, if
such obligation shall have been paid when due by such Person, (b) debt
described in items (i)-(iv) above fully collateralized by cash, (c)
Guarantees consisting of obligations of the Borrower or its Subsidiaries,
incurred in the ordinary course of business, to repurchase inventory from
its dealers and distributors pursuant to the terms of its dealer and
distributor agreements, or (d) Guarantees consisting of obligations of the
Borrower and its Subsidiaries, incurred in the ordinary course of business,
to repurchase inventory from banks or other financial institutions in the
event of the repossession of such inventory by the bank or financial
institution from the dealer for whom the inventory was financed by the bank
or financial institution.
"Default" means any condition or event the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute
an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, including all regulations from time to time promulgated
thereunder.
"Event of Default" has the meaning set forth in Section 7.01.
6
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"Facility Fee Percentage" means: (a) at any time that the Credit
Rating by Moody's is lower than Baa3 and the Credit Rating by S&P is lower
than BBB-, a rate per annum equal to 0.3125%; (b) at any time that the
Credit Rating by Moody's is Baa3 and the Credit Rating by S&P is BBB-, a
rate per annum equal to 0.225%; (c) at any time that the Credit Rating by
Moody's is Baa2 and the Credit Rating by S&P is BBB, a rate per annum equal
to 0.20%; and (d) at any time that the Credit Rating by Moody's is Baa1 or
higher and the Credit Rating by S&P is BBB+ or higher, a rate per annum
equal to 0.1875%. If at any time the Borrower has a Credit Rating split
between those set forth in clauses (a) - (d) above, then the Facility Fee
Percentage shall be the rate per annum that would be applicable if the
highest of the applicable Credit Ratings is used. If at any time the
Borrower has a Credit Rating from only one of S&P and Moody's, then the
Facility Fee Percentage shall be the rate per annum that would be
applicable for such Credit Rating. If at any time the Borrower does not
have a Credit Rating from either Moody's or S&P, then the Facility Fee
Percentage shall be the rate per annum that would be applicable if the
lowest of the Credit Ratings is used. In this event, the Borrower shall
diligently attempt to obtain from either of the Rating Agencies a private
letter rating of the Notes, which rating shall then determine the meaning
of "Facility Fee Percentage" as if it were a Credit Rating. Any change in
the Facility Fee Percentage shall be effective as of the date on which any
of the Rating Agencies announces a change in the Borrower's Credit Rating
(if applicable), the date on which the Borrower has no Credit Rating or the
date on which the Borrower obtains a private letter rating of the Notes
from any of the Rating Agencies.
"FASB 106 Adjustment" means the sum of the current and long-term
portions of the Borrower's liability resulting from the Borrower's
adoption, and subsequent application, of Financial Accounting Standards
Board Statement 106, as shown from time to time in the Borrower's balance
sheet under the captions "Accrued Postretirement Benefits" and "Current
Liabilities: Accrued Postretirement Benefits".
"FASB 109 Adjustment" means the amount of tax benefit resulting
from time to time from the application of Financial Accounting Standards
Board Statement 109 to the FASB 106 Adjustment, as calculated by the
Borrower in accordance with generally accepted accounting principles.
"Fixed Rate Loan" means any Competitive Loan offered by a Lender
pursuant to Section 2.05 accruing interest at an absolute percentage rate
per annum, not necessarily related to the Alternate Base Rate, the Adjusted
CD Rate or the LIBOR Rate, selected by such Lender and expressed as a
decimal (to no more than four decimal places), which the Borrower shall
have elected to accept.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation of any other Person and, without limiting the generality
of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise) or
7<PAGE>
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(ii) entered into for the purpose of assuring in any other manner the
obligee of such Debt or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part),
provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"Interest Period" means: (a) with respect to any Syndicated Loan:
(i) initially, the period commencing on the Borrowing Date with
respect to such Syndicated Loan and ending, with respect to LIBOR
Syndicated Loans, one, two, three or six months thereafter as selected
by the Borrower in its Notice of Borrowing as provided in Section
2.03; or, with respect to CD Loans, 30, 60, 90 or 180 days thereafter
as selected by the Borrower in its Notice of Borrowing as provided in
Section 2.03; or, with respect to ABR Loans, within ninety days
thereafter as selected by the Borrower in its Notice of Borrowing as
provided in Section 2.03; and
(ii) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Syndicated Loan and
ending, with respect to LIBOR Syndicated Loans, one, two, three or six
months thereafter as selected by the Borrower no later than 11:00 a.m.
(New York City time) three Business Days prior to the last day of the
then current Interest Period with respect to such LIBOR Syndicated
Loan; or, with respect to CD Loans, 30, 60, 90 or 180 days thereafter
as selected by the Borrower no later than 11:00 a.m. (New York City
time) two Business Days prior to the last day of the then current
Interest Period with respect to such CD Loan; or, with respect to ABR
Loans, within ninety days thereafter as selected by the Borrower no
later than 10:30 a.m. (New York City time) on the same Business Day as
the last day of the then current Interest Period with respect to such
ABR Loan; and
(b) with respect to any Competitive Loan:
(i) as to any LIBOR Competitive Loan, the period commencing on
the date of such LIBOR Competitive Loan and ending one, two, three or
six months thereafter, as the Borrower may elect; and
(ii) as to any Fixed Rate Loan, the period (not to be less than
seven days nor to exceed 360 days) commencing on the date of such
Competitive Loan and ending on the date specified in the Competitive
Bid Request pursuant to which the offer to make the Fixed Rate Loan
was extended;
provided, that all of the foregoing provisions relating to Interest Periods
are subject to the following:
(A) if any Interest Period would otherwise end on a day which is
not a Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless, with respect to LIBOR Loans only, 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;
8
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(B) with respect to Syndicated Loans only, if the Borrower shall
fail to give notice as provided above with respect to a LIBOR
Syndicated Loan or a CD Loan, the Borrower shall be deemed to have
selected an ABR Loan to replace the affected LIBOR Syndicated Loan or
CD Loan;
(C) with respect to Syndicated Loans only, if the Borrower fails
to specify the Interest Period applicable to a LIBOR Syndicated Loan,
an Interest Period of a one month duration shall apply, and if the
Borrower fails to specify the Interest Period applicable to a CD Loan,
an Interest Period of a 30 day duration shall apply;
(D) no Interest Period shall extend beyond the Termination Date;
and
(E) with respect to Syndicated Loans only, the Borrower shall
make no more than five Interest Period selections in any calendar
month and shall select Interest Periods in such a manner that all
Interest Periods at any one time outstanding hereunder shall end on no
more than five different dates in any calendar month.
"Joint Venture Company" means VME Group N.V., a Netherlands
corporation which is fifty percent-owned by the Borrower.
"LIBOR Borrowing" means a Borrowing comprised of LIBOR Syndicated
Loans or LIBOR Competitive Loans.
"LIBOR Competitive Loan" means any Competitive Loan bearing
interest at a rate determined by reference to the LIBOR Rate in accordance
with the provisions of Article II.
"LIBOR Loan" means collectively a LIBOR Competitive Loan and a
LIBOR Syndicated Loan.
"LIBOR Rate" means, with respect to any LIBOR Borrowing for any
Interest Period, an interest rate per annum determined by the Agent to be
the arithmetic average of the rates designated as "LIBO" on Telerate screen
number 3750 USD-LIBOR-BBA (rounded upwards if necessary, to the next
one-sixteenth of one percent) for deposits with a maturity comparable to
such Interest Period offered in immediately available funds in the London
interbank market at approximately 11:00 A.M. (London time) two Business
Days before the first day of such Interest Period; provided, however, that
if such screen is cancelled or becomes otherwise unavailable, the "LIBOR
Rate" shall be determined by some other reference to be agreed upon by the
Borrower and the Agent.
"LIBOR Syndicated Loan" means any Syndicated Loan bearing
interest at a rate determined by reference to the LIBOR Rate in accordance
with the provisions of Article II.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset. For the purposes of this Agreement, the Borrower or any
Subsidiary shall be deemed to own subject to a Lien any asset which it has
9<PAGE>
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acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means a Syndicated Loan or a Competitive Loan.
"Margin" means as to any Competitive Bid made by a Lender
pursuant to Section 2.05(b), the margin (expressed as a percentage rate per
annum in the form of a decimal to no more than four decimal places) to be
added to or subtracted from the LIBOR Rate in order to determine the
interest rate acceptable to such Lender with respect to the Competitive
Loan to which such bid relates. As used in this Agreement, the phrase "the
sum of" any Margin and the LIBOR Rate, or similar phrase, shall require an
addition (if this definition requires an addition of such Margin to such
rate) or a subtraction (if this definition requires a subtraction of such
Margin from such rate).
"Material Subsidiary" means (i) any Subsidiary of the Borrower
with revenues during the fiscal year of the Borrower most recently ended
equal to or greater than 10% of the total revenues of the Borrower and its
Consolidated Subsidiaries during such year or (ii) any Subsidiary of the
Borrower with assets as of the last day of the Borrower's most recently
ended fiscal year equal to or greater than 10% of the total assets of the
Borrower and its Consolidated Subsidiaries at such date; provided, however,
that intercompany accounts shall be excluded from the determination of
total assets for purposes of clause (ii) above.
"Moody's" means Moody's Investor Services, Inc.
"Non-Cash Benefit Plan Adjustment" means the non-cash impact on
consolidated stockholders' equity resulting from time to time from the
application of Financial Accounting Standards Board Statement 87 to the
Borrower's Retirement Program for Salaried Employees - Plan 23, including,
but not limited to, any such impact that results from the termination of
the Borrower's leveraged employee stock ownership plan.
"Notes" means the Competitive Notes and the Syndicated Notes, and
"Note" means any Competitive Note or Syndicated Note.
"Notice of Borrowing" has the meaning ascribed to it in Section
2.03 hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, a
trust or unincorporated organization, and a government or political
subdivision or an agency thereof.
"Plan" means at any time an employee pension benefit plan as
defined in Section 3(2) of ERISA and which is covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code
and is either (i) maintained by a member of the Controlled Group for
employees of a member of the Controlled Group or (ii) maintained pursuant
to a collective bargaining agreement or any other arrangement under which
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more than one employer makes contributions and to which a member of the
Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made
contributions.
"Rating Agency" means S&P or Moody's and "Rating Agencies" means
both S&P and Moody's.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System from time to time in effect and shall include
any successor or other regulation or official interpretation of said Board
of Governors relating to reserve requirements applicable to member banks of
the Federal Reserve System.
"Regulations G, U and X" means Regulations G, U and X of the
Board of Governors of the Federal Reserve System from time to time in
effect and shall include any successor or other regulation or official
interpretation of said Board of Governors relating to the extension of
credit by banks for the purpose of purchasing or carrying margin stocks
applicable to member banks of the Federal Reserve System.
"Required Lenders" means: (a) at any time prior to the
termination of the Commitments as provided hereunder, Lenders having
Commitments representing at least 51% of the Aggregate Commitments or (b)
for purposes of acceleration pursuant to Article VII or at any time
subsequent to the termination of Commitments as provided hereunder, Lenders
holding Loans representing at least 51% of the aggregate principal amount
of the Loans outstanding.
"Responsible Officer" means the President, Vice President and
Treasurer, Vice President and Controller or Assistant Treasurer of the
Borrower, or any person designated by the Vice President and Treasurer of
the Borrower.
"S&P" means Standard & Poor's Corporation.
"Statutory Reserves" means a fraction (expressed as a
percentage), the numerator of which is one and the denominator of which is
one minus a percentage (expressed as a decimal) which is in effect on the
date of determination as prescribed by the Board of Governors of the
Federal Reserve System (or any successor), for determining the reserve
requirement for a member bank of the Federal Reserve System in New York
City with deposits exceeding one billion dollars in respect of new
non-personal time deposits in dollars in New York City having a maturity of
three months and in an amount of $100,000 or more.
"Subsidiary" of a Person means any corporation or other entity of
which securities or other ownership interests having ordinary voting power
to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such
Person.
"Syndicated Loan" means a loan made by a Lender to the Borrower
pursuant to Section 2.01.
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"Syndicated Notes" means promissory notes of the Borrower in the
form of Exhibit C hereto, evidencing the obligations of the Borrower to
repay the Syndicated Loans.
"Terex Adjustment" means the impact on consolidated stockholder's
equity resulting from time to time from (i) the bankruptcy or insolvency of
Terex Corporation or Clark Material Handling Company or (ii) the failure of
Terex Corporation or Clark Material Handling Company to perform any of the
liabilities and obligations which they assumed in connection with the sale
of Clark Material Handling Company and its affiliates by the Borrower to
Terex Corporation; provided, however, that the amount of this adjustment
shall in no event exceed $37,000,000.00.
"Termination Date" means the date of termination of the Lenders'
obligations to make Loans hereunder to the Borrower, as provided in Section
11.01 hereof.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the interest rate by reference to which interest on such Loan or
on the Loans comprising such Borrowing is determined.
"Wholly-Owned Consolidated Subsidiary" means any Consolidated
Subsidiary all of the shares of capital stock or other ownership interests
of which (except directors' qualifying shares) are at the time directly or
indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared
in accordance with generally accepted accounting principles applied on a
basis consistent with the most recent audited consolidated financial
statements of the Borrower and its Consolidated Subsidiaries delivered to
the Lenders. The Borrower shall promptly notify the Agent of any material
change in or application of such generally accepted accounting principles
adopted by the Borrower and reflected or to be reflected in financial
statements of the Borrower, including, but not limited to, any such changes
or applications resulting from the Borrower's adoption of the principles
set forth in the Exposure Draft entitled "Accounting for the Impairment of
Long-Lived Assets", and the Borrower and Lenders agree that, in the event
of any such change, they shall discuss in good faith adjustment to the
covenants contained in Sections 6.01, 6.02, 6.03 and 6.04 hereof.
ARTICLE II
LOANS
SECTION 2.01. Syndicated Loans. Each Lender severally, and not
jointly, agrees, on the terms and conditions set forth in this Agreement,
to make revolving credit loans (individually, a "Syndicated Loan";
collectively, the "Syndicated Loans") to the Borrower from time to time
during the Commitment Period in a principal amount outstanding at any time
not exceeding the amount of such Lender's Commitment, subject to reduction
as provided in Section 2.09, subject, however, to the conditions that (i)
at no time shall the outstanding aggregate principal amount of all
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Syndicated Loans and all Competitive Loans made by the Lenders exceed the
Aggregate Commitments and (ii) at no time shall (A) the sum of (x) the
outstanding aggregate principal amount of all Syndicated Loans made by any
Lender and (y) the portion of such Lender's Commitment deemed (pursuant to
Section 2.06(a)) used by such Lender with respect to Competitive Loans
exceed (B) the Commitment of such Lender. The Borrower may borrow, repay
the Syndicated Loans in whole or in part and reborrow, all in accordance
with the terms and conditions hereof. All Syndicated Loans shall be due
and payable at the end of the Interest Period applicable thereto, and all
amounts outstanding shall be due and payable on the Termination Date. Each
Borrowing of Syndicated Loans shall be made by the Lenders simultaneously
and proportionately to the amount of each Lender's Commitment, it being
understood that no Lender shall be responsible for any default by any other
Lender in that other Lender's obligation to make a Syndicated Loan
hereunder nor shall any Lender's Commitment be increased or decreased as a
result of the default by any other Lender in that other Lender's obligation
to make a Syndicated Loan hereunder.
Section 2.02. Syndicated Notes. The Borrower shall execute and
deliver to the Agent, for each Lender, on or before the Closing Date, a
Syndicated Note in the form of Exhibit C attached hereto and made a part
hereof to evidence that Lender's Syndicated Loans, in the principal amount
of such Lender's Commitment and with other appropriate insertions (a
"Syndicated Note"). Each Lender is hereby authorized to record the amount
and type of each Syndicated Loan made by such Lender, the date and the
amount of each payment or prepayment of principal thereof, the length of
the Interest Period with respect thereto, the LIBOR Rate applicable to each
LIBOR Syndicated Loan, the Alternate Base Rate applicable to each ABR Loan,
and the Adjusted CD Rate applicable to each CD Loan, on its books or
records or on the schedule annexed to and constituting a part of its
Syndicated Note, and any such recordation shall, in the absence of manifest
error, constitute prima facie evidence of the accuracy of the information
so recorded, provided, however, that failure by a Lender to make any such
recordation on its books or records or on its Syndicated Note shall not
affect any of the obligations of the Borrower under such Syndicated Note or
this Agreement.
2.03. Notice of Borrowing. Whenever the Borrower desires to
borrow under Section 2.01 hereof, it shall deliver to the Agent a written
Syndicated Loan Notice of Borrowing, a form of which is attached hereto as
Exhibit A-5, (each a "Notice of Borrowing") no later than (a) 11:00 a.m.
(New York City time) on the third Business Day prior to the proposed
Borrowing Date, in the case of a requested LIBOR Syndicated Loan, (b) 11:00
a.m. (New York City time) on the second Business Day prior to the proposed
Borrowing Date, in the case of a requested CD Loan, or (c) 10:30 a.m. (New
York City time) on the proposed Borrowing Date, in the case of a requested
ABR Loan. The Notice of Borrowing shall specify (i) the proposed Borrowing
Date (which shall be a Business Day), (ii) the amount of the proposed
Borrowing, (iii) whether such Borrowing is to consist of LIBOR Syndicated
Loans, CD Loans or ABR Loans, provided that any Syndicated Loan made while
a Default is continuing may be made only as an ABR Loan, and (iv) the
Interest Period for such Borrowing. Each Notice of Borrowing which shall
fail to state an Interest Period applicable to a LIBOR Borrowing shall be
deemed to be a request for an Interest Period of a one month duration, and
each Notice of Borrowing which shall fail to state an Interest Period
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applicable to a CD Borrowing shall be deemed to be a request for an
Interest Period of a thirty day duration. LIBOR Borrowings and CD
Borrowings shall be in minimum amounts of $8,000,000 and integral multiples
of $1,000,000 in excess of that amount. ABR Borrowings shall be in a
minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess
of that amount. In lieu of delivering a Notice of Borrowing, the Borrower
may give the Agent telephonic notice by the required time and specifying
the required information of any proposed Borrowing under Section 2.01;
provided that such telephonic notice shall be promptly confirmed in writing
by delivery by telecopier or telex of a Notice of Borrowing to the Agent on
the same Business Day Agent receives telephonic notice. If the Borrower
fails to specify whether a Borrowing is to be a LIBOR Borrowing, a CD
Borrowing or an ABR Borrowing, such Borrowing shall be an ABR Borrowing.
In the case of LIBOR Borrowings, the Agent shall notify the Borrower two
Business Days prior to the Borrowing Date of the LIBOR Rate applicable to
the proposed LIBOR Borrowing for the Interest Period specified for such
LIBOR Borrowing. In the case of CD Borrowings, the Agent shall notify the
Borrower on the Borrowing Date of the Adjusted CD Rate applicable to the
proposed CD Borrowing for the Interest Period specified for such CD
Borrowing.
Neither the Agent nor any Lender shall incur any liability to the
Borrower in acting upon any telephonic notice referred to above that the
Agent believes in good faith to have been given by a duly authorized
officer or other person authorized to borrow on behalf of the Borrower or
for otherwise acting in good faith under this Section and upon funding of
the Syndicated Loans by the Lenders in accordance with this Agreement.
Section 2.04. Disbursement of Funds. (a) The Agent shall give
each Lender notice of each Notice of Borrowing, or telephonic notice
thereof, and the contents thereof, promptly on the day of the Agent's
receipt thereof. Except as provided to the contrary in subsection (c)
below, each Lender shall make the amount of its Syndicated Loan available
to the Agent, in same day funds, at the office of the Agent located in New
York, New York, not later than 1:00 p.m. (New York time) on the Borrowing
Date, and the Agent shall make the proceeds of such Syndicated Loans
available to the Borrower by 3:00 p.m. (New York time) on such Borrowing
Date by causing an amount of same day funds equal to the proceeds of all
such Syndicated Loans received by the Agent to be credited to the account
of the Borrower at such office of the Agent. Each Lender may at its option
make any Syndicated Loan which is a LIBOR Syndicated Loan by causing a
foreign branch or affiliate of such Lender to make such Loan, but only if
any exercise of such option shall not subject the Borrower to any
additional or increased payment obligations pursuant to this Agreement.
(b) Unless the Agent shall have been notified by any Lender
prior to any Borrowing Date in respect of any Syndicated Loan that such
Lender does not intend to make available to the Agent such Lender's
Syndicated Loan on such Borrowing Date, the Agent may assume that such
Lender has made such amount available to the Agent on such Borrowing Date,
and the Agent in its sole discretion may, but shall not be obligated to,
make available to the Borrower a corresponding amount on such Borrowing
Date. If the Agent does determine to make available to the Borrower such
corresponding amount, the Agent shall promptly notify the Borrower of such
determination. If such corresponding amount is not in fact made available
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to the Agent by such Lender, the Agent shall promptly notify such Lender of
such fact, and shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from
the date on which the Agent notified such Lender that such corresponding
amount was not received by the Agent until the date such amount is paid to
the Agent, at the customary rate set by the Agent for the correction of
errors among banks for two Business Days and thereafter at the ABR Rate.
If such Lender does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent shall promptly notify the Borrower, and
the Borrower shall immediately pay such corresponding amount to the Agent.
Nothing in this Section shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights
that the Borrower may have against any Lender as a result of any default by
such Lender hereunder.
(c) Each Borrowing of Syndicated Loans which does not increase
the aggregate outstanding principal amount of Syndicated Loans owing to
Lenders over the aggregate principal amount of Syndicated Loans outstanding
immediately prior to the making of such Syndicated Loans shall be effected
by the Lenders by applying the proceeds of the new Borrowing of Syndicated
Loans (or portion thereof) to the Syndicated Loans (or portion thereof) due
and payable on such date, and accrued interest on the Syndicated Loan (or
portion thereof) due and payable on such date shall be paid by the Borrower
at the time of such new Borrowing of Syndicated Loans.
Section 2.05. Competitive Bid Procedure. (a) In order to
request Competitive Bids, the Borrower shall hand deliver or telex or
telecopy to the Agent a duly completed Competitive Bid Request in the form
of Exhibit A-1 hereto (each a "Competitive Bid Request"), signed by a
Responsible Officer of the Borrower, to be received by the Agent (i) in the
case of Borrowings of LIBOR Competitive Loans, not later than 10:00 a.m.
New York City time four Business Days before a proposed Borrowing of LIBOR
Competitive Loans, and (ii) in the case of Borrowings of Fixed Rate Loans,
not later than 10:00 a.m. New York City time one Business Day before a
proposed Borrowing of Fixed Rate Loans. No CD Loan or ABR Loan shall be
requested in or made pursuant to a Competitive Bid Request. Competitive
Bid Requests that do not conform substantially to the format of Exhibit A-1
may be rejected in the Agent's sole discretion, and the Agent shall notify
the Borrower of such rejection by telex or telecopier not later than noon,
New York City time on the date of receipt. Such Competitive Bid Request
shall in each case refer to this Agreement and specify (w) whether the
Loans then being requested are to be LIBOR Competitive Loans or Fixed Rate
Loans, (x) the date of such Loans (which shall be a Business Day), (y) the
aggregate principal amount thereof (which shall not be greater than the
aggregate amount of the then unused Commitments of all the Lenders, shall
not be less than $5,000,000 and shall be an integral multiple of
$1,000,000), and (z) the Interest Period with respect thereto. The
maturity date for repayment for each Competitive Loan to be made as a part
of each Borrowing shall be the last day of the Interest Period relating
thereto. Promptly on the date of receipt by the Agent of such Competitive
Bid Request, the Agent shall invite by telex or telecopier (in the form set
forth in Exhibit A-2 hereto) the Lenders to make Competitive Bids pursuant
to such Competitive Bid Request in accordance with the terms and conditions
of this Agreement.
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(b) Each Lender may, in its sole discretion, make one or more
Competitive Bids to the Borrower responsive to such Competitive Bid
Request. Each Competitive Bid by a Lender must be received by the Agent
via telex or telecopier, in the form of Exhibit A-3 hereto, (i) in the case
of LIBOR Competitive Loans, not later than 9:30 a.m. New York City time,
three Business Days before a proposed Borrowing of LIBOR Competitive Loans,
and (ii) in the case of Fixed Rate Loans, not later than 9:30 a.m. New York
City time, on the Business Day of a proposed Borrowing of Fixed Rate Loans.
Multiple bids will be accepted by the Agent. Any Competitive Bid of any
Lender that does not conform precisely to the format of Exhibit A-3 may be
rejected by the Agent upon consultation with the Borrower and the Agent
shall notify such Lender of such rejection by telex or telecopier as soon
as practicable after consultation with the Borrower. Each Competitive Bid
of any Lender shall refer to this Agreement and specify (x) the maximum
principal amount (which may be up to the full amount of the requested
Borrowing regardless of the Commitment of such Lender and which shall be in
a minimum amount of $5,000,000 and in an integral multiple of $1,000,000)
of the Competitive Loan that such Lender is willing to make to the
Borrower, (y) the Competitive Bid Rate at which such Lender is prepared to
make the Competitive Loan and (z) the Interest Period and last date
thereof. If any Lender shall elect not to make a Competitive Bid, such
Lender shall so notify the Agent via telex or telecopier (i) in the case of
LIBOR Competitive Loans, not later than 9:30 a.m. New York City time, three
Business Days before a proposed Borrowing of LIBOR Competitive Loans, and
(ii) in the case of Fixed Rate Loans, not later than 9:30 a.m. New York
City time, the same Business Day of a proposed Borrowing of Fixed Rate
Loans; provided, however, that failure by any Lender to give such notice
shall not cause such Lender to be obligated to make any Competitive Loan.
A Competitive Bid submitted by a Lender pursuant to this paragraph (b)
shall be irrevocable.
(c) The Agent shall promptly notify the Borrower by telex or
telecopier (i) in the case of LIBOR Competitive Loans, not later than 10:00
a.m. New York City time, three Business Days before a proposed Borrowing of
LIBOR Competitive Loans, and (ii) in the case of Fixed Rate Loans, not
later than 10:00 a.m. New York City time the same Business Day of a
proposed Borrowing of Fixed Rate Loans, of the number of Competitive Bids
made, the Competitive Bid Rate and the maximum principal amount of each
Competitive Loan in respect of which a Competitive Bid was made and the
identity of the Lender making such Competitive Bid. The Agent shall send a
copy of all Competitive Bids to the Borrower as soon as practicable after
receipt thereof.
(d) The Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The Borrower shall
notify the Agent by telephone, confirmed by telex or telecopier in the form
of a Competitive Bid Accept/Reject Letter, a copy of which is attached as
Exhibit A-4 hereto, whether and to what extent it has decided to accept or
reject any of or all the bids referred to in paragraph (c) above, (x) in
the case of a LIBOR Competitive Loan, not later than 10:30 a.m., New York
City time, three Business Days before a proposed Borrowing of LIBOR
Competitive Loans, and (y) in the case of a Fixed Rate Loan, not later than
10:30 a.m., New York City time, on the day of a proposed Borrowing of Fixed
Rate Loans; provided, however, that (i) the failure by the Borrower to give
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such notice shall be deemed to be a rejection of all the bids referred to
in paragraph (c) above, (ii) the Borrower shall not accept a bid made at a
particular Competitive Bid Rate if the Borrower has decided to reject a bid
made at a lower Competitive Bid Rate, (iii) the aggregate amount of the
Competitive Bids accepted by the Borrower shall not exceed the principal
amount specified in the Competitive Bid Request, (iv) if the Borrower shall
accept a bid or bids made at a particular Competitive Bid Rate but the
amount of such bid or bids shall cause the total amount of bids to be
accepted by the Borrower to exceed the amount specified in the Competitive
Bid Request, then the Borrower shall accept a portion of such bid or bids
in an amount equal to the amount specified in the Competitive Bid Request
less the amount of all other Competitive Bids accepted with respect to such
Competitive Bid Request, which acceptance, in the case of multiple bids at
such Competitive Bid Rate, shall be made pro rata in accordance with the
amount of each such bid at such Competitive Bid Rate, and (v) except
pursuant to clause (iv) above, no bid shall be accepted for a Competitive
Loan unless such Competitive Loan is in a minimum principal amount of
$5,000,000 and an integral multiple of $1,000,000; provided further,
however, that if a Competitive Loan must be in an amount less than
$5,000,000 because of the provisions of clause (iv) above, such Competitive
Loan may be for a minimum of $1,000,000 or any integral multiple thereof,
and in calculating the pro rata allocation of acceptances of portions of
multiple bids at a particular Competitive Bid Rate pursuant to clause (iv)
the amounts shall be rounded to integral multiples of $1,000,000 in a
manner which shall be in the discretion of the Borrower. A notice given by
the Borrower pursuant to this paragraph (d) shall be irrevocable.
(e) The Agent shall promptly notify the Lenders whether or not
their Competitive Bids have been accepted (and if so, in what amount) by
telex or telecopier sent by the Agent. Each successful bidder will
thereupon become bound, subject to the other applicable conditions hereof,
to make the Competitive Loan in respect of which its Competitive Bid has
been accepted.
(f) No Competitive Bid Request shall be issued by the Borrower
within five Business Days of the date of any other Competitive Bid Request.
(g) If the Agent in its capacity as a Lender shall elect to
submit a Competitive Bid, it shall submit such bid to the Borrower
one-quarter hour earlier than the latest time at which the other Lenders
are required to submit their bids to the Agent pursuant to Section 2.05(b).
(h) All notices required by this Section 2.05 shall be made in
accordance with Section 11.04.
Section 2.06. Competitive Loans. (a) Competitive Loans made by
the Borrower on any date shall be in an integral multiple of $1,000,000 and
in a minimum aggregate principal amount of $5,000,000. Competitive Loans
shall be made to the extent Competitive Bids are accepted by the Borrower
in accordance with Section 2.05(d). At no time shall the aggregate
outstanding principal amount of all Competitive Loans exceed an amount
equal to the Aggregate Commitments minus the aggregate then outstanding
principal amount of all Syndicated Loans. The Aggregate Commitments shall
be deemed used from time to time to the extent of the aggregate amount of
the Competitive Loans then outstanding, pro rata in accordance with the
Lenders' respective Commitments.
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(b) Each Competitive Loan shall be a LIBOR Competitive Loan or a
Fixed Rate Loan, as the Borrower may request subject to and in accordance
with Section 2.05. Each Lender may at its option make any LIBOR
Competitive Loan by causing a foreign branch or affiliate of such Lender to
make such Loan but only if any exercise of such option shall not subject
the Borrower to any additional or increased payment obligations pursuant to
this Agreement. Any exercise of such option in accordance with the terms
hereof shall not affect the obligation of the Borrower to repay such Loan
in accordance with the terms of the applicable Competitive Note.
Competitive Loans of more than one interest rate option may be outstanding
at the same time.
(c) Each Lender shall make its Competitive Loan on the proposed
date thereof by paying the amount required to the Agent, in immediately
available funds not later than 1:00 p.m., New York City time, and the Agent
shall by 3:00 p.m., New York City time, credit the amounts so received to
the general deposit account of the Borrower with the Agent or, if
Competitive Loans are not made on such date because any condition precedent
to a Borrowing herein specified shall not have been met, return the amounts
so received to the respective Lenders as soon as practicable.
Section 2.07. Competitive Notes. The Borrower shall execute and
deliver to each Lender (or to the Agent on behalf of each Lender) a
Competitive Note substantially in the form of Exhibit B attached hereto.
The Competitive Note issued to each Lender shall (i) be payable to the
order of such Lender and be dated the Closing Date, (ii) be in a stated
principal amount equal to the Aggregate Commitments and be payable in the
outstanding principal amount of Competitive Loans evidenced thereby from
time to time, (iii) mature with respect to each Competitive Loan evidenced
thereby on the last day of the Interest Period applicable thereto, (iv)
bear interest as provided in Section 3.01 in respect of LIBOR Competitive
Loans or Fixed Rate Loans, as the case may be, evidenced thereby, and (v)
be entitled to the benefits of this Agreement and the other loan documents.
Each Competitive Note shall bear interest from the date of the first
Borrowing evidenced by such Note on the outstanding principal balance
thereof as set forth in Section 3.01. Each Lender shall, and is hereby
authorized by the Borrower to, endorse on the schedule attached to each
Competitive Note of such Lender (or on a continuation of such schedule
attached to each such Note and made a part thereof) an appropriate notation
evidencing the date, amount and interest rate of each Competitive Loan of
such Lender, each payment or prepayment of principal of any Competitive
Loan and the other information provided for on such schedule; provided,
however, that the failure of any Lender to make such a notation or any
error therein shall not in any manner affect the obligation of the Borrower
to repay the Competitive Loans made by such Lender in accordance with the
terms of such Competitive Note.
Section 2.08. Use of Proceeds. The proceeds of the Loans shall
be used solely for general corporate purposes of the Borrower, including,
but not limited to, acquisitions and commercial paper support.
Section 2.09. Optional Reduction of Commitments. The Borrower
shall have the right, from time to time, upon not less than three Business
Days' prior notice to the Agent, to terminate the Commitments or reduce the
amount of the Aggregate Commitments, provided that (a) any such reduction
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shall be in an amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof and shall permanently reduce the Aggregate Commitments then
in effect, (b) no such reduction may reduce the amount of the Aggregate
Commitments to an amount less than the aggregate outstanding principal
amount of Competitive Loans, (c) to the extent, if any, that the amount of
the Loans then outstanding exceeds the amount of the Aggregate Commitments
as then reduced, the Borrower shall, on the date of such reduction, prepay
the Syndicated Loans in an amount not less than such excess, together with
accrued interest on the amount so prepaid to the date of such prepayment
and any amounts owing by the Borrower pursuant to Section 11.02(b) hereof
as a result of such prepayment, and (d) the Borrower shall, on the date of
such reduction, pay accrued facility fees pursuant to Section 3.06 hereof
on the amount of such reduction to the date of such reduction. Upon any
such reduction of the Aggregate Commitments, the Commitment of each Lender
shall be reduced pro rata. Each notice of reduction of the Aggregate
Commitments shall be irrevocable once given.
Section 2.10. Optional Prepayment of Loans. (a) The Borrower
may at any time and from time to time prepay Syndicated Loans, in whole or
in part, without premium or penalty, upon at least one Business Day's
notice to the Agent, in the case of prepayment of ABR Loans, and upon at
least three Business Days' notice to the Agent, in the case of prepayment
of LIBOR Syndicated Loans or CD Loans, specifying the date and amount of
prepayment and the Loans and the type of Syndicated Loans being prepaid.
Upon receipt of such notice the Agent shall promptly notify each Lender
thereof. If such notice is given by the Borrower, the Borrower shall make
such prepayment, and the payment amount specified in such notice shall be
due and payable on the date specified therein, together with accrued
interest to such date on the amount prepaid and any amounts owing by the
Borrower pursuant to Section 11.02(b) hereof as a result of such
prepayment. Partial payments pursuant to this Section shall be in an
aggregate principal amount of $5,000,000 or a whole multiple of $1,000,000
in excess thereof.
(b) Competitive Loans may not be prepaid by the Borrower, except
upon acceleration pursuant to Article VII hereof.
ARTICLE III
INTEREST RATE PROVISIONS, FEES AND PAYMENTS
Section 3.01. Interest Rate and Payments. (a) Each LIBOR Loan
shall bear interest on the unpaid principal amount at a rate per annum
equal to the LIBOR Rate plus (i) if such Loan is a LIBOR Competitive Loan,
the Margin specified by the Lender making such Loan in its Competitive Bid
with respect to such Loan and (ii) if such Loan is a LIBOR Syndicated Loan,
the Applicable LIBOR Margin. Each CD Loan shall bear interest on the
unpaid principal amount at a rate per annum equal to the Adjusted CD Rate
plus the Applicable CD Margin. The ABR Loans shall bear interest on the
unpaid principal amount at a rate per annum equal to the Alternate Base
Rate. Each Fixed Rate Loan shall bear interest at a rate per annum equal
to the fixed rate of interest offered by the Lender making such Loan and
accepted by the Borrower pursuant to Section 2.05.
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(b) Interest on each LIBOR Loan, each CD Loan and each Fixed
Rate Loan shall be due and payable in arrears at the end of the Interest
Period applicable thereto and also, in the case of a LIBOR Loan with an
Interest Period in excess of three months, upon the expiration of three
months following the commencement of the Interest Period, in the case of a
CD Loan with an Interest Period in excess of 90 days, upon the expiration
of 90 days following the commencement of the Interest Period, and in the
case of a Fixed Rate Loan with an Interest Period in excess of 90 days, at
the end of each calendar quarter, unless, as of the end of such calendar
quarter, no more than 90 days remain in the Interest Period. Interest on
each ABR Loan shall be due and payable in arrears at the end of the
Interest Period applicable thereto and on the last Business Day of each
calendar quarter. Interest on principal prepaid on Loans shall also be due
and payable in arrears upon such prepayment and accrued and unpaid interest
on all Loans shall also be due and payable in arrears upon any acceleration
of principal pursuant to Article VII and on the Termination Date.
(c) The Agent shall notify the Lenders, in accordance with the
Agent's customary procedures, of the LIBOR Rate applicable to each LIBOR
Loan and the Adjusted CD Rate applicable to each CD Loan, and shall notify
the Lenders from time to time, in accordance with the Agent's customary
procedures, of the ABR Rate.
Section 3.02. Late Principal Payment. Any principal payments on
the Loans not paid when due, whether at stated maturity, by notice of
prepayment, by acceleration or otherwise, shall, to the extent permitted by
applicable law, thereafter bear interest (compounded monthly and payable
upon demand) at a rate which is 2% per annum in excess of the rate of
interest otherwise payable under this Agreement in respect of such
principal amount until such unpaid amount has been paid in full (whether
before or after judgment).
Section 3.03. General Provisions as to Payments. The Borrower
shall make each payment of interest on the Loans and each payment of fees
pursuant to Section 3.06 and Section 3.07 hereof not later than 1:00 p.m.
(New York City time) on the date when due, in funds immediately available
in New York City, to the Agent, for the account of the Lenders, at its
address referred to in Section 11.04 of this Agreement. Payments of
principal, whether at the stated repayment date, on the Termination Date,
by acceleration or by prepayment, shall be made in the same manner as
prescribed for payments of interest. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon
shall be payable for such extended time.
Section 3.04. Pro Rata Treatment and Payments. Each Borrowing
of Syndicated Loans by the Borrower hereunder, each payment (including each
prepayment) by the Borrower on account of principal or interest with
respect to Syndicated Loans or on account of fees hereunder, and any
reduction of the Aggregate Commitments hereunder shall be made pro rata
among the Lenders, in accordance with their respective Commitments. Each
payment (including each prepayment) by the Borrower on account of principal
or interest with respect to Competitive Loans shall be made pro rata among
the Lenders in accordance with the respective principal amounts of the
Competitive Loans extended by each Lender comprising a part of the
Borrowing as to which such payment is made. All payments (including
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prepayments) to be made by the Borrower on account of principal, interest
and fees shall be made without set-off or counterclaim to the Agent, for
the account of the Lenders, at the Agent's office located in New York, New
York, in dollars and in immediately available funds. The Agent shall
distribute such payments to each Lender promptly on the day of the Agent's
receipt thereof by causing such Lender's portion of such payment to be
deposited in such account as may be designated by such Lender. If the
Agent does not distribute any Lender's portion of such payment by such
time, such Lender shall promptly notify the Agent of such fact, and shall
be entitled to recover such portion on demand from the Agent together with
interest thereon, for each day from the date on which such Lender notified
the Agent that such portion was not received by the Lender until the date
such portion is paid to such Lender, at the customary rate set by the Agent
for the correction of errors among banks.
Section 3.05. Computation of Interest. Interest on LIBOR Loans,
CD Loans and Fixed Rate Loans, and interest on ABR Loans based on the Base
CD Rate or the Federal Funds Effective Rate, shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed,
calculated as to each Loan from and including the first day thereof to the
date of payment thereof. Interest on ABR Loans based on the Prime Rate
shall be computed on the basis of a 365/366 day year and paid for the
actual number of days elapsed, calculated as to each Loan from and
including the first day thereof to the date of payment thereof.
Section 3.06. Facility Fee. The Borrower agrees to pay to the
Agent, for the account of each Lender, above and beyond and in addition to
interest as provided elsewhere in this Agreement, a facility fee in an
amount equal to the Facility Fee Percentage on such Lender's Commitment,
from the date of this Agreement to but not including the Termination Date,
payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing June 30, 1994, and computed on the basis
of a 365/366 day year on the actual number of days elapsed.
Section 3.07. Agent's Fees. The Borrower agrees to pay to the
Agent the fees according to the terms of the letter agreement dated March
10, 1994.
ARTICLE IV
CONDITIONS TO LOANS
Section 4.01. Conditions to Initial Loans. The obligation of
each Lender to make Loans on the date of the initial Borrowing(s) is
subject to the satisfaction of the following conditions:
(a) prior to and immediately after such Loans have been made, no
Default or Event of Default shall have occurred and be continuing;
(b) the representations and warranties of the Borrower contained
in this Agreement shall be true in all material respects on and as of
such date such Loans are made;
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(c) receipt by the Agent, on behalf of each Lender, of a duly
executed Syndicated Note, in the principal amount of such Lender's
Commitment, each dated the Closing Date;
(d) receipt by the Agent, on behalf of each Lender, of a duly
executed Competitive Note, in a principal amount equal to the
Aggregate Commitments, each dated the Closing Date;
(e) receipt by the Agent, with sufficient copies for each
Lender, of a written opinion letter of John J. Moran, Assistant
Secretary and Senior Counsel of the Borrower, substantially in the
form of Exhibit E hereto, dated the Closing Date and covering such
additional matters relating to the transactions contemplated hereby as
the Required Lenders may reasonably request;
(f) receipt by the Agent, with sufficient copies for each
Lender, of a certificate signed by the chief accounting officer or
Treasurer of the Borrower and dated the Closing Date, to the effect
set forth in clauses (a) and (b) of this Article IV; and
(g) receipt by the Agent, with sufficient copies for each
Lender, of all documents as the Required Lenders may reasonably
request relating to the existence of the Borrower, the authority for
and the validity and enforceability of this Agreement and the Notes,
and any other matters relevant hereto, all in form and substance
satisfactory to the Required Lenders.
Section 4.02. Conditions to All Loans. The obligation of each
Lender to make Loans hereunder shall be subject to the following conditions
precedent. On the date of each Borrowing hereunder:
(a) The Agent shall have received a notice of such Borrowing as
required by Section 2.05(d) or Section 2.03, as applicable;
(b) in the case of a Borrowing of Competitive Loans, or a
Borrowing of Syndicated Loans which would increase the aggregate
principal amount of Syndicated Loans owing to the Lenders over the
aggregate principal amount of Syndicated Loans outstanding immediately
prior to the making of such Syndicated Loans, the representations and
warranties of Borrower contained herein shall be true and correct in
all material respects with the same effect as though made on and as of
such date; and in the case of a Borrowing of Syndicated Loans which
would not increase the aggregate principal amount of Syndicated Loans
owing to the Lenders over the aggregate principal amount of Syndicated
Loans outstanding immediately prior to the making of such Syndicated
Loans, the representations and warranties of Borrower contained
herein, other than those set forth in Section 5.04(b) and Section
5.05, shall be true and correct in all material respects with the same
effect as though made on and as of such date; and
(c) in the case of a Borrowing of Competitive Loans, or a
Borrowing of Syndicated Loans which would increase the aggregate
principal amount of Syndicated Loans owing to the Lenders over the
aggregate principal amount of Syndicated Loans outstanding immediately
prior to the making of such Syndicated Loans, the Borrower shall be in
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compliance with all the terms and provisions contained herein on its
part to be observed or performed, and both at the time of and
immediately after such Borrowing no Default or Event of Default shall
have occurred and be continuing; and in the case of a Borrowing of
Syndicated Loans which would not increase the aggregate principal
amount of Syndicated Loans owing to the Lenders over the aggregate
principal amount of Syndicated Loans outstanding immediately prior to
the making of such Syndicated Loans, the Borrower shall be in
compliance with all the terms and provisions contained herein on its
part to be observed or performed, and both at the time of and
immediately after such Borrowing no Event of Default shall have
occurred and be continuing.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the applicable
matters specified in paragraphs (b) and (c) of this Section 4.02. The
Agent and Lenders agree that for purposes of determining satisfaction of
the conditions precedent specified in paragraphs (b) and (c) above with
respect to Section 5.04(b) hereof, the Agent shall make such reasonable
determination in good faith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
Section 5.01. Corporate Existence and Power. The Borrower is a
corporation duly incorporated, validly existing and in good standing under
the laws of Delaware, is duly licensed and duly qualified as a foreign
corporation in good standing in all the jurisdictions in which the
character of the property owned or leased or the nature of the business
conducted by it requires such licensing or qualification and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
Section 5.02. Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by the Borrower of
this Agreement and the Notes are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any governmental body, agency
or official and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of
incorporation or by-laws of the Borrower or of any agreement, judgment,
injunction, order, decree or other instrument binding upon the Borrower or
any of its property or result in the creation or imposition of any Lien on
any asset of the Borrower or any of its Subsidiaries.
Section 5.03. Binding Effect. This Agreement constitutes, and
each of the Notes, when executed and delivered in accordance with this
Agreement, will constitute, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and except
as enforceability thereof may be limited by equitable principles.
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Section 5.04. Financial Information. (a) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of
December 31, 1993 and the related consolidated statement of income and
statement of changes in financial position for the fiscal year then ended,
reported on by Price Waterhouse and set forth in the Borrower's 1993 Annual
Report, which is incorporated by reference in the Borrower's 1993 Form
10-K, copies of which have been delivered to the Lenders, fairly present,
in conformity with generally accepted accounting principles, the
consolidated financial position of the Borrower and its Consolidated
Subsidiaries as of such date and their consolidated results of operations
and changes in financial position for such period.
(b) Since December 31, 1993 there has been no material adverse
change in the business, financial position or results of operations of the
Borrower and its Consolidated Subsidiaries, considered as a whole.
Section 5.05. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower threatened
against or affecting, the Borrower or any of its Subsidiaries before any
court or arbitrator or any governmental body, agency or official in which
there is a reasonable possibility of an adverse decision where the damages
would exceed an amount in excess of fifteen percent (15%) of the
consolidated current assets of the Borrower and its Consolidated
Subsidiaries or which in any manner draws into question the validity or
enforceability of this Agreement or the Notes.
Section 5.06. Compliance with ERISA. Each member of the
Controlled Group has substantially fulfilled its obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan
and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and has not incurred any liability to the
PBGC or a Plan under Title IV of ERISA which could reasonably be expected
to materially adversely affect the business, consolidated financial
position or consolidated results of operations of the Borrower and its
Consolidated Subsidiaries.
Section 5.07. Taxes. The United States Federal income tax
returns of the Borrower and its Subsidiaries have been examined and closed
through the fiscal year ended December 31, 1991. The Borrower and its
Subsidiaries have filed all United States Federal income tax returns and
all other material tax returns which are required to be filed by them and
have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any Subsidiary, except for taxes and
assessments being contested in good faith by Borrower or any Subsidiary.
The charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
Section 5.08. Subsidiaries. Each of the Borrower's corporate
Material Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of incorporation,
is duly licensed and duly qualified as a foreign corporation in good
standing in all of the jurisdictions in which the character of the property
owned or leased or the nature of the business conducted by it requires such
licensing or qualification except in such jurisdictions where failure to be
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so licensed or qualified could not materially adversely affect the
business, consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries, taken as a
whole, and has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as
now conducted. As of the date hereof, the Borrower has no Material
Subsidiaries other than as set forth in Exhibit F attached hereto and made
a part hereof.
Section 5.09. Not an Investment Company. The Borrower is not
(a) an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of
1935.
Section 5.10. Contractual Obligations. To the best knowledge of
the Borrower, neither the Borrower nor any of its Subsidiaries is subject
to or bound by any contractual obligations which could have a material
adverse effect on the financial condition or operations of the Borrower and
its Subsidiaries, taken as a whole.
Section 5.11. No Default. To the best knowledge of the
Borrower, no event has occurred and is continuing which constitutes (a) a
Default or an Event of Default under this Agreement, or (b) a default under
any other instrument for borrowed money in an aggregate principal amount in
excess of $10,000,000 binding upon the Borrower or any of its Subsidiaries
or under any material contract, agreement, instrument, judgment, decree,
order, statute, rule or regulation binding upon or affecting the Borrower
or any of its Subsidiaries or the assets of the Borrower or any of its
Subsidiaries.
Section 5.12. Compliance with Laws. To the best knowledge of
the Borrower, except to the extent that failure to comply could not
reasonably be expected to materially interfere with the conduct of the
business of the Borrower and its Subsidiaries, taken as a whole, the
Borrower and each of its Subsidiaries has complied with all applicable laws
with respect to: (i) any restrictions, specifications or other requirements
pertaining to its business and operations; (ii) the conduct of its
business; and (iii) the use, maintenance, and operation of the real and
personal properties owned or leased by it in the conduct of its business.
To the best knowledge of the Borrower, the Borrower and each of its
Subsidiaries is in compliance with all federal, state, local and foreign
environmental laws and regulations, including without limitation the
Federal Resource Conservation and Recovery Act, as amended, and the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), their implementing regulations and all applicable state
and foreign hazardous waste laws and regulations, and has no liability,
whether fixed, unliquidated, absolute, contingent or otherwise, under any
such laws or regulations, including without limitation any liabilities for
any fines or penalties, or for investigation, removal or remedial expense
to effect compliance with or discharge any duty, obligation or claim under
any such laws or regulations, except where the failure to so comply or the
liability would not exceed an amount in excess of fifteen percent (15%) of
the consolidated current assets of the Borrower and its Consolidated
Subsidiaries; provided, however, in determining the amount of the
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Borrower's liability under CERCLA, the Borrower's liability shall be
reduced by the amount which the Borrower reasonably determines will be paid
by other responsible parties who are jointly and severally liable with the
Borrower for such liability (such determination to take into consideration
the inability of such other responsible parties to pay the amount of such
reduction to the Borrower's liability as a result of such other responsible
parties' bankruptcy or insolvency).
Section 5.13. Title to Assets. To the best knowledge of the
Borrower, the Borrower and each of its Subsidiaries has good and marketable
title to all of its assets owned by it which are material to the operation
of its business, subject to no Lien or the claim of any third person except
for Liens permitted pursuant to Section 6.03 herein and excepting all
machinery, equipment and all other leasehold improvements by the Borrower
on the premises at the Borrower's Gwinner, North Dakota plant which are
located on real property leased from the Burlington Northern Railroad on a
lease terminable on thirty days prior notice by either party.
Section 5.14. Disclosure. No representation or warranty of the
Borrower contained in this Agreement or any other document, certificate or
written statement furnished to the Lenders pursuant hereto or in connection
herewith contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein
or therein not misleading. There is no fact known to the Borrower which
materially adversely affects the business, operations, property, assets or
condition (financial or otherwise) of the Borrower and its Subsidiaries,
taken as a whole, which has not been disclosed herein or in such other
documents, certificates and statements furnished to the Lenders.
ARTICLE VI
COVENANTS
The Borrower agrees that, so long as any amount payable under any
Note remains unpaid, any Commitment exists hereunder, or any other amount
arising pursuant hereto remains unpaid:
Section 6.01. Minimum Consolidated Net Worth. The Borrower will
not permit its Consolidated Net Worth to at any time fall below an amount
equal to the sum of (a) $352,500,000, plus (b) twenty-five percent (25%) of
the consolidated net income of the Borrower and its Consolidated
Subsidiaries accrued subsequent to December 31, 1993, such Consolidated Net
Worth to be computed as of the end of each fiscal quarter of the Borrower.
In no event shall the amount of the Consolidated Net Worth required to be
maintained by the Borrower hereunder be reduced by the amount of any losses
incurred by the Borrower and its Consolidated Subsidiaries after December
31, 1993.
Section 6.02. Limitation on Consolidated Debt. The Borrower
will not, and will not permit any of its Consolidated Subsidiaries to,
incur any Debt if, after giving effect thereto, the ratio of the
consolidated Debt of the Borrower and its Consolidated Subsidiaries to the
sum of (i) the consolidated Debt of the Borrower and its Consolidated
Subsidiaries, plus (ii) the Consolidated Net Worth of the Borrower and its
Consolidated Subsidiaries, would exceed fifty-five percent (55%).
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Section 6.03. Limitation on Liens. The Borrower shall not at
any time create or assume, and will not cause, suffer or permit a
Subsidiary to create or assume, any Debt secured by any Lien on the
property of the Borrower or any of its Subsidiaries; provided, however,
that the foregoing covenants shall not be applicable to the following:
(a) Liens in existence as of the Closing Date, as described in
Exhibit G attached hereto and made a part hereof;
(b) (i) any Lien on any property hereafter acquired or
constructed by the Borrower or a Subsidiary and created
contemporaneously with, or within 180 days after, such acquisition or
completion of construction and commencement of full operation of such
property, whichever is later, to secure or provide for the payment of
all or any part of the purchase price or construction cost of such
property; or (ii) the acquisition of property subject to any Lien upon
such property existing at the time of acquisition thereof, whether or
not assumed by the Borrower or such Subsidiary; or (iii) any Lien
existing on the property or on the outstanding shares or indebtedness
of a corporation at the time such corporation shall become a
Subsidiary; or (iv) Liens on the property of a corporation existing at
the time such corporation is merged into or consolidated with the
Borrower or a Subsidiary or at the time of a sale, lease or other
disposition of the properties of a corporation or firm as an entirety
or substantially as an entirety to the Borrower or a Subsidiary;
provided, however, that any such Lien does not apply to property owned
by the Borrower or such Subsidiary prior to such event or to property
thereafter acquired other than (x) additions to the property acquired
pursuant to such event or (y) other property which, together with the
property acquired pursuant to such event, is part of a single
construction or development program;
(c) Liens incurred to purchase equipment or make capital
expenditures in the ordinary course of business of the Borrower or a
Subsidiary;
(d) other Liens on property of the Borrower, provided that, at
the time of or prior to imposition of each Lien, the Borrower makes
effective provision whereby all obligations of the Borrower to the
Lenders pursuant to this Agreement and the Notes will be secured by
such Lien equally and ratably with any and all other Debt secured by
the same property or assets;
(e) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any Lien
permitted by this Section; provided, however, that the principal
amount of Debt secured thereby shall not exceed the principal amount
outstanding immediately prior to the time of such extension, renewal
or replacement, and that such extension, renewal or replacement shall
be limited to the property (or property which, in the ordinary course
of business of the Borrower or such Subsidiary, replaces the original
property) which secured the Lien so extended, renewed or replaced and
additions to such property;
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(f) Liens of the United States or a State to secure partial,
progress or other advance payments pursuant to a contract or statute;
provided, however, that the book value of all assets secured by all
such Liens does not at any time exceed $10,000,000; and
(g) other Liens that do not, in the aggregate outstanding at any
time, exceed 15% of the Borrower's Consolidated Net Worth.
Section 6.04. Restrictions on Sales, Mergers and Consolidations.
The Borrower will not, and will cause each of its Material Subsidiaries not
to, (a) in one transaction or in a series of transactions, consolidate or
merge with any other Person, or sell or otherwise dispose of all or
substantially all of its properties or business or any of its divisions or
businesses that, if incorporated separately, would constitute a Material
Subsidiary; (b) liquidate, wind up or dissolve (or suffer any liquidation
or dissolution); or (c) convey, sell or otherwise dispose of the capital
stock of any Material Subsidiary, except that: (i) the Borrower may
transfer assets to any of its Subsidiaries unless, after giving effect to
such transfer, the aggregate book value all of the Borrower's assets
transfered during the term of this Agreement to any of its Subsidiaries
would exceed 15% of the Borrower's assets; (ii) Material Subsidiaries of
the Borrower may merge with and into, or sell or transfer assets to, other
Subsidiaries of the Borrower, and Material Subsidiaries of the Borrower may
merge with and into the Borrower; and (iii) the Borrower may merge with any
other Person, or any Material Subsidiary of the Borrower may consolidate or
merge with any other Person; provided that, in the case of any merger of
the Borrower, the Borrower is the surviving corporation in such merger,
and, in the case of any merger or consolidation of a Material Subsidiary of
the Borrower, the surviving corporation in such merger or consolidation is
or becomes as a result thereof a Material Subsidiary of the Borrower, and
immediately following any such consolidation or merger, and after giving
effect thereto, the Borrower could incur an additional $1 of Debt and
remain in compliance with the provisions of the other Sections of this
Article VI; provided further that the foregoing restrictions contained in
this Section 6.04 shall not apply to the initial public offering of shares
of common stock of Clark Automotive Products Corporation, a Michigan
corporation.
Section 6.05. Information. The Borrower will deliver to the
Agent, with sufficient copies for each Lender:
(a) as soon as available and in any event within 120 days after
the end of each fiscal year of the Borrower, a copy of the Annual
Report on Form 10-K, other than the exhibits thereto (unless such
exhibits are specifically requested by the Agent), required to be
filed by the Borrower with the Securities and Exchange Commission
pursuant to, and meeting the requirements of, the Securities Exchange
Act of 1934, as amended, for the previous fiscal year, with the
financial statements of the Borrower and its Consolidated Subsidiaries
contained therein reported on in a manner acceptable to the Securities
and Exchange Commission by Price Waterhouse or other independent
public accountants of nationally recognized standing and with the
financial statements of the Joint Venture Company contained therein
reported on by independent public accountants of recognized standing
in accordance with generally accepted accounting principles applicable
in the jurisdiction in which the Joint Venture Company is organized or
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in the jurisdiction in which the books and records of the Joint
Venture Company are maintained;
(b) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, a copy of the Quarterly Report on Form 10-Q, other than the
exhibits thereto (unless such exhibits are specifically requested by
the Agent), required to be filed by the Borrower with the Securities
and Exchange Commission pursuant to, and meeting the requirements of,
the Securities Exchange Act of 1934, as amended, for such quarter,
with the financial statements contained therein certified (subject to
normal year-end adjustments) as to fairness of presentation, generally
accepted accounting principals and consistency by the chief accounting
officer of the Borrower;
(c) forthwith upon the occurrence of any Default or Event of
Default, a certificate of the chief financial officer or the chief
accounting officer of the Borrower setting forth the details thereof
and the action which the Borrower is taking or proposes to take with
respect thereto;
(d) promptly upon the mailing thereof to the stockholders of the
Borrower generally, copies of all financial statements, reports and
proxy statements so mailed;
(e) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or
other reports which the Borrower shall have filed with the Securities
and Exchange Commission;
(f) if and when any member of the Controlled Group (1) gives or
is required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of
ERISA, or knows that the plan administrator of any Plan (other than a
Plan which is a multiemployer plan as defined in Section 4001(a)(3) of
ERISA) has given or is required to give notice of any such reportable
event, or (2) receives from the plan administrator of any Plan which
is a multiemployer plan, as defined in Section 4001(a)(3) of ERISA,
notice of any such reportable event which the plan administrator has
given or is required to give of such reportable event to the PBGC, a
copy of the notice of such reportable event given or required to be
given to the PBGC;
(g) if at any time the value of all "margin stock" (as defined
in Regulation U of the Board of Governors of the Federal Reserve
System) owned by the Borrower or any Consolidated Subsidiary exceeds
25% of the value of the assets of the Borrower or such Consolidated
Subsidiary, as reasonably determined by the Borrower, prompt notice of
such fact and, promptly upon the request of any Lender, a duly
completed statement of purpose on Form U-1 for each Lender together
with such other information or documents as any Lender may be required
to obtain under said Regulation U in connection with this Agreement;
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(h) within five days following the delivery of each set of
financial statements referred to in clauses (a) and (b) above, a
certificate of the chief financial officer or the chief accounting
officer of the Borrower setting forth in reasonable detail the
calculations required to establish whether the Borrower and its
Consolidated Subsidiaries were in compliance with the requirements of
Section 6.01 and Section 6.02 on the date of such financial
statements; and
(i) from time to time such additional information regarding the
financial position or business of the Borrower, any Subsidiary or the
Joint Venture Company as any Lender may reasonably request.
Section 6.06. Payment of Taxes and Claims. The Borrower will
pay, and will cause each of its Subsidiaries to pay, all material taxes,
assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its franchises, business,
income or property before any penalty or interest accrues thereon, and all
claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and payable and
which by law have or may become a Lien, upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto, provided no such tax, assessment, charge or claim need be
paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, and if the Borrower or such
Subsidiary shall provide a reserve or other appropriate provision, if any,
as shall be required in conformity with generally accepted accounting
principles.
Section 6.07. Maintenance of Corporate Existence; Properties;
Insurance. Except as permitted by Section 6.04 herein, the Borrower will,
and will cause each of the Material Subsidiaries to, keep in full force and
effect its legal existence. The Borrower will maintain, and will cause
each of its Subsidiaries to maintain, in good repair, working order and
condition all material properties used or useful in its business and from
time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain, insurance (including
self-insurance) of such types, in such amounts and covering such risks as
is consistent with prudent business practice, and the Borrower shall have
and maintain, and shall cause each of its Subsidiaries to have and
maintain, at all times fidelity bonds and all workers' compensation or
similar insurance as may be required by law. All expenses of insurance
shall be prepaid by the Borrower or its Subsidiaries, as the case may be,
or paid under installment plans provided by the broker or carriers. The
Borrower will promptly notify the Agent if any policy of insurance is
cancelled and is not immediately replaced with similar coverage, or if
self-insurance is substituted for any policy of insurance other than that
which may be placed with Celfor Bermuda.
Section 6.08. Inspection; Books and Records. The Borrower will
permit, and will cause each of its Subsidiaries to permit, any authorized
representatives designated by any Lender to visit and inspect any of the
properties of the Borrower or any of its Subsidiaries, including its
financial books and records, and to discuss its affairs, finances and
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accounts with its officers and independent public accountants, all upon
reasonable notice and at such times during normal business hours and as
often as may be reasonably requested. Each Lender hereby agrees that it
will keep confidential any financial reports and other information
previously or from time to time supplied to it by the Borrower hereunder,
to the extent that such information is not and does not become publicly
available, and will use such financial reports and other information only
in connection with the transactions contemplated by this Agreement and for
no other purpose, provided that nothing herein shall affect the disclosure
of any such information (i) by any Lender to any other Lender, (ii) to the
extent required by law (including statute, rule, regulation or judicial
process), (iii) to counsel for any Lender or to their respective
accountants, each of whom shall also be bound by the confidentiality
obligations set forth herein, (iv) to bank examiners and auditors and
appropriate government examining authorities, (v) to the extent necessary
or appropriate in connection with any litigation to which any Lender is a
party, or (vi) subject to the provisions of Sections 8.01, 8.04 and 8.05
hereof, by any Lender to any actual or prospective participant or assignee
of any part of such Lender's Commitment or any Loan owing to or Note held
by such Lender, a determination by a Lender as to the application of the
circumstances described in the foregoing clauses (i)-(v) being conclusive
if made in good faith. Each Lender hereby agrees that it shall give the
Borrower notice prior to disclosure of any such information pursuant to
clause (ii) and clause (v) hereof, to the extent permitted under applicable
law. The Borrower will, and will cause each of its Subsidiaries to, at all
times maintain adequate financial books and records in accordance with
generally accepted accounting principles, as in effect from time to time,
consistently applied.
Section 6.09. Compliance with Laws. The Borrower will comply,
and will cause each of its Subsidiaries to comply, with the requirements of
all applicable laws, rules, regulations and orders of any governmental
authority, including without limitation all federal, state, local and
foreign environmental laws and regulations, noncompliance with which could
materially adversely affect the business, properties, assets, operations or
condition (financial or otherwise) of the Borrower and its Subsidiaries,
taken as a whole, except for those which are being contested in good faith
by appropriate proceedings promptly instituted and diligently conducted and
for which such reserve or other appropriate provision, if any, as shall be
required in conformity with generally accepted accounting principles shall
have been made.
Section 6.10. Margin Stock. Except to the extent the Loans are
exempted pursuant to Section 221.6 of Regulation U, none of the proceeds of
the Loans will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any "margin
stock" within the meaning of Regulation U.
ARTICLE VII
DEFAULTS
Section 7.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be
continuing:
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(a) the Borrower shall fail to pay principal on any Note within
5 days of when due or interest on any Note or any other amount payable
hereunder within 10 days of when due;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 6.01, Section 6.03, or Section 6.04;
(c) the Borrower shall fail to observe or perform its covenant
contained in Section 6.02 hereof for 10 days after the later of the
commencement of such failure or notice to the Borrower thereof;
(d) the Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement (other than those covered by
clauses (a), (b) or (c) above) for 30 days after the later of the
commencement of such failure or notice to the Borrower thereof;
(e) any representation, warranty, certification or statement
made or deemed to be made pursuant to Section 4.02 hereof by the
Borrower in this Agreement or in any certificate, financial statement
or other document delivered pursuant to this Agreement shall prove to
have been incorrect when made in any material respect;
(f) the Borrower or any Material Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization
or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it for such
purpose, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become
due, or shall take any corporate action to authorize any of the
foregoing;
(g) an involuntary case or other proceeding shall be commenced
against the Borrower or any Material Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of
its property for such purpose, and such involuntary case or other
proceeding shall have been neither dismissed nor stayed for a period
of 60 days; or an order for relief shall be entered against the
Borrower or any Material Subsidiary under the Federal bankruptcy laws
as now or hereafter in effect;
(h) any event or condition shall occur which could result in the
acceleration of the maturity of any Debt of the Borrower or any
Material Subsidiary (other than the Notes) in an aggregate outstanding
principal amount in excess of $10,000,000;
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(i)(1) A "reportable event" (as defined in Section 4043 of
ERISA, other than a "reportable event" with respect to which the PBGC
has waived the 30-day notice requirement) shall have occurred with
respect to any Plan and, on the basis of such reportable event, there
are reasonable grounds under Section 4042(a)(1), (2) or (3) of ERISA
for the termination of such Plan by the PBGC or for the appointment by
the appropriate United States District Court of a trustee to
administer such Plan; (2) a trustee shall be appointed by a United
States district court to administer any Plan; or (3) the PBGC shall
institute proceedings to terminate any Plan; and the occurrence of any
of the events described in clauses (1), (2) or (3) could reasonably be
expected to result in a liability to the Borrower or any member of the
Controlled Group which could reasonably be expected to materially
adversely affect the business, consolidated financial position or
consolidated results of operations of the Borrower and its
Consolidated Subsidiaries;
(j) a Change in Control Default, as defined in Section 7.02
below, shall have occurred; or
(k) judgments or orders for the payment of money in an aggregate
amount in excess of $10,000,000 shall be rendered against the Borrower
and continue unsatisfied for a period of 30 days, excluding judgments
or decrees which have been vacated, discharged, stayed or bonded
pending appeal within 30 days from the date of entry thereof and
judgments to the extent covered by insurance;
then, and in every such event, the Agent may, and at the direction of the
Required Lenders will, by notice to the Borrower, terminate the Commitments
and the Commitments shall thereupon automatically terminate, and the Agent
may, and at the direction of the Required Lenders will, by notice to the
Borrower, declare the Notes (together with accrued interest thereon and all
other amounts owing pursuant hereto) to be, and the Notes and all such
other amounts shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower; provided, that in the case of any of the
Events of Default specified in clauses (f) or (g) above with respect to the
Borrower or a Material Subsidiary, without any notice to the Borrower or
any other act by the Agent or any Lender, the Commitments shall
automatically terminate and the Notes (together with accrued interest
thereon and all other amounts owing pursuant hereto) shall become
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
If at any time after acceleration of the maturity of the Notes
and all other amounts owing pursuant hereto as provided above, the Borrower
shall pay all arrears of interest and all payments on account of principal
of the Loans which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on overdue
interest, at the rates specified in this Agreement) and all Events of
Default and Defaults (other than nonpayment of principal of and accrued
interest on the Notes, and other obligations due and payable solely by
virtue of acceleration) shall be remedied or waived pursuant to Section
11.08, then by written notice to the Borrower, the Required Lenders may
elect, in the sole discretion of such Required Lenders, to rescind and
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annul the acceleration and its consequences; but such action shall not
affect any subsequent Default or Event of Default or impair any right or
remedy consequent thereon. The provisions of the preceding sentence are
intended merely to bind the Lenders to a decision which may be made at the
election of the Required Lenders; they are not intended to benefit the
Borrower and do not give the Borrower the right to require the Lenders to
rescind or annul any acceleration hereunder, even if the conditions set
forth herein are met.
Section 7.02. Change in Control Default. (a) For purposes of
Section 7.01(j) hereof, a "Change in Control Default" shall occur on any
date following a Change of Control of the Borrower on which any of the
following shall occur: (i) Moody's rates public senior unsecured long-term
debt of the Borrower at Ba2 or lower or S&P rates public senior unsecured
long-term debt of the Borrower at BB or lower; (ii) in response to a
request by the Borrower in accordance with the provisions of subsection (b)
of this Section 7.02, Moody's has issued a private letter rating of the
Notes at Ba2 or lower or S&P has issued a private letter rating of the
Notes at BB or lower; or (iii) 60 days after the date on which Required
Lenders requested that the Borrower obtain a private letter rating of the
Notes in accordance with the provisions of subsection (b) of this Section
7.02, any such private letter rating shall not have been issued by the
rating agency or agencies from whom such private letter rating was sought,
unless public senior unsecured long-term debt of the Borrower shall then be
rated better than Ba2 by Moody's or BB by S&P.
(b) If at any time on or after a Change of Control of the
Borrower, the Borrower does not have public senior unsecured long-term debt
outstanding that is publicly rated by either Moody's or S&P, the Borrower
will notify the Agent. Upon the request of Required Lenders, the Borrower
will promptly, and in any event within one Business Day after receiving
such request, seek and thereafter diligently attempt to obtain from either
of Moody's or S&P a private letter rating of the Notes, and, promptly, and
in any event within one Business Day, after receiving such private letter
rating, deliver a copy thereof to the Agent. If the Borrower does not
obtain a private letter rating of the Notes from either Moody's or S&P
within 60 days after the Required Lenders shall have requested the Borrower
to obtain a private letter rating of the Notes in accordance with this
subsection (b), the Borrower will promptly, and in any event within one
Business Day, after the end of such 60-day period notify the Agent of such
failure. If the Borrower shall obtain a private letter rating of the Notes
in accordance with this subsection (b), the Required Lenders may at any
time thereafter (but not more often than once in each period of three
consecutive months) request the Borrower to obtain a new private letter
rating of the Notes in accordance with this subsection (b).
(c) For purposes of this Section 7.02, "Change of Control" of
the Borrower means either: (i) that any Person or group, as such term is
defined pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended, other than the employee stock ownership plan and trust established
pursuant to the Clark Equipment Company Employee Stock Ownership Plan and
the Clark Equipment Company Leveraged Employee Stock Ownership Trust, each
adopted effective July 1, 1985, as amended from time to time, acquires
ownership, direct, indirect or beneficial, of more than fifty percent (50%)
of the outstanding voting capital stock of the Borrower; or (ii) at any
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time after the date of this Agreement, less than fifty percent (50%) of the
members of the Board of Directors of the Borrower are persons who either
are members of the Board of Directors of the Borrower as of the date hereof
or who were recommended for election to succeed such members of the Board
of Directors of the Borrower by a majority of such members of the Board of
Directors of the Borrower.
ARTICLE VIII
ASSIGNMENTS AND PARTICIPATIONS
Section 8.01. Assignment. (a) Each Lender may assign to one or
more institutions all or a portion of its interests, rights and obligations
under this Agreement (including, without limitation, all or a portion of
such Lender's Commitment or the Loans and the Notes held by it); provided,
however, that (i) any such assignment, other than an assignment to another
Lender which does not result in any one Lender's Commitment exceeding
thirty percent (30%) of the Aggregate Commitments hereunder, may be made
only with prior written consent of the Borrower, which shall not be
unreasonably withheld, (ii) any such assignment shall be pursuant to an
assignment and acceptance in the form attached hereto as Exhibit H and made
a part hereof (an "Assignment and Acceptance"); (iii) each such assignment
shall be of a constant, and not a varying, percentage of the assigning
Lender's rights and obligations under this Agreement and shall be in a
minimum amount of $2,500,000, or, if less, the aggregate amount of the
assigning Lender's rights and obligations, (iv) the parties to each such
assignment shall execute and deliver to the Agent, for recording in the
Register, as defined in Section 8.02 hereof, an Assignment and Acceptance,
together with the Note(s) subject to such assignment and a processing and
recordation fee of $2,000, (v) each such assignee, if it is not already a
Lender, must execute and deliver to the Borrower, prior to the effective
date of the assignment or receipt of any non-public information supplied by
the Borrower or the Lenders to the assignee, a confidentiality agreement in
the form of Exhibit I attached hereto and made a part hereof, (vi) each
such assignee, if it is not already a Lender, must complete and deliver to
the Agent an Administrative Questionnaire, and (vii) the parties to each
such assignment shall comply with all of the provisions of Section 8.06
hereof. Upon acceptance and recording pursuant to Section 8.03, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution
thereof (except as otherwise agreed by the assignor, the assignee and the
Agent), (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 and (y) the assigning Lender thereunder
shall, to the extent of the interest assigned by such Lender, be released
from its obligations under this Agreement other than its obligation to keep
certain information confidential as provided in Section 6.08 (and, in the
case of an Assignment and Acceptance covering all of the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto, but shall continue to be entitled
to the benefits of Section 9.04, Section 11.02, Section 11.06 and Section
11.15, to the extent that any event or occurrence giving rise to the need
for such benefits arose or accrued prior to the effective date of such
Assignment and Acceptance, as well as to any interest and fees accrued for
its account but not yet paid).
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Notwithstanding the foregoing, any Lender assigning rights and
obligations under this Agreement may retain any Competitive Loans made by
it outstanding at such time and in such case shall retain its rights
hereunder in respect of any Competitive Loans so retained until such
Competitive Loans have been repaid in full in accordance with this
Agreement.
(b) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed
to confirm as follows: (i) such assigning Lender warrants that it is the
legal and beneficial owner of the interest being assigned thereby free and
clear of any adverse claim and that its Commitment and the outstanding
balances of its Loans, in each case without giving effect to assignments
thereof which have not become effective, are as set forth in such
Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representa-
tions made in or in connection with this Agreement, or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement, any other loan document or any other instrument or document
furnished pursuant hereto, or the financial condition of the Borrower or
any Subsidiary thereof or the performance or observance by the Borrower or
any Subsidiary thereof of any of its obligations under this Agreement, any
other loan document or any other instrument or document furnished pursuant
hereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with
copies of the most recent financial statements delivered pursuant to
Section 6.05 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Agent, such assigning Lender 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 decisions in taking or not taking
action under this Agreement; (vi) such assignee appoints and authorizes the
Agent to take such action as Agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.
(c) Any Assignment and Acceptance by any Lender shall be made in
compliance with the terms of this Article VIII. Notwithstanding this
requirement, any Lender may, at any time, without the consent of the
Borrower, pledge all or any portion of its rights under this Agreement and
its Notes to a Federal Reserve Bank; provided, however, that no such
assignment shall release the transferor Lender from its obligations
hereunder.
Section 8.02. Register. The Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register for the
recordation of the name and address of, and the Commitment of and the
principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register as to the name and address of
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each Lender shall be conclusive in the absence of manifest error and the
Borrower, the Lenders and the Agent may treat each person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement; provided, however, that failure to make any such entry or
recordation shall not affect any of the obligations of the Borrower under
this Agreement or the Notes. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
Section 8.03. Recordation; Replacement Notes. Upon its receipt
of an Assignment and Acceptance executed by an assigning Lender and an
assignee, an Administrative Questionnaire completed for the assignee
(unless the assignee shall already be a Lender hereunder), the processing
and recording fee referred to in Section 8.01(a) above, the Note or Notes
subject to such Assignment and, if required, the prior written consent of
the Borrower to such assignment, the Agent shall (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Lenders and the
Borrower. Within five Business Days after receipt of such notice, the
Borrower, at its own expense, shall execute and deliver to the Agent a new
Note or Notes to the order of such assignee in an amount equal to the
aggregate amount of the Commitment or the aggregate principal amount of the
Loans assumed by it pursuant to such Assignment and Acceptance, as the case
may be, and, if the assigning Lender has retained any portion of such
Lender's Commitment or any Loans hereunder, a new Note or Notes to the
order of the assigning Lender in an amount equal to the aggregate amount of
the Commitment or the aggregate principal amount of the Loans, as the case
may be, retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in the form of Exhibit B
or Exhibit C hereto, as the case may be. The Agent shall promptly return
cancelled Notes to the Borrower upon its receipt of new Notes.
Section 8.04. Participations. Any Lender may at any time sell
to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, the Note or Notes held by such
Lender or any other interest of such Lender hereunder, provided, however,
that (i) each such sale of a participating interest shall be in an amount
equal to or greater than $100,000, (ii) each Lender must retain all rights
of approval hereunder, without the consent of any participant, except
rights of approval with respect to amendments, modifications or waivers
relating to the interest rates borne by the Loans, the amount of fees
payable hereunder as applicable to such participant, the amount of the
Commitments, the maturity dates of the Loans, and the dates when interest
and fees are required to be paid hereunder, and (iii) each such participant
must execute and deliver to the Borrower, prior to the earlier of
effectiveness of such sale of a participating interest or receipt of any
non-public information supplied by the Borrower or the Lenders to the
participant, a confidentiality agreement in the form of Exhibit I attached
hereto and made a part hereof. In the event of any such sale by a Lender
of participating interests to a Participant, such Lender's obligations
under this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain
the holder of such Note or Notes for all purposes under this Agreement, and
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the Borrower shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement.
The Borrower agrees that each participant will be entitled to the benefits
of Section 9.01, Section 9.04, Section 11.02 and Section 11.15 hereof with
respect to its participation in the Loans or the Notes or under this
Agreement.
Section 8.05. Disclosure of Information. Any Lender may, in
connection with any assignment or proposed assignment, or any sale or
proposed sale of a participating interest, pursuant to this Article VIII,
disclose to the assignee or prospective assignee or to the participant or
prospective participant any information, including without limitation any
non-public information, relating to the Borrower furnished to the Lender by
or on behalf of the Borrower; provided, however, that prior to any
disclosure of any non-public information relating to the Borrower the
recipient thereof shall execute and deliver to the Borrower a
confidentiality agreement in the form of Exhibit I attached hereto and made
a part hereof or in such other form as may be approved by the Borrower and
the Agent, which approval shall not be unreasonably withheld.
Section 8.06. Tax Withholding. Each Lender agrees that if,
pursuant to this Article VIII, any interest of such Lender in this
Agreement or in its Note or Notes is assigned to any assignee which is
organized under the laws of any jurisdiction other than the United States
or any State thereof (including the District of Columbia), such Lender
shall cause such assignee, concurrently with the effectiveness of such
assignment, (a) to represent to the Borrower that under applicable law and
treaties no taxes will be required to be withheld by the Borrower with
respect to any payments to be made to such assignee in respect of the Note
or Notes, (b) to furnish to the Borrower either United States Internal
Revenue Service Form 4224 or United States Internal Revenue Service Form
1001 (wherein such assignee claims entitlement to complete exemption from
United States federal withholding tax on all interest payments under the
Note or Notes) and (c) to agree to provide (to the extent permissible under
current law) to the Borrower a new Form 4224 or Form 1001 upon the
expiration or obsolescence of any previously delivered form and comparable
statements in accordance with applicable United States laws and regulations
and amendments duly executed and completed by such assignee, and to comply
from time to time with all applicable United States laws and regulations
with regard to such withholding tax exemption. In the event any Lender
fails to fulfill any of its obligations under this Section, Borrower may
replace such Lender pursuant to the terms and conditions set forth in
Section 9.05.
ARTICLE IX
CHANGE IN CIRCUMSTANCES AFFECTING LOANS
Section 9.01. Capital Adequacy.
(a) If any Lender shall have determined that the applicability
of any law, rule, regulation or guideline adopted pursuant to or arising
out of the July 1988 report of the Basle Committee on Banking Regulations
and Supervisory Practices entitled "International Convergence of Capital
Measurement and Capital Standards," or the adoption after the date hereof
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of any other law, rule, regulation or guideline regarding capital adequacy,
or any change in any of the foregoing, or in the interpretation or
administration of any of the foregoing by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any lending office
of such Lender) or any Lender's holding company with any request or
directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital or
on the capital of such Lender's holding company, if any, as a consequence
of its obligations hereunder, and under similar agreements with its other
customers, to a level below that which such Lender or such Lender's holding
company could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's policies and the policies of such
Lender's holding company with respect to capital adequacy) by an amount
deemed by such Lender to be material, such Lender shall notify the Borrower
as soon as practicable of any such determination and thereupon the Borrower
shall pay to such Lender, on demand, such additional amount or amounts as
will compensate such Lender or such Lender's holding company for any such
reduction suffered. In determining such additional amounts, each Lender
will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable.
(b) In the event that any amounts are owing by the Borrower to
any Lender pursuant to subsection (a) above, such Lender shall deliver to
the Borrower a statement explaining the basis upon which such amounts have
been determined to be owing, which statement shall be conclusive and
binding absent manifest error.
(c) Failure on the part of any Lender to demand compensation for
any reduction in return on capital with respect to any Interest Period
shall not constitute a waiver of such Lender's rights to demand
compensation for any reduction in return on capital in such Interest Period
or in any other Interest Period. The protection of this Section shall be
available to each Lender regardless of any possible contention of
invalidity or inapplicability of the law, regulation or condition which
shall have been imposed.
Section 9.02. Illegality of LIBOR Loans. (a) Notwithstanding
any other provisions herein, if any Lender reasonably determines (which
determination shall be conclusive and binding in the absence of manifest
error) that it has become unlawful, as a result of any law, treaty, rule,
regulation, or determination of a court or other governmental authority, or
any change therein, or in the interpretation or application thereof,
applicable to it, or for any other reason, for such Lender to make or
maintain LIBOR Loans, (an "Illegality"), the obligation of such Lender to
make or maintain such Loans shall, upon the happening of such event,
forthwith be suspended for the period of the Illegality. In such event,
such Lender shall give notice of such determination to the Borrower and to
the Agent, the Borrower shall promptly on demand by such Lender repay such
Lender's LIBOR Loans outstanding and reborrow any such LIBOR Syndicated
Loans as either ABR Loans or CD Loans, at the Borrower's election, and all
Syndicated Loans thereafter made by such Lender during the period of the
Illegality shall be ABR Loans or CD Loans. If any Illegality results in
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payment of a LIBOR Loan other than on the last day of the Interest Period
applicable thereto, the Borrower shall pay to such Lender, on demand,
one-half of any amounts owing pursuant to Section 11.02(b) hereof.
(b) For purposes of subsection (a), a notice to the Borrower by
any Lender or Participant shall be effective, if lawful, on the last day of
the then-current Interest Period; in all other cases, such notice shall be
effective on the date of receipt by the Borrower.
(c) If an Illegality occurs with respect to a Lender, prior to
giving notice pursuant to (a) above, the affected Lender shall make all
reasonable efforts (which shall not require the Lender to incur a loss or
otherwise suffer any disadvantage) to make within 30 days an assignment of
its rights and delegation and transfer of its obligations hereunder to
another of its offices, branches or affiliates for the purpose of causing
such Illegality to cease to exist so long as such assignment and delegation
will not create another Illegality and the Lender shall be permitted under
applicable law to continue to hold LIBOR Loans pending such assignment and
delegation.
Section 9.03. Unavailability of LIBOR Loans or CD Loans;
Interest Rate Unascertainable. (a) Notwithstanding any other provisions
herein, if the Agent reasonably determines (which determination shall be
conclusive and binding in the absence of manifest error) that by reason of
circumstances affecting the Agent, the interbank Eurodollar market or the
position of the Agent in such market, adequate and reasonable means do not
exist for ascertaining the LIBOR Rate, then the Agent shall give notice of
such determination to the Borrower. From and after the date of receipt by
the Borrower of such notice, all Syndicated Loans shall be made as ABR
Loans or CD Loans, and the Borrower shall not request, and the Lenders
shall not offer to make, Competitive Loans which are LIBOR Competitive
Loans.
(b) Notwithstanding any other provisions herein, if the Agent
reasonably determines (which determination shall be conclusive and binding
in the absence of manifest error) that the Adjusted CD Rate cannot be
determined for any reason, including, without limitation, the inability of
the Agent to obtain sufficient bids in accordance with the terms of the
definition of Fixed Certificate of Deposit Rate, then the Agent shall give
notice of such determination to the Borrower. From and after the date of
receipt by the Borrower of such notice, all Syndicated Loans shall be made
as ABR Loans or LIBOR Syndicated Loans.
(c) Notwithstanding any other provisions herein, if any Lender
reasonably determines (which determination shall be conclusive and binding
absent manifest error) that the LIBOR Rate shall not represent the
effective pricing to that Lender for dollar deposits of comparable amounts
being loaned by that Lender for the relevant period, or that the Adjusted
CD Rate will not adequately and fairly reflect the cost to that Lender of
making or maintaining CD Loans of comparable amounts for the relevant
period, then such Lender shall give notice of such determination to the
Borrower, and with respect to any such LIBOR Loans or CD Loans, as the case
may be, (i) the Borrower shall promptly on demand by such Lender repay such
outstanding LIBOR Loans or CD Loans, as the case may be, and (ii) all Loans
thereafter made by such Lender shall, at such Lender's option, be of a Type
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other than the Type subject to the foregoing determination, until such time
that the Lender reasonably determines (which determination shall be
conclusive and binding absent manifest error) that the LIBOR Rate
represents effective pricing to that Lender for dollar deposits of
comparable amounts being loaned by that Lender for the relevant period, or
that the Adjusted CD Rate adequately and fairly reflects the cost to that
Lender of making and maintaining CD Loans of comparable amounts for the
relevent period, as the case may be. If any such determination results in
payment of a LIBOR Loan or a CD Loan other than on the last day of the
Interest Period applicable thereto, the Lender shall be responsible for any
amounts owing pursuant to Section 11.02(b) hereof.
Section 9.04. Reserve Requirements; Taxes. (a) The cost to the
Lenders of making or maintaining the Loans may fluctuate as a result of
imposition of, or changes in, the reserve requirements promulgated by the
Board of Governors of the Federal Reserve System, including without
limitation reserve requirements applicable to "Eurocurrency liabilities"
pursuant to Regulation D or any other then applicable regulation of the
Board of Governors which prescribes reserve requirements applicable to
"Eurocurrency liabilities" as presently defined in Regulation D.
Accordingly, the Borrower shall pay to any Lender, on demand, such
additional amount or amounts as will compensate it for the effect of such
reserve requirements (other than as a result of any change by way of
imposition or increase of reserve requirements, in the case of CD Loans,
included in Statutory Reserves) to the extent actually incurred by such
Lender as determined by such Lender pursuant to the next sentence hereof,
which determination shall be conclusive absent manifest error. Any amount
payable by the Borrower to any Lender pursuant to this Section 9.04(a) with
respect to LIBOR Loans shall be determined by multiplying (i) the aggregate
amount actually incurred by such Lender as a result of such reserve
requirements by (ii) a fraction, the numerator of which shall be the
aggregate amount of such Lender's LIBOR Loans then outstanding, and the
denominator of which shall be the then aggregate Eurocurrency liabilities
of such Lender.
(b) Notwithstanding any other provision herein, if after the
date of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not
having the force of law) shall change the basis of taxation of payments to
any Lender of the principal of or interest on any of such Lender's Loans or
any other amounts payable hereunder (other than taxes imposed on the
overall net income of such Lender) or shall impose, modify or deem
applicable any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, such
Lender or shall impose on such Lender or the London interbank market any
other condition affecting this Agreement or such Lender's Loans, and the
result of any of the foregoing shall be to increase the cost to such Lender
of making or maintaining any Loan or to reduce the amount of any sum
received or receivable by such Lender hereunder (whether of principal,
interest or otherwise) in respect thereof by an amount deemed by such
Lender to be material, then such additional amount or amounts as will
compensate such Lender for such additional costs or reduction will be paid
to such Lender by the Borrower upon demand by such Lender.
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(c) In the event that any amounts are owing by the Borrower to
any Lender pursuant to subsection (a) or subsection (b) above, such Lender
shall deliver to the Borrower a statement explaining the basis upon which
such amounts have been determined to be owing, which statement shall be
conclusive and binding absent manifest error.
Section 9.05. Replacement of Lenders in Certain Circumstances.
Notwithstanding anything to the contrary contained in Section 9.01, Section
9.04 or Section 11.02(b) hereof, if any Lender shall make a demand to the
Borrower for payment pursuant to Section 9.01, Section 9.03(c), Section
9.04 or Section 11.02(b) hereof, then the Borrower may, at any time within
thirty days after such demand (but only at a time when no Default or Event
of Default has occurred and is continuing), upon notice to such Lender and
all other parties hereto that the Borrower is exercising its rights
pursuant to this Section 9.05, and subject to the payment of all amounts
due to such Lender (including, without limitation, facility fees under
Section 3.06 hereof accrued through the date of the assignment referred to
below, and any amounts payable pursuant to Section 9.01, Section 9.03(c),
Section 9.04, Section 11.02(b) and Section 11.06 hereof, including amounts
payable pursuant to Section 11.02(b) as a result of such assignment and the
compensation demanded by the Lender which gave rise to the Borrower's
exercise of its rights hereunder), cause such Lender to (and such Lender
shall) assign pursuant to Section 8.01 hereof all (but not less than all)
such Lender's Loans and Commitment and other obligations under this
Agreement to any assignee or assignees selected by the Borrower that will
agree to accept such assignment for a price equal to the aggregate
principal amount of all such Lender's outstanding Loans and accrued
interest thereon through the date of such assignment, and which assignee or
assignees shall assume all (but not less than all) of such Lender's
Commitment and other obligations hereunder.
ARTICLE X
THE AGENT
Section 10.01. Appointment. Each Lender hereby irrevocably
designates and appoints Chemical Bank as the Agent of such Lender under
this Agreement and each such Lender irrevocably authorizes Chemical Bank,
as the Agent for such Lender, to take such action on its behalf under the
provisions of this Agreement and to exercise such powers and perform such
duties as are expressly delegated to the Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Agent shall not 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 otherwise
exist against the Agent.
Section 10.02. Delegation of Duties. The Agent may exercise any
of its duties under this Agreement by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties including the advancing of funds to the
Borrower and distribution of funds to the Lenders. The Agent shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
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Section 10.03. Exculpatory Provisions. Neither the Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (a) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this Agreement
(except for its or such Person's own gross negligence or willful
misconduct), or (b) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by the Borrower or
any officer therefor contained in this Agreement or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Agent under or in connection with, this Agreement or for
the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the Notes or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The Agent
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 to inspect the properties, books or
records of the Borrower.
Section 10.04. Reliance by Agent. The Agent shall be entitled
to rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation reasonably 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, without
limitation, counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless an Assignment and
Acceptance, as defined in Article VIII, shall have been filed with the
Agent pursuant to Article VIII. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of Required 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 by reason of taking or continuing to take any such action. The Agent
shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the Notes in accordance with a request of
Required Lenders, and such request and any action taken or failed to be
taken pursuant thereto shall be binding upon all the Lenders and all future
holders of the Notes.
Section 10.05. Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Agent has actual knowledge thereof or has
received notice from a Lender or the Borrower 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 Agent receives such a notice,
the Agent shall promptly give notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders; provided that unless
and until the Agent shall have received such directions, the 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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Section 10.06. Non-Reliance on Agent. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the Borrower,
shall be deemed to constitute any representation or warranty by the Agent
to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the 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
Borrower 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 the 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 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 Borrower. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent hereunder, the Agent
shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of the Borrower which may
come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
Section 10.07. Indemnification. Each Lender agrees to indemnify
the Agent in its capacity as such (to the extent not reimbursed by the
Borrower and without limiting the obligation of the Borrower to do so),
ratably according to its Pro Rata Amount, as defined below, 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 without limitation at any time
following the payment of the Notes) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement
or any documents contemplated hereby or any action taken or omitted by the
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 resulting solely from the Agent's gross
negligence or willful misconduct and, provided, further, that if the Agent
is at any time reimbursed by the Borrower for any indemnity paid by the
Lenders pursuant to this Section, the Agent shall pay each Lender, ratably
according to its Pro Rata Amount, such reimbursement received from the
Borrower. For purposes hereof, a Lender's "Pro Rata Amount" means the
aggregate amount payable by all Lenders pursuant to this Section 10.07, or
the aggregate amount payable to all Lenders pursuant to this Section 10.07,
as the case may be, multiplied by a fraction, the numerator of which is
such Lender's Commitment, and the denominator of which is the Aggregate
Commitments. The agreements in this Section 10.07 shall survive the
payment of the Notes and all other amounts payable hereunder.
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Section 10.08. Agent in Its Individual Capacity. The Agent and
its affiliates may make loans to, accept deposits from and generally engage
in any kind of business with the Borrower as though the Agent were not the
Agent hereunder. With respect to Loans made or renewed by it and any Note
issued to it, the Agent shall have the same rights and powers under this
Agreement as any Lender and may exercise the same as though it were not the
Agent, and the terms "Lender" and "Lenders" shall include the Agent in its
individual capacity.
Section 10.09. Successor Agent. The Agent may resign as Agent
upon 45 days' notice to the Borrower and the Lenders. If the Agent shall
resign as Agent under this Agreement, then Required Lenders during such 45
day period shall appoint from among the Lenders a successor agent for the
Lenders, whereupon and following such successor agent's written acceptance
thereof such successor agent shall succeed to the rights, powers and duties
of the Agent, and the term "Agent" means such successor agent effective
upon its appointment, and the former Agent's rights, powers and duties as
Agent shall be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article X shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Termination Date. Unless earlier terminated
pursuant to the terms of this Agreement, the Lenders' obligations to make
Loans hereunder to the Borrower shall terminate on April 6, 1997 (such
date, as it may be extended pursuant hereto, is herein referred to as the
"Termination Date"); provided, however, that the Lenders may, at their
option concurred in by all Lenders in writing, renew this Agreement for no
more than two successive one-year terms thereafter upon the written request
of the Borrower delivered to the Agent no later than two years and 90 days,
and no earlier than two years and 120 days, prior to the Termination Date
as in effect at the time of such request. The Lenders shall respond to any
such request within thirty days of receipt thereof by the Agent and failure
to respond within the requisite time period shall be deemed to be a
rejection of such extension offer. In the event that less than all of the
Lenders agree to renew this Agreement, then, at the option of the Borrower,
this Agreement shall be renewed in an amount equal to the total amount of
the Commitments of remaining Lenders; provided, however, that in no event
shall this Agreement be renewed if the total amount of the Commitments of
the remaining Lenders is less than 66 2/3% of the Aggregate Commitments as
of the Closing Date. In the event that this Agreement is renewed, any
Lender that, pursuant to this Section 11.01, elects or is deemed to elect
not to renew this Agreement shall, as of the Termination Date determined
without giving effect to such renewal, cease to be a party hereto.
Section 11.02. Indemnification. (a) The Borrower hereby
indemnifies the Agent and each Lender for and holds them harmless from all
losses, costs, expenses (including attorneys' fees and expenses and costs
of settlement), damages, penalties, actions, judgments, suits or other
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liabilities, or disbursements of any kind (including without limitation,
those arising under Section 10.07 hereof), except any such items arising
out of the gross negligence or willful misconduct of the Agent or such
Lender, which the Agent or such Lender may incur or which may be imposed
upon or asserted against the Agent or such Lender in any way relating to or
arising out of the Borrower's use of the proceeds of the Loans, this
Agreement, the Notes or proceedings commenced as a result of any tender
offer, proxy contest or other similar transaction involving the Borrower.
This agreement shall survive termination of this Agreement and payment in
full of the Notes.
(b) The Borrower hereby indemnifies each Lender and holds such
Lender harmless from any loss, cost or expense which such Lender shall
actually sustain or incur as a consequence of (i) a failure by the Borrower
to pay principal of or interest on any LIBOR Loan, CD Loan or Fixed Rate
Loan of such Lender when due, including, but not limited to, any such loss,
cost or expense arising from interest or fees payable by such Lender to
lenders of funds obtained by it in order to make or maintain its LIBOR
Loans or CD Loans or any Fixed Rate Loan hereunder, (ii) failure by the
Borrower to make a Borrowing after the Borrower has given a notice in
accordance with Section 2.03 or after Competitive Bids have been accepted,
(iii) failure by the Borrower to make any prepayment after the Borrower has
given a notice in accordance with Section 2.09 or Section 2.10, and (iv) a
payment of a LIBOR Loan, a CD Loan or a Fixed Rate Loan (whether by
prepayment, on acceleration, or otherwise), or an assignment pursuant to
Section 9.05 hereof of a LIBOR Loan, a CD Loan or a Fixed Rate Loan, on a
day which is not the last day of the Interest Period with respect thereto,
in each case including, but not limited to, an amount equal to the excess,
if any, as reasonably determined by such Lender of (A) its cost of
obtaining the funds for the Loan being paid, prepaid, assigned or not
borrowed for the period from the date of such payment, prepayment,
assignment or failure to borrow to the last day of the Interest Period for
such Loan (or, in the case of a failure to borrow, the Interest Period for
such Loan which would have commenced on the date of such failure to borrow)
over (B) the amount of interest (as reasonably determined by the Lender)
that would be realized by the Lender in reemploying the funds so paid,
prepaid, assigned or not borrowed. Each Lender shall provide to the
Borrower a statement, supported where applicable by documentary evidence,
explaining the amount of any such loss, cost or expense, which statement
shall, in the absence of manifest error, be conclusive with respect to the
parties hereto. The Borrower shall pay to each Lender within fifteen
Business Days following receipt by the Borrower of such statement, the
amount shown thereon as owing by the Borrower to the Lender. This
agreement shall survive termination of this Agreement and payment in full
of the Notes.
Section 11.03. Representation of Lenders. Each Lender hereby
represents that it is a commercial lender or financial institution which
makes loans in the ordinary course of its business and that it will make
each Loan made by it hereunder in the ordinary course of such business;
provided, however, that, subject to Article VIII, the disposition of the
Notes held by that Lender shall at all times be within its exclusive
control.
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Section 11.04. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank
wire, telex, telecopier, rapifax or similar writing) and shall be given to
such party at its address, telex number, telecopier number or rapifax
number set forth on the signature pages hereof or such other address, telex
number, telecopier number or rapifax number as such party may hereafter
specify for that purpose by notice to the Lenders and the Borrower. Each
such notice, request or other communication shall be effective (a) if given
by telex, when such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received, (b) if given by
telecopier or rapifax, upon receipt (receipt confirmed), (c) if by
messenger or by nationally recognized overnight carrier addressed as
aforesaid (with charges prepaid), upon written confirmation of delivery, or
(d) if given by any other means, when delivered at the address specified in
this Section.
Section 11.05. No Waivers. No failure or delay by any party in
exercising any right, power or privilege hereunder or under any Note 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.
Section 11.06. Expenses; Documentary Taxes. The Borrower shall
pay (a) all reasonable out-of-pocket expenses of the Agent (including
reasonable fees and disbursements of special counsel to the Agent) in
connection with the preparation of this Agreement, and all reasonable
out-of-pocket expenses of the Agent and the Lenders in connection with any
waiver or consent hereunder or any amendment hereof or any Default or
alleged Default hereunder, and (b) if an Event of Default occurs, all
reasonable out-of-pocket expenses incurred by the Agent and any Lender,
including fees and disbursements of counsel, in connection with such Event
of Default and collection and other enforcement proceedings resulting
therefrom. The Borrower shall indemnify each Lender against any transfer
taxes, documentary taxes, assessments or charges made by any governmental
authority by reason of the execution, delivery or performance of this
Agreement or the Notes. This Agreement shall survive termination of this
Agreement and payment in full of the Notes.
Section 11.07. Sharing of Set-Offs. Each Lender agrees that if
it shall, by exercising any right of set-off or counterclaim or otherwise,
receive payment of a proportion of the principal and interest due with
respect to the Syndicated Note or the Competitive Note held by it, as a
result of which the unpaid principal portion of the Syndicated Note or
Competitive Note held by it shall be proportionately less than the unpaid
principal portion of the Syndicated Note or Competitive Note, respectively,
held by any other Lender, the Lender receiving such proportionately greater
payment shall purchase a participation in the Syndicated Note or
Competitive Note, as the case may be, held by such other Lender, and such
other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Syndicated Notes or
Competitive Notes, as appropriate, held by the Lenders shall be shared by
the Lenders pro rata, provided, that nothing in this Section shall impair
the right of any Lender to exercise any right of set-off or counterclaim it
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may have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under the Notes.
The Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a Note, whether or
not acquired pursuant to the foregoing arrangements, may exercise rights of
set-off or counterclaim and other rights with respect to such participation
as fully as if such holder of a participation were a direct creditor of the
Borrower in the amount of such participation.
Section 11.08. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the
Required Lenders, provided that no such amendment or waiver shall, unless
signed by all the Lenders, (a) increase or subject any Lender to any
additional obligation, (b) increase the Aggregate Commitments, (c) reduce
the principal of or rate of interest on any Loan or any fees hereunder, (d)
postpone the date fixed for any payment of principal of or interest on any
Loan or any fees hereunder, (e) change the percentage of the Commitments,
or the number of Lenders, which shall be required for the Lenders or any of
them to take any action under this Section or any other provision of this
Agreement, (f) change the definition of Interest Period herein, or (g)
amend or waive any provision of Section 11.09 or Section 11.16 hereof; and
provided further that no such amendment or waiver of any provision of
Article X hereof shall be effective without the written concurrence of the
Agent.
Section 11.09. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns except that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Lenders.
Section 11.10. Collateral. Each of the Lenders represents to
each of the other Lenders that it in good faith is not relying upon any
"margin stock" (as defined in Regulation U) as collateral in the extension
or maintenance of the credit provided for in this Agreement.
Section 11.11. Obligations Several; Independent Nature of
Lenders' Rights. The obligation of each Lender hereunder is several, and
no Lender shall be responsible for the obligations or Commitment of any
other Lender hereunder. Nothing contained in this Agreement and no action
taken by the Lenders pursuant thereto shall be deemed to constitute the
Lenders to be a partnership, an association, a joint venture or any other
kind of entity. The amounts payable at any time hereunder to each Lender
shall be a separate and independent debt, and each Lender shall be entitled
to protect and enforce its rights arising out of this Agreement and it
shall not be necessary for any other Lender to be joined as an additional
party in any proceeding for such purpose.
Section 11.12. Survival of Warranties. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans hereunder and the
execution and delivery of the Notes.
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Section 11.13. Severability. In case any provision in or
obligation under this Agreement or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 11.14. Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial. All judicial proceedings brought against the
Borrower or any of the Lenders arising out of or relating to this
Agreement, any Note or any obligation of the Borrower or any obligation of
the Lenders in connection herewith or therewith may be brought in any state
or federal court of competent jurisdiction in the State and County of New
York and by execution and delivery of this Agreement each of the Borrower
and the Lenders accepts for itself and in connection with its properties,
generally and unconditionally, the jurisdiction of the aforesaid courts and
waives any defense of forum non conveniens, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement,
such Note or such obligation. All parties to this Agreement irrevocably
waive all right to trial by jury in any judicial proceeding arising out of
or relating to this Agreement, any Note or any such obligation. Each of
the Borrower and the Lenders agrees that it either has designated and
appointed such Persons as it selects to receive on its behalf service of
all process in any such proceeding in any such court, such service being
hereby acknowledged by each of the Borrower and the Lenders to be effective
and binding in every respect, or, in the alternative, hereby agrees and
consents that service of all process in any such proceeding in any such
court by certified mail at its notice address provided in the applicable
signature pages hereto constitutes effective notice and shall be effective
and binding in every respect. If any agent appointed by the Borrower or
any Lender refuses to accept service, the Borrower and each of the Lenders
hereby agrees that service upon it by mail shall constitute sufficient
notice. Nothing herein shall affect the right to service of process in any
other manner permitted by law or shall limit the right of any Lender or the
Borrower to bring proceedings in the courts of any other jurisdiction.
Section 11.15. Taxes. All payments made by the Borrower to the
Agent and to the Lenders hereunder shall be made free and clear of, and
without reduction for or on account of, any present or future 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 and franchise
taxes (imposed with respect to net income) of the United States of America
or any political subdivision or taxing authority thereof or therein
(including Puerto Rico) (such non-excluded taxes being called "Foreign
Taxes"). If any Foreign Taxes are required to be withheld from any amounts
payable hereunder or under the Notes, the amounts so payable shall be
increased to the extent necessary to yield (after payment of all Foreign
Taxes) interest or any such other amounts payable hereunder at the rates or
in the amounts specified in this Agreement and the Notes. Whenever any
Foreign Tax is payable by the Borrower, as promptly as possible thereafter,
the Borrower shall send to the Lenders a certified copy of an original
official receipt showing payment thereof. If the Borrower fails to pay any
Foreign Taxes when due to the appropriate taxing authority or fails to
remit to the Lenders the required receipts or other required documentary
49<PAGE>
<PAGE>
evidence, the Borrower shall indemnify the Lenders for any incremental
taxes, interest or penalties that may become payable as a result of any
such failure. Notwithstanding anything to the contrary contained herein,
however, in the event that a Lender (or any assignee of such Lender's
obligations hereunder) is a foreign corporation or partnership for United
States income tax purposes, the Borrower's obligation under the first two
sentences of this Section 11.15 shall apply only to payments which are
effectively connected with the conduct of a trade or business by the Lender
(or its assignee) within the United States within the meaning of Section
882 of the Internal Revenue Code of 1986, as amended.
Section 11.16. Reinstatement. To the extent any Lender receives
any payment by or on behalf of the Borrower, which payment or any part
thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to the Borrower or its
estate, trustee, receiver, custodian or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then
to the extent of such payment or repayment, the obligation or part hereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated by the amount so repaid and shall be included within the
liabilities of the Borrower to such Lender as of the date such initial
payment, reduction or satisfaction occurred.
Section 11.17. New York Law. This Agreement and each Note shall
be construed in accordance with and governed by the law of the State of New
York.
Section 11.18. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
Section 11.19. Entire Agreement. This Agreement, the other loan
documents related hereto and the side letter agreement referred to in
Section 3.07 constitute the entire contract between the parties relative to
the subject matter hereof. Any previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement, the
other loan documents and the side letter agreements referred to herein.
Nothing in this Agreement, the other loan documents or the side letter
agreements referred to herein, expressed or implied, is intended to confer
upon any party other than the parties hereto and thereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
the other loan documents or the side letter agreements referred to herein.
50<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
CLARK EQUIPMENT COMPANY
By: /s/ William N. Harper
Title: Vice President and Controller
By: /s/ Thomas B. Jones, Jr.
Title: Assistant Treasurer
100 N. Michigan Street
South Bend, Indiana 46634
Telex number: 6718074
Rapifax numbers: (219) 239-0238
or 0237
Commitments
$20,000,000.00 CHEMICAL BANK
By: /s/ C. C. Wardell
Christopher Wardell
Managing Director
Notice Address pursuant to Section 11.05:
Jennifer H. McGowan
Vice President
Chemical Securities Inc.
10 South LaSalle Street
Suite 2300
Chicago, Illinois 60603
Telephone: (312) 807-4035
Facsimile: (312) 443-1964
Notice Address (copy):
Christopher C. Wardell
Managing Director
Chemical Bank
270 Park Avenue, Tenth Floor
New York, New York 10017
Telephone: (212) 270-2053
Facsimile: (212) 270-3860
51
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$12,500,000.00 ROYAL BANK OF CANADA
By: /s/ Gordon MacArthur
Name: Gordon MacArthur
Title: Manager
Notice Address pursuant to Section 11.05:
New York Branch
Royal Bank of Canada
c/o New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, New York 11201-2701
Telephone: (212) 858-7168
Facsimile: (718) 522-6292/3
Notice Address (copy):
Royal Bank of Canada
One North Franklin Street, Suite 700
Chicago, Illinois 60606
Attention: Gordon C. MacArthur, Manager
Telephone: (312) 551-1613
Facsimile: (312) 551-0805
52
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<PAGE>
$12,500,000.00 COMERICA BANK
By: /s/ Phillip A. Coosaia
Name: Phillip A. Coosaia
Title: Assistant Vice President
Notice Address pursuant to Section 11.05:
Phillip A Coosaia
Comerica Bank
500 Woodward Avenue - MC 3279
Detroit, Michigan 48226
Telephone: (313) 222-7044
Facsimile: (313) 222-3330/6199
Notice Address (copy):
Sandra Fields
Comerica Bank
500 Woodward Avenue - MC 3279
Detroit, Michigan 48226
Telephone: (313) 222-3805
Facsimile: (313) 222-3330/6199
53<PAGE>
<PAGE>
$12,500,000.00 NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Christopher B. Torie
Name: Christopher B. Torie
Title: Senior Vice President
Notice Address pursuant to Section 11.05:
Christopher Torie
NationsBank of North Carolina, N.A.
70 West Madison Avenue, Suite 5300
Chicago, Illinois 60602
Telephone: (312) 853-5794
Facsimile: (312) 853-9194
Notice Address (copy):
Kathy Mumpower
NationsBank of North Carolina, N.A.
One NationsBank Plaza NCI-002-06-19
Charlotte, North Carolina 28255
Telephone: (704) 386-7429
Facsimile: (704) 386-8694
54<PAGE>
<PAGE>
$12,500,000.00 PNC BANK, NATIONAL ASSOCIATION
By: /s/ James N. DeVries
Name: James N. DeVries
Title: Vice President
Notice Address pursuant to Section 11.05:
PNC Bank, N.A.
Fifth Avenue and Wood Street
Pittsburgh, PA 15222
Telephone:_________________________
Facsimile:_________________________
Notice Address (copy):
PNC Bank, N.A.
Chicago Office
500 West Madison Street, Suite #3140
Chicago, IL 60661
Telephone: (312) 906-3400
Facsimile: (312) 906-3420
55<PAGE>
<PAGE>
$7,500,000.00 UNION BANK OF SWITZERLAND,
CHICAGO BRANCH
By: /s/ Walter R. Wolff
Name: Walter R. Wolff
Title: First Vice President
By: /s/ Thomas H. Meyers
Name: Thomas H. Meyers
Title: Lending Officer
Notice Address pursuant to Section 11.05:
Denis J. Campbell, IV
Union Bank of Switzerland,
Chicago Branch
30 South Wacker Drive, 40th Floor
Chicago, Illinois 60606
Telephone: (312) 993-5604
Facsimile: (312) 993-5530
Notice Address (copy):
Anna Trost
Union Bank of Switzerland,
Chicago Branch
30 South Wacker Drive, 40th Floor
Chicago, Illinois 60606
Telephone: (312) 993-5522
Facsimile: (312) 993-5530
56<PAGE>
<PAGE>
$7,500,000.00 ABN-AMRO BANK N.V.
By: /s/ Robert J. Graff
Name: Robert J. Graff
Title: Vice President
By: /s/ Bernard J. McGuigan
Name: Bernard J. McGuigan
Title: Group Vice President
Notice Address pursuant to Section 11.05:
Robert J. Graff
ABN AMRO Bank N.V.
135 South LaSalle Street
Chicago, Illinois 60603
Telephone: (312) 443-2675
Facsimile: (312) 606-8425
Notice Address (copy):
Loan Administration
ABN AMRO Bank N.V.
135 South LaSalle Street
Chicago, Illinois 60603
Telephone: (312) 443-2961
Facsimile: (312) 606-8435
57<PAGE>
<PAGE>
$7,500,000.00 BANK BRUSSELS LAMBERT - NEW YORK BRANCH
By: /s/ Dominick H.J. Vangaever
Name: Dominick H.J. Vangaever
Title: Vice President -Credit Dept.
By: /s/ Eric Hollanders
Name: Eric Hollanders
Title: Senior Vice President - Credit Dept.
Notice Address pursuant to Section 11.05:
Mary V. Roney
Vice President
Bank Brussels Lambert - New York Branch
70 West Madison Avenue
Chicago, Illinois 60602
Telephone: (312) 541-0068
Facsimile: (312) 541-0072
Notice Address (copy):
Jose Garces
Bank Brussels Lambert - New York Branch
630 Fifth Avenue, 6th Floor
New York, New York 10111
Telephone: (212) 632-5429
Facsimile: (212) 632-5308
58<PAGE>
<PAGE>
$7,500,000.00 BANK OF MONTREAL
By: /s/ Jeffrey C. Nicholson
Name: Jeffrey C. Nicholson
Title: Director
Notice Address pursuant to Section 11.05:
Jeffrey C. Nicholson
Bank of Montreal
115 South LaSalle Street
Chicago, Illinois 60603
Telephone: (312) 750-3732
Facsimile: (312) 750-6057
Notice Address (copy):
Debra J. Sandt
Bank of Montreal
115 South LaSalle Street
Chicago, Illinois 60603
Telephone: (312) 750-3727
Facsimile: (312) 750-4344
______________
$100,000,000
59
Exhibit 4(d)
EXECUTION COPY
AMENDMENT NO. 1 dated as of February 21, 1995 (this "Amendment"),
among Clark Equipment Company, a Delaware corporation (the "Borrower"), the
financial institutions parties hereto (the "Lenders") and Chemical Bank, a
New York banking corporation, as agent for the Lenders (in such capacity,
the "Agent").
PRELIMINARY STATEMENTS. (1) The Borrower, the Lenders and the Agent
have entered into the Master Credit Agreement dated as of April 6, 1994
(the "Credit Agreement") and have agreed to amend the Credit Agreement as
hereinafter set forth.
(2) Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to such terms in the Credit Agreement.
In consideration of the premises and the agreements, provisions and
covenants herein contained, the parties hereto hereby agree, on the terms
and subject to the conditions set forth herein, as follows:
SECTION 1. Amendment of the Credit Agreement. The Credit Agreement
is hereby amended as follows:
(a) The defined terms "Aggregate Commitments" and "Commitment"
contained in Section 1.01 of the Credit Agreement are hereby deleted and
the following defined terms substituted therefor:
"Aggregate Commitments" means the aggregate amount of the
Commitments of all Lenders, subject to reduction as provided in
Section 2.09.
"Commitment" means, with respect to each Lender, such Lender's
Original Commitment and Additional Commitment, collectively.
(b) The following defined terms are hereby added to Section 1.01 of
the Credit Agreement (in appropriate alphabetical order):
"Additional Commitment" means, with respect to each Lender, the
amount set forth opposite the name of such Lender under the heading
"Additional Commitment" on the signature pages hereof, subject to
reduction as provided in Section 2.09. The original aggregate amount
of the Additional Commitments is $100,000,000.
"Additional Commitment Termination Date" means February 20, 1996.
"Original Commitment" means, with respect to each Lender, the
amount set forth opposite the name of such Lender under the heading
"Original Commitment" on the signature pages hereof, subject to
reduction as provided in Section 2.09. The original aggregate amount
of the Original Commitments is $100,000,000.
(c) The defined term "Interest Period" contained in Section 1.01 of
the Credit Agreement is hereby amended to add the following at the end of
clause (D) of the proviso clause thereto:
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<PAGE>
"and no Interest Period shall extend beyond the Additional Commitment
Termination Date if, as a result thereof, Loans in an aggregate
principal amount in excess of $100,000,000 would be subject to
Interest Periods which extend beyond the Additional Commitment
Termination Date."
(d) Section 2.09 of the Credit Agreement is hereby deleted in its
entirety and the following substituted therefor:
Section 2.09. Reductions of the Commitments. The Borrower shall
have the right, from time to time, upon not less than three Business
Days' prior notice to the Agent, to terminate the Original Commitments
and/or the Additional Commitments or reduce the amount of the Original
Commitments and/or the Additional Commitments. In addition, the
Additional Commitment of each Lender shall automatically terminate on
the Additional Commitment Termination Date and the Aggregate
Commitments shall be reduced accordingly. Any reduction or
termination of the Commitments shall be subject to the following: (a)
any such reduction shall be in an amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and shall permanently reduce
the Original Commitments or the Additional Commitments, as applicable,
then in effect, (b) no such reduction or termination may reduce the
amount of the Aggregate Commitments to an amount less than the
aggregate outstanding principal amount of Competitive Loans (after
giving effect to any repayments of Competitive Loans on the date of
such reduction), (c) to the extent, if any, that the amount of the
Loans then outstanding exceeds the amount of the Aggregate Commitments
as then reduced, the Borrower shall, on the date of such reduction or
termination, prepay the Syndicated Loans in an amount not less than
such excess, together with accrued interest on the amount so prepaid
to the date of such prepayment and any amounts owing by the borrower
pursuant to Section 11.02(b) hereof as a result of such prepayment,
and (d) the Borrower shall, on the date of such reduction or
termination, pay accrued facility fees pursuant to Section 3.06 hereof
on the amount of such reduction or termination to the date of such
reduction or termination. Upon any such reduction of the Original
Commitments or the Additional Commitments, the Original Commitment or
Additional Commitment, as the case may be, of each Lender shall be
reduced pro rata. Each notice of reduction of the Original
Commitments or the Additional Commitments shall be irrevocable once
given.
(e) Section 8.01(a) of the Credit Agreement is hereby amended to add
the following clause (viii) to the proviso clause thereto:
"(viii) any assignment of such Lender's Original Commitment shall
include an assignment of an equal portion of such Lender's Additional
Commitment, and any assignment of such Lender's Additional Commitment
shall include an assignment of an equal portion of such Lender's
Original Commitment."
(f) Section 11.01 of the Credit Agreement is hereby amended to (i)
change the date in the first sentence thereof from "April 6, 1997" to
"April 6, 1998" and (ii) to delete the words "two successive one-year
terms" contained in the proviso clause to the first sentence thereof and to
substitute the words "one additional one-year term" therefor.
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<PAGE>
SECTION 2. Consent to Sale of Borrower's Interest in the Joint
Venture Company. Notwithstanding anything to the contrary contained in the
Credit Agreement, the Lenders hereby consent to the Borrower's sale of all
or any portion of its interest in the Joint Venture Company.
SECTION 3. Representations and Warranties. The Borrower represents
and warrants to each of the Lenders and the Agent that:
(a) This Amendment and each of the replacement Notes executed in
connection herewith have been duly authorized, executed and delivered
by it and constitutes its legal, valid and binding obligation,
enforceable in accordance with their respective terms except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws
affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(b) Before and after giving effect to this Amendment, the
representations and warranties set forth in Article V of the Credit
Agreement are true and correct in all material respects with the same
effect as if made on the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) Before or after giving effect to this Amendment, no Event of
Default or Default has occurred and is continuing.
SECTION 4. Condition to Effectiveness. The amendments to the Credit
Agreement set forth in this Amendment shall become effective as of the date
first above written when the Agent shall have received (i) counterparts of
this Amendment that, when taken together, bear the signatures of the
Borrower and all of the Lenders and (ii) a replacement Competitive Note and
a replacement Syndicated Note executed by the Borrower for each of the
Lenders.
SECTION 5. Credit Agreement. Except as specifically amended hereby,
the Credit Agreement shall continue in full force and effect in accordance
with the provisions thereof as in existence on the date hereof. After the
date hereof, any reference to the Credit Agreement shall mean the Credit
Agreement as amended hereby. For purposes of determining each Lender's
Original Commitment and Additional Commitment, the signature pages to this
Amendment shall be deemed to also constitute signature pages to the Credit
Agreement.
SECTION 6. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. Counterparts. This Amendment may be executed in two or
more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract.
SECTION 8. Expenses. The Borrower agrees to reimburse the Agent for
its out-of-pocket expenses in connection with this Amendment, including the
reasonable fees, charges and disbursements of Sidley & Austin, counsel for
the Agent.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date and
year first above written.
CLARK EQUIPMENT COMPANY
By: /s/ Thomas L. Doepker
Title: Vice President and Treasurer
By: /s/ Thomas B. Jones, Jr.
Title: Assistant Treasurer
Commitments:
Original Commitment CHEMICAL BANK
$20,000,000.00
Additional Commitment
$20,000,000.00
By: /s/ C. C. Wardell
Name: C. C. Wardell
Title: Managing Director
Original Commitment THE ROYAL BANK OF CANADA
$12,500,000.00
Additional Commitment
$12,500,000.00
By: /s/ Gordon MacArthur
Name: Gordon MacArthur
Title: Manager
Original Commitment COMERICA BANK
$12,500,000.00
Additional Commitment
$12,500,000.00
By: /s/ Phillip A. Coosaia
Name: Phillip A. Coosaia
Title: Assistant Vice President
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<PAGE>
Original Commitment NATIONSBANK OF NORTH CAROLINA, N.A.
$12,500,000.00
Additional Commitment
$12,500,000.00
By: /s/ Christopher B. Torie
Name: Christopher B. Torie
Title: Senior Vice President
Original Commitment PNC BANK, NATIONAL ASSOCIATION
$12,500,000.00
Additional Commitment
$12,500,000.00
By: /s/ James N. DeVries
Name: James N. DeVries
Title: Vice President
Original Commitment UNION BANK OF SWITZERLAND,
$7,500,000.00 CHICAGO BRANCH
Additional Commitment
$7,500,000.00
By: /s/ Walter R. Wolff
Name: Walter R. Wolff
Title: Managing Director
By: /s/ Denis J. Campbell IV
Name: Denis J. Campbell IV
Title: Vice President
Original Commitment ABN-AMRO BANK N.V.
$7,500,000.00
Additional Commitment
$7,500,000.00
By: /s/ Bernard J. McGuigan
Name: Bernard J. McGuigan
Title: Group Vice President
By: /s/ John Wm. Stanger
Name: John Wm. Stanger
Title: Group Vice President
-5-<PAGE>
<PAGE>
Original Commitment BANK BRUSSELS LAMBERT - NEW YORK
$7,500,000.00 BRANCH
Additional Commitment
$7,500,000.00
By: /s/ Gerrit Verlodt
Name: Gerrit Verlodt
Title: Senior Vice President
By: /s/ Eric Hollanders
Name: Eric Hollanders
Title: Senior Vice President
Credit Department
Original Commitment BANK OF MONTREAL
$7,500,000.00
Additional Commitment
$7,500,000.00
By: /s/ Jonathan D. Hook
Name: Jonathan D. Hook
Title: Director
-6-
Exhibit 10(b)
15 February 1995
Mr. Frank M. Sims
Clark Equipment Company
100 North Michigan Street
P. O. Box 7008
South Bend, Indiana 46634
Dear Mr. Sims:
The terms and conditions of your employment with Clark Equipment Company
(CLARK) are contained in a letter dated 12 November 1992 (the 1992
Agreement). The purpose of this letter (herein "this Agreement") is to
amend and restate our agreement.
Specifically, CLARK proposes the following:
1. STATEMENT OF PURPOSE.
You have deferred $113,500 of your base salary. Those deferred amounts
have been used by CLARK to purchase insurance policies on your life with
the proceeds of those policies payable to CLARK on your death. CLARK
expects that those proceeds are sufficient to fund the benefits set forth
in this Agreement.
The purpose of this Agreement is to describe the benefits to which you or
your surviving spouse or estate will become entitled if you die, retire or
otherwise cease to be an employee of CLARK.
2. EMPLOYMENT.
2.1 Duties. CLARK will continue to employ you and you will continue to
serve CLARK either as a Senior Vice President at CLARK's Principal Offices,
with duties and responsibilities appropriate to such a position, or, in
such other capacity and location with duties and responsibilities as the
Chief Executive Officer may from time to time determine.
2.2 Compensation. For your services as a full-time employee of CLARK,
your salary shall be fixed from time to time by the Chief Executive
Officer, but shall not be less than a rate which is 88.75% of the average
of the Hay Management Consultants Industrial Salary Survey, as determined
from year to year, for the number of Hay Client Points of your position as
of the date of this Agreement. In no event will your salary be reduced to
a rate below its then current rate unless reductions of the same percentage
are being made at the same time to the salaries of all other CLARK officers
in the Corporate Offices at or above the vice president level, and your
salary would then be restored to its prior level when, and to the same
extent, that occurs for the other officers. As a full-time employee you
will be afforded the opportunity to earn a bonus or other non-salary
compensation and to participate in all employee benefits or perquisites as
may be made applicable to employees of like rank and position.
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<PAGE>
3. BENEFITS UPON YOUR DEATH, RETIREMENT OR TERMINATION OF EMPLOYMENT.
3.1 Retirement. If you elect to retire from the employ of CLARK for any
reason, CLARK agrees to make monthly payments to you for the rest of your
life in an amount determined from Exhibit A to this Agreement reduced by
the amount of any payments received by you pursuant to the Deferred
Compensation Agreements awarded to you on 1 May 1974 and 14 January 1980.
3.2 Death After Retirement. If, after being retired from the employ of
CLARK pursuant to Section 3.1, you die, CLARK agrees to make monthly
payments to your widow, Jo Anne Sims, for the rest of her life, in an
amount equal to 60% of the monthly sum guaranteed to you in Section 3.1
reduced by the amount of any payments received by her or any other
beneficiary pursuant to the Deferred Compensation Agreements awarded to you
on 1 May 1974 and 14 January 1980.
3.3 Death Before Retirement. If you die while still an employee of CLARK,
CLARK will pay to your widow, Jo Anne Sims, for the rest of her life, the
amounts which would have been payable to her pursuant to Section 3.2 if you
had retired from the employ of CLARK on the first day of the month in which
you died.
3.4 Supplemental Payments. CLARK will also make monthly payments to you
(or to your widow) in an amount equal to the additional amounts of pension
benefits that would have been payable to you (or to her) from the CLARK
Retirement Program for Salaried Employees if the amount of such pension
benefits were not limited either by Section 415 of the Internal Revenue
Code or by any other law or regulation that limits either the amount of
pension benefits or the amount of salary that can be used to determine
pension benefits.
3.5 Termination Of Your Employment Other Than For Cause. If your
employment is terminated by CLARK other than for cause (as defined in
Section 3.6), you will be entitled to a one time payment equal to 1.5 times
your then annual salary, excluding bonus. In addition, you would be
entitled to elect to retire at the time of such termination and thereby
qualify for the payments provided for in Section 3.1.
3.6 Termination Of Your Employment For Cause. CLARK may terminate this
Agreement and your employment for cause immediately upon notice to you if
it is established that there has been either continued neglect or a
material breach of your duties and obligations hereunder. If your
employment is terminated by CLARK for cause, you will have the option to
retire pursuant to Section 3.1 at that time in lieu of such termination.
4. CHANGE IN CONTROL OF CLARK.
If at a time when you are no longer an active employee at CLARK and you or
your widow, Jo Anne Sims, are entitled to monthly payments pursuant to
Sections 3.1, 3.2, 3.3 or 3.4 of this Agreement, a change in control of
CLARK occurs as defined in Section 9 hereof, then CLARK shall pay or cause
to be paid to you (or to her), within 30 days thereafter, a one-time lump
sum payment in lieu of the monthly payments that would otherwise be payable
to you or to her pursuant to such sections. The amount of such lump sum
payment shall be an amount sufficient that, after your payment of all
-2-<PAGE>
<PAGE>
income taxes thereon, the amount remaining will be the present value of all
future payments to which you or your surviving spouse would otherwise be
entitled under this Agreement, calculated as described in Section 9.5.
5. YOUR DEFERRAL OBLIGATION.
You agree to forego the receipt of salary and salary increases awarded to
you after 1 June 1984 in amounts sufficient to satisfy the salary deferral
schedule incorporated herein as Exhibit B. Since the cumulative total of
such salary amounts so foregone now equals the amounts shown in Exhibit B,
you have no further obligation to forego salary or salary increases.
6. NON-COMPETITION.
While employed by CLARK, your duties have related to all of the business
operations of CLARK, both in the United States and elsewhere in the world.
For such time as you are employed by CLARK, and thereafter for a period of
(i) five years if your employment terminates at a time and for a reason
that entitles you to lifetime monthly payments pursuant to this Agreement
or (ii) two years if the termination of your employment does not entitle
you to such lifetime monthly payments, but in any event only for so long as
CLARK satisfies its obligations under this Agreement, you agree to refrain
from competing with CLARK or any of its subsidiaries or affiliates in the
United States or elsewhere in the world with respect to any aspect of the
business conducted by CLARK or its subsidiaries or affiliates (collectively
"the Business"), including without limitation, the design, manufacture,
sale or distribution of products which are competitive with those of CLARK,
or becoming an employee or representative of any person, firm or company
which competes with CLARK or any of its subsidiaries or affiliates in the
United States or elsewhere in the world with respect to the Business. If a
court shall finally hold that the time or territory or any other provisions
stated in this Section 6 constitutes an unreasonable restriction upon you,
the provisions of this Agreement shall not be rendered void, but shall
instead apply as to time for a period of two years and as to territory in
the continental United States or to such lesser extent as such court may
judicially determine constitutes a reasonable restriction under the
circumstances involved. If you request and obtain from the Human
Effectiveness Committee of the Board of Directors of CLARK (or a successor
committee) a written approval that an employment opportunity or other
activity that you are considering would not be in violation of this Section
6, then CLARK will abide by such determination and will not seek to enforce
this Section with respect to such employment or activity.
7. CONFIDENTIAL INFORMATION.
During the course of your employment with CLARK, you have received,
developed or otherwise become aware of confidential information of CLARK,
VME Group N.V., and their subsidiaries and affiliates. For a period of
five years following the cessation of your employment with CLARK for any
reason (but only for so long as CLARK satisfies its obligations under this
Agreement), you will not use, disclose, give, sell or otherwise divulge to
any person, firm or corporation any confidential information regarding
CLARK or VME Group N.V. or any of their subsidiaries or affiliates. The
term "confidential information" shall include but not be limited to any
aspect of CLARK's or VME Group N.V.'s (or their subsidiaries' or
-3-<PAGE>
<PAGE>
affiliates') business, trade secrets, strategies, potential acquisitions or
divestitures, discussions relating to acquisitions or divestitures,
financial statements or other financial information, forecasts, operations,
business plans, prices, discounts, products, product specifications,
designs, plans, processes, data and know-how, ideas, technical information
and intellectual property, except such information as is otherwise made
publicly available by CLARK or VME Group N.V., or their subsidiaries or
affiliates. You will not remove from CLARK's possession any confidential
information, and shall return to CLARK on or before the termination of your
employment any confidential information which may have previously been in
your possession. The provisions of this Section 7 shall survive any
termination of this Agreement. Any other agreements between CLARK and you
relating to confidentiality shall, to the extent not inconsistent herewith,
remain in effect.
8. EMPLOYEES.
For a period of three years from the date of the cessation of your
employment with CLARK (but only for so long as CLARK satisfies its
obligations under this Agreement), you agree to refrain from suggesting,
persuading, or inducing any key employees of CLARK or its subsidiaries or
affiliates to leave their employ at CLARK to be employed elsewhere.
9. CHANGE IN CONTROL OF CLARK.
9.1 This Section Governs. If following a change in control of CLARK as
hereinafter defined your employment terminates, the provisions of this
Section 9 shall govern your rights and shall, to the extent inconsistent
with the other provisions of this Agreement or other agreements between you
and CLARK, supersede such other provisions and agreements.
9.2 Resignation Within One Year. If within one year after a change in
control of CLARK you terminate your employment with CLARK, such termination
will be treated as a termination by CLARK other than for cause.
9.3 Resignation After Change In Location, Duties, Compensation. If any
time subsequent to a change in control of CLARK, you terminate your
employment with CLARK within six months after the occurrence of one or more
of the following events: (i) a change in the location of your employment;
(ii) a significant change in the nature and scope of your employment
responsibilities or duties including but not limited to a change in title
or reporting responsibility; or (iii) any reduction in your compensation,
benefits or perquisites, either separately or in the aggregate, such
termination will be treated as a termination by CLARK other than for cause.
9.4 Termination By Clark. If after a change in control of CLARK you are
terminated by CLARK other than for cause (as defined in Section 9.6), CLARK
shall pay or cause to be paid to you within 30 days thereafter:
(a) An amount sufficient that, after your payment of all income taxes
thereon, the amount remaining will be the present value of all future
payments to which you or your surviving spouse would otherwise be entitled
under all of the other provisions of this Agreement except for those
included in this Section 9;
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(b) An amount sufficient that, after your payment of all income taxes
thereon, the amount remaining will be the present value of any lump sum
payments payable to you at a future date or dates under the provisions of
this Agreement that are not included in this Section 9, regardless of
whether such future payments are conditioned on your still being an active
employee at such future date or dates (any such condition being hereby
waived); and
(c) A severance payment equal to two times "base income" as
hereinafter defined. Notwithstanding the foregoing, if the aggregate
payments to which you are entitled as a result of a termination by CLARK
other than for cause would constitute an "excess parachute payment" under
Internal Revenue Code Section 280 G(b), then the severance payment set
forth in this paragraph (c) shall be reduced to the extent necessary so
that when it is added to all other payments constituting "parachute
payments", the total "parachute payments" are not more than 2.99 times
"base income". No amount will be payable under this paragraph (c) if the
total of the other "parachute payments" exceeds 2.99 times "base income".
For the purpose of this paragraph (c), the term "base income" shall mean
your average annual total taxable compensation received from CLARK over the
last five years ending before the change in control of CLARK occurs.
9.5 Present Value Calculation. For the purposes of paragraphs (a) and (b)
of Section 9.4, "present value" will be calculated using the interest rate
specified in Section 411(a)11(B)(ii) of the Internal Revenue Code of 1986,
or any successor section thereto, as of the date of such termination and
the 1983 Group Annuitants Mortality Table, or the mortality table (if it is
different) then being used by CLARK's actuaries for valuation purposes with
respect to CLARK's qualified pension plans. All calculations for the
purposes of Sections 9.4 and 9.7 shall be made, at the expense of CLARK, by
the independent auditors of CLARK. As soon as practicable after the need
for such calculation arises, CLARK shall provide to its auditors all
information needed to perform such calculations.
9.6 Other Than For Cause - Defined. For the purposes of this Section 9, a
termination of your employment by CLARK shall be "other than for cause" if
it is either (i) treated as such pursuant to Sections 9.2 or 9.3 hereof or
(ii) if such termination by CLARK occurs after a change in control of
CLARK, for any reason other than either continued neglect or a material
breach of your duties and obligations under this agreement.
9.7 Tax Protection. In the event that you become entitled to payments
under Section 9.4 and the aggregate payments to which you are entitled
(disregarding paragraph (c) of Section 9.4) constitutes an "excess
parachute payment" under Internal Revenue Code Section 280 G(b), then CLARK
will pay to you at the time of the payments under Section 9.4 an amount
sufficient that, after your payment of income taxes and any excise taxes
thereon, the amount remaining will be sufficient to pay any excise tax
imposed on you by the Internal Revenue Code because of such "excess
parachute payment".
9.8 Expenses. In the event of a change in control of CLARK, all
subsequent legal and accounting fees and expenses incurred by you in
connection with, or in prosecuting or defending, any dispute arising out of
or relating to this Agreement shall be paid by CLARK provided you prevail
in whole or in part in any such dispute.
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9.9 Change In Control - Defined. For the purpose of this Agreement, a
change in control of CLARK shall mean any of the following events:
(1) the acquisition of beneficial ownership of 25% or more of
the shares of the Common Stock of CLARK by or for any person (as such term
is defined in Section 14(d)(2) of the Securities Exchange Act of 1934),
including for purposes of calculating such person's ownership, all shares
beneficially owned by the affiliates and associates (as such terms are
defined in Rule 12b-2 of the Securities Exchange Act of 1934) of such
person, provided, however, that the term "person" shall not include any of
the following: CLARK, any subsidiary of CLARK, any employee benefit plan
or employee stock plan of CLARK or of any subsidiary of CLARK, any dividend
reinvestment plan of CLARK, any person or entity organized, appointed or
established by CLARK for or pursuant to the terms of any such plan, or any
person which becomes the beneficial owner of 25% or more of such shares
then outstanding solely as a result of the acquisition by CLARK or any
employee benefit plan of CLARK of shares of the Common Stock of CLARK,
provided that such person does not thereafter acquire any shares of the
Common Stock of CLARK, or
(2) during any period of 24 consecutive months, individuals who
at the beginning of such period constitute the Board of Directors of CLARK
cease for any reason to constitute a majority thereof, unless the election,
or nomination for election by CLARK's stockholders, of each new director
was approved by a vote of at least two-thirds of the directors then still
in office who were directors at the beginning of such period, or
(3) CLARK's stockholders shall approve (a) the merger or
consolidation of CLARK with or into another corporation and CLARK shall not
be the surviving corporation, or (b) an agreement to sell or otherwise
dispose of all or substantially all of CLARK's assets (including a plan of
liquidation).
10. TERMINATION OF SURVIVOR BENEFITS.
In the event that, (i) while you are employed pursuant to this Agreement,
your spouse predeceases you, or (ii) while you are either so employed or
retired and eligible for payments pursuant to Section 3.1, either your
marriage ends by divorce or you wish to delete from this Agreement the
provisions providing for benefits to your surviving spouse for a reason
other than her death, you may notify CLARK of such fact and request that
this Agreement be amended to delete the surviving spouse provisions. If in
the opinion of legal counsel to CLARK such amendment can be legally made
and will be effective to extinguish any legal rights that your spouse or
former spouse might have under this Agreement, and subject to the
satisfaction of any conditions (such as obtaining a written waiver or
consent from such spouse or former spouse) expressed in such legal opinion,
CLARK will agree to so amend this Agreement. CLARK will also agree to
include in such amendment an actuarial adjustment, on an equal value basis,
of the benefits payable to you under this Agreement to reflect the fact
that benefits will no longer be payable to a surviving spouse.
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11. SPOUSE OPTION AND GUARANTEE.
11.1 In calculating the monthly amounts of Sections 3.1 and 3.2, the 60%
Spouse Option under the Clark Equipment Company Retirement Program for
Salaried Employees was assumed. Accordingly, if and so long as this
Agreement provides for any benefits to be payable to your surviving spouse,
CLARK's agreement to make or to continue the monthly payments under
Sections 3.1 or 3.2 is expressly conditioned upon your selecting and
maintaining the 60% Spouse Option at the time you elect retirement.
11.2 If your widow, Jo Anne Sims, either becomes entitled to benefits
pursuant to Section 3.2 or 3.3, or would have been entitled to benefits
pursuant to one of such Sections but for the fact that she predeceased you,
and if the aggregate amount of the monthly payments made to you and to her
under this Agreement is less than the applicable guarantee as shown in the
table below, a lump sum payment will be made either to your estate or to
such other beneficiary as you may have otherwise designated, in an amount
equal to the difference between the applicable guaranteed amount and the
aggregate amounts paid to you and to her.
Section Under Which Your Guaranteed Total
Widow Was (or Would Have Payments Equal
Been) Eligible for 60 Times This
Monthly Benefits Monthly Amount:
3.2 The amount which was payable to you
under Section 3.1.
3.3 The amount which would have been payable
to you under Section 3.1 if you had
retired from CLARK on the first day of
the month in which you died
12. COMPENSATION ADMINISTRATION BY CLARK.
Notwithstanding your obligation under Section 5 to forego the receipt of
salary, CLARK will, except as otherwise required either by law or to
maintain the tax qualified status of its benefit programs, continue to
administer your salary, benefits and non-salary compensation as if that
obligation to forego did not exist.
13. CLARK RETIREMENT PROGRAM.
As used in this Agreement, the term "Clark Retirement Program" means the
Clark Equipment Company Retirement Program for Salaried Employees or any
successor pension plan funded entirely by CLARK. Such term does not
include the Clark Savings and Investment Plan or the Clark Leveraged
Employee Stock Ownership Plan. Notwithstanding the foregoing, for the
purpose of this Agreement, the amount of any monthly payment received by
either you, or your widow, from the CLARK Retirement Program shall be
deemed to include the entire amounts which would be payable to either of
you from the Clark Equipment Company Retirement Program for Salaried
Employees without regard to any reduction in such benefits to reflect the
amounts payable from the Clark Leveraged Employee Stock Ownership Plan.
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14. GOVERNING LAW.
This Agreement shall be governed by the law of the State of Indiana.
15. SEVERABILITY.
If any provision of this Agreement is held invalid, such invalidity shall
not affect the remaining provisions of this Agreement to the extent those
provisions are not dependent upon the invalid provision.
16. REMEDIES.
In the event of a violation of any of the provisions of this Agreement by
either you or CLARK, the other party will be entitled, if it so elects, in
addition to all other remedies under applicable law, to institute
proceedings at law or in equity to seek damages with respect to such
violation or to enforce specific performance of this Agreement or to enjoin
the violating party from engaging in any activity in violation thereof.
Prior to taking any legal action to seek damages or enforce such
provisions, either party will give to the other party written notice of the
claimed violations and allow the other party a period of sixty days to cure
such violations.
17. AMENDMENT AND RESTATEMENT OF THE 1992 AGREEMENT.
Upon execution by you of this Agreement, the 1992 Agreement shall be amend-
ed and restated by this Agreement.
If the foregoing is entirely satisfactory to you, please sign and return
the attached copy of this letter whereupon it shall constitute an agreement
between us as of the date first set forth above.
Very truly yours,
CLARK EQUIPMENT COMPANY
Accepted and Agreed to: By /s/ Leo J. McKernan
Leo J. McKernan
/s/ Frank M. Sims Chairman, President and
Chief Executive Officer
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Mr. Frank M. Sims
15 February 1995
EXHIBIT A
Benefit Schedule
Section 3.1 Payable for Retirement
Amounts Between
$ 9,766.67 1 August 1994 and 31 July 1995
$10,550.00 1 August 1995 and 31 July 1996
$11,391.67 1 August 1996 and 31 July 1997
$12,300.00 1 August 1997 and Thereafter
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EXHIBIT B
Mr. Frank M. Sims
15 February 1995
Salary Deferral Schedule
Section 5 Period Amount
1 June 1984 through 31 July 1985 $28,000
1 August 1985 through 31 July 1986 28,000
1 August 1986 through 31 July 1987 13,900
1 August 1987 through 31 July 1988 200
1 August 1988 through 31 July 1989 800
1 August 1989 through 31 July 1990 1,400
1 August 1990 through 31 July 1991 2,400
1 August 1991 through 31 July 1992 7,400
1 August 1992 through 31 July 1993 12,400
1 August 1993 through 31 July 1994 19,000
-10-
Exhibit 10 (l)
CLARK EQUIPMENT COMPANY
INCENTIVE COMPENSATION PLAN
FOR CORPORATE OFFICE MANAGEMENT
(AMENDED AND RESTATED EFFECTIVE 1 JANUARY 1994)
This Plan was adopted the 18th day of February 1992, and on 14 February
1994 was amended and restated by the Human Effectiveness Committee of the
Board of Directors of Clark Equipment Company ("Clark"), effective as of
1 January 1994, as set forth below.
1. Statement of Purpose
1.1 For many years Clark has maintained a program providing an incentive
for executives and managers through a means for them to participate in
the success of the Company. This Plan provides an incentive for such
employees by rewarding performance on the basis of the achievement of
planned income and return on equity, and other goals.
2. Definitions
Unless the context provides a different meaning, whenever used in this
Plan the following terms shall have the following meanings:
2.1 "Actual Net Income" means the Net Income actually achieved by the
Company for the Year.
2.2 "Actual Return on Equity" means the Return on Equity actually achieved
by the Company for the Year.
2.3 "Average Equity" means, for any Year, the average of the stockholders'
equity in the Company for the last five quarterly financial reports of
the Company ending with the report as of December 31 of such Year.
2.4 "Board" means the Board of Directors of Clark Equipment Company.
2.5 "Committee" means the Human Effectiveness Committee of the Board or
such other Committee to which the Board has delegated the
responsibility for administering the Plan.
2.6 "Company" means Clark Equipment Company.
2.7 "Compensation Year" or "Year" means a calendar year for which
incentive compensation is determined pursuant to the Plan, beginning
with the Year 1994.
2.8 "Corporate Office" means the corporate office of the Company.
2.9 "Hay Average Incentive Compensation" or "HAIC" means, with respect to
each Participant, the difference between average total compensation
and average base salary for his salary grade. This HAIC amount shall
be determined for the Year in accordance with the Hay Compensation
Report for Industrial Management at the average salary level of
surveyed companies.
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2.10 "Incentive Compensation" means the incentive amount payable to a
Participant as determined pursuant to Section 3 of the Plan.
2.11 "Net Income" means the reported net earnings of the Company for the
Year.
2.12 "Participant" means an employee in the Corporate Office who (a) is in
salary grade 61 or higher, or (b) is in salary grade 59 or 60, and
whose inclusion in the Plan has been approved by the Chief Executive
Officer of the Company.
2.13 "Plan" means the Clark Equipment Company Incentive Compensation Plan
for Corporate Office Management, as set forth herein.
2.14 "Planned Net Income" means the amount of Net Income contained in the
Company's plan for the Year, as submitted to the Board for the Year.
The determination of Planned Net Income may be revised, for purposes
of this Plan, at the discretion of the Committee, during the Year to
reflect any change in capitalization, or a transaction such as any
acquisition, divestiture, merger, consolidation, separation,
(including a spin-off or other distribution of stock or property), any
reorganization, any partial or complete liquidation, or other major
changes in the business which were not reflected in the plan.
2.15 "Planned Return on Equity" means the percentage Return on Equity
contained in the Company's plan for the Year, as submitted to the
Board for the Year. The determination of Planned Return on Equity may
be revised, for purposes of this Plan, at the discretion of the
Committee, during the Year to reflect any change in capitalization, or
a transaction such as any acquisition, divestiture, merger,
consolidation, separation, (including a spin-off or other distribution
of stock or property), any reorganization, any partial or complete
liquidation, or other major changes in the business which were not
reflected in the plan.
2.16 "Return on Equity" or "ROE" means the Net Income of the Company for
the Year as a percentage of Average Equity for such Year.
3. Incentive Compensation
3.1 The Incentive Compensation for each Participant for each Year will be
a percentage of Hay Average Incentive Compensation for such Year equal
to the sum of the HAIC percentages determined under Sections 3.2, 3.3
and 3.4, subject to the limitations of Sections 3.5 and 3.6.
3.2 (a) The HAIC percentage under this Section is based on the financial
performance of the Company for the Year as determined from the
following matrix of Return on Equity and Net Income:
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Actual Return on Equity
Compared to Planned Return on Equity
No Less
Than +5%
-5% -2.5% +2.5% or More
Points Points Equal Points Points
Actual 120% 60% 65% 70% 75% 80%
Net or more
Income 110% 50% 55% 60% 65% 70%
as a
Per-
centage 100% 40% 45% 50% 55% 60%
of
Planned 90% 30%* 35% 40% 45% 50%
Net at least
Income 80% -- 25%* 30% 35% 40%
Percentages within the box are percentages of HAIC
If Planned Net Income is a loss, then the 110% line shall mean a
10% improvement, etc.
(b) Intermediate values within the above matrix will be determined by
interpolation, except that there will be no interpolation below
the two HAIC percentages marked with an asterisk(*), nor will
there be any Incentive Compensation payable below these HAIC
percentages.
(c) If either Planned Return on Equity or Planned Net Income is less
than an amount equal to six percent Return on Equity, then:
(i) if either Actual Return on Equity or Actual Net Income
is less than an absolute dollar amount equivalent to six percent
Return on Equity, the maximum percentage of HAIC under this
Section is 50%; or
(ii) if both Actual Return on Equity and Actual Net Income
are at least equal to an absolute dollar amount equivalent to six
percent Return on Equity, the actual HAIC percentage shall be
determined from the above matrix except that, for measurement
purposes, Planned Return on Equity shall be deemed to be six
percent and Planned Net Income shall be deemed to be the amount
of Net Income equal to six percent Return on Equity.
3.3 The HAIC percentage under this Section is based on the achievement of
one or more operating goals recommended by the Chief Executive Officer
and approved by the Committee for the Year.
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The percentage of HAIC payable for performance of these goals will be
established each Year by the Committee but, in general, will be stated
as follows:
Percentage of
Performance Percentage
of Goal(s) of HAIC
120% or more 40%
110% 35%
100% 25%
90% 20%
at least 80% 15%
Intermediate values will be determined by interpolation.
3.4 The HAIC percentage under this Section will be determined for each
Participant other than the Chief Executive Officer for the Year by the
Committee on the recommendations of the Chief Executive Officer. Such
percentage for the Chief Executive Officer will be determined by the
Committee. Normally, the incentive compensation awarded under this
Section for good performance will be 25% of HAIC, but may vary from 0
to 50% of HAIC.
3.5 Except to the extent provided in Section 3.6, no Incentive
Compensation will be earned in any Year for which Actual Net Income is
negative.
3.6 At the discretion of the Committee, after a second consecutive Year in
which Actual Net Income is positive following a Year in which Actual
Net Income is negative, an evaluation may be made by the Committee of
performance during the Year of negative Actual Net Income immediately
preceding the first of such Years of positive Actual Net Income.
Performance for such Year shall be measured in the same manner as is
done for a profitable Year as provided in Sections 3.2, 3.3 and 3.4,
except that the HAIC percentage for such Year shall not, in the
aggregate, exceed 50%, and at the discretion of the Committee such
HAIC percentage may be reduced to zero. The resulting percentage of
HAIC, if any, will, at the discretion of the Committee, be paid, in
addition to the amounts earned for performance in such second
consecutive Year in which Actual Net Income is positive, to the
Participants who were Participants in the Plan during the relevant
Year of negative Actual Net Income.
Notwithstanding the preceding paragraph of this Section 3.6, in the
event that the Year 1994 is the second consecutive Year in which
Actual Net Income is positive following one or more Years in which
Actual Net Income is negative, Incentive Compensation will be paid
with respect to such Year(s) of negative Actual Net Income if and to
the extent that it would have been payable under this Plan as in
effect on December 31, 1993.
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4. Adjustments
4.1 At the discretion of the Committee, the Incentive Compensation payable
to any Participant for any Year may be adjusted either upward or
downward to reflect extraordinary events or circumstances.
5. Payment of Incentive Compensation
5.1 The Incentive Compensation payable pursuant to this Plan shall be paid
as soon as practicable following the end of the Year and the
determination and approval of the amounts payable, except as provided
in Section 3.5.
6. Termination of Participation
6.1 If a Participant in the Plan ceases to be a Participant for any
reason, he shall have no right to any incentive payments under the
Plan. However, at the sole discretion of the Committee, he may be
granted a pro rata payment for the Year in which he ceased to be a
Participant.
7. No Creation of Employment Rights
7.1 Nothing contained herein shall provide any employee of the Company
with any right to continued employment or in any way abridge the
rights of the Company to determine the terms and conditions of
employment, and whether to terminate the employment, of any employee.
8. Authority
8.1 Except as otherwise expressly provided herein, full power and
authority to interpret and administer this Plan shall be vested in the
Committee. The Committee may, in their sole discretion, adopt, amend,
modify, suspend or terminate such rules and policies as they may
determine in connection with the performance of their responsibilities
under the Plan.
9. Effective Date
9.1 This Plan, as amended and restated herein, shall be effective
beginning as of 1 January 1994.
10. Amendment and Termination
10.1 This Plan may be amended or terminated at any time at the sole
discretion of the Committee.
10 February 1994
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Exhibit 10(m)
CLARK EQUIPMENT COMPANY
INCENTIVE COMPENSATION PLAN
FOR BUSINESS UNIT MANAGEMENT
(AMENDED AND RESTATED EFFECTIVE 1 JANUARY 1994)
This Plan was adopted the 18th day of February 1992, and on 14 February
1994 was amended and restated by the Human Effectiveness Committee of the
Board of Directors of Clark Equipment Company ("Clark"), effective as of
1 January 1994, as set forth below.
1. Statement of Purpose
1.1 For many years Clark has maintained a program providing an incentive
for executives and managers in the Business Units of the Company
through a means for them to participate in the success of their
Business Units. This Plan provides an incentive for such employees by
rewarding performance on the basis of the achievement of planned
income and return on capital, and other goals.
2. Definitions
Unless the context provides a different meaning, whenever used in this
Plan the following terms shall have the following meanings:
2.1 "Actual Net Income" means the Net Income actually achieved by the Unit
for the Year.
2.2 "Actual Return on Capital" means the Return on Capital actually
achieved by the Unit for the Year.
2.3 "Average Capital" means, with respect to each Business Unit for any
Year, the average of the Capital of the Unit for the last five
quarterly reports of the Unit ending with the report as of December 31
of such Year.
2.4 "Board" means the Board of Directors of Clark Equipment Company.
2.5 "Business Unit" or "Unit" means a subsidiary or other business unit of
the Company that is determined by the Committee to be eligible to
participate in the Plan.
2.6 "Capital" means total assets reflected on the Business Unit's
financial statements, net of all valuation reserves such as
accumulated depreciation, bad debt reserves, LIFO reserves and the
like, less all non-interest bearing liabilities, deferred credits,
pension liabilities and any management incentive compensation
liability. Intercompany balances with the Corporate Office are
excluded from assets or non-interest liabilities. This should result
in Capital being equal to Business Unit equity plus debt and plus or
minus any intercompany balances with the Corporate Office.
2.7 "Committee" means the Human Effectiveness Committee of the Board or
such other Committee to which the Board has delegated the
responsibility for administering the Plan.
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2.8 "Company" means Clark Equipment Company.
2.9 "Compensation Year" or "Year" means a calendar year for which
incentive compensation is determined pursuant to the Plan, beginning
with the Year 1994.
2.10 "Corporate Office" means the corporate office of the Company.
2.11 "Hay Average Incentive Compensation" or "HAIC" means, with respect to
each Participant, the difference between average total compensation
and average base salary for his salary grade. This HAIC amount shall
be determined for the Year in accordance with the Hay Compensation
Report for Industrial Management at the average salary level of
surveyed companies.
2.12 "Incentive Compensation" means the incentive amount payable to a
Participant as determined pursuant to Section 3 of the Plan.
2.13 "Net Income" means, with respect to each Business Unit for any Year,
Unit income before tax determined under U. S. Generally Accepted
Accounting Principles and the Company's policies and less provision
for income taxes. Income taxes are to be provided for by tax
jurisdiction in accordance with generally accepted accounting
principals, Company policy and tax law of the jurisdiction.
2.14 "Participant" means an employee of the Business Unit who (a) is in
salary grade 61 or higher, or (b) is in salary grade 59 or 60, and
whose inclusion in the Plan has been recommended by the Business Unit
Planning Board and approved by the Chief Executive Officer of the
Company.
2.15 "Plan" means the Clark Equipment Company Incentive Compensation Plan
for Business Unit Management, as set forth herein.
2.16 "Planned Net Income" means the amount of Net Income contained in the
Business Unit's plan for the Year, as submitted to the Board for the
Year. The determination of Planned Net Income may be revised, for
purposes of this Plan, at the discretion of the Committee, during the
Year to reflect any change in capitalization, or a transaction such as
any acquisition, divestiture, merger, consolidation, separation,
(including a spin-off or other distribution of stock or property), any
reorganization, any partial or complete liquidation, or other major
changes in the business which were not reflected in the plan.
2.17 "Planned Return on Capital" means the percentage Return on Capital
contained in the Business Unit's plan for the Year, as submitted to
the Board for the Year. The determination of Planned Return on
Capital may be revised, for purposes of this Plan, at the discretion
of the Committee, during the Year to reflect any change in
capitalization, or a transaction such as any acquisition, divestiture,
merger, consolidation, separation, (including a spin-off or other
distribution of stock or property), any reorganization, any partial or
complete liquidation, or other major changes in the business which
were not reflected in the plan.
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<PAGE>
2.18 "Return on Capital" or "ROC" means, with respect to each Unit for any
Year, the Net Income of the Unit for the Year as a percentage of
Average Capital of the Unit for such Year.
3. Incentive Compensation
3.1 The Incentive Compensation for each Participant in a Unit for each
Year will be a percentage of Hay Average Incentive Compensation for
such Year equal to the sum of the HAIC percentages determined under
Sections 3.2, 3.3 and 3.4, subject to the limitations of Section 3.5.
3.2 (a) The HAIC percentage under this Section is based on the financial
performance of the Business Unit for the Year as determined from
the following matrix of Return on Capital and Net Income:
Actual Return on Capital
Compared to Planned Return on Capital
No Less
Than +5%
-5% -2.5% +2.5% or More
Points Points Equal Points Points
Actual 120% 60% 65% 70% 75% 80%
Net or more
Income 110% 50% 55% 60% 65% 70%
as a
Per-
centage 100% 40% 45% 50% 55% 60%
of
Planned 90% 30%* 35% 40% 45% 50%
Net at least
Income 80% -- 25%* 30% 35% 40%
Percentages within the box are percentages of HAIC
If Planned Net Income is a loss, then the 110% line shall mean a
10% improvement, etc.
(b) Intermediate values within the above matrix will be determined by
interpolation, except that there will be no interpolation below
the two HAIC percentages marked with an asterisk (*), nor will
there be any Incentive Compensation payable below these HAIC
percentages.
(c) If either Planned Return on Capital or Planned Net Income is less
than an amount equal to six percent Return on Capital, then:
(i) if either Actual Return on Capital or Actual Net Income
is less than an absolute dollar amount equivalent to six percent
Return on Capital, the maximum percentage of HAIC under this
Section is 50%; or
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<PAGE>
(ii) if both Actual Return on Capital and Actual Net Income
are at least equal to an absolute dollar amount equivalent to six
percent Return on Capital, the actual HAIC percentage shall be
determined from the above matrix except that, for measurement
purposes, Planned Return on Capital shall be deemed to be six
percent and Planned Net Income shall be deemed to be the amount
of Net Income equal to six percent Return on Capital.
3.3 The HAIC percentage under this Section is based on the achievement of
one or more operating goals established by the Chief Executive Officer
of the Company for the Business Unit for the Year.
The percentage of HAIC payable for performance of these goals will be
stated separately for each Business Unit but, in general, will be
stated as follows:
Percentage of
Performance Percentage
of Goal(s) of HAIC
120% or more 40%
110% 35%
100% 25%
90% 20%
at least 80% 15%
Intermediate values will be determined by interpolation.
3.4 The HAIC percentage under this Section will be determined for each
Unit, or for each Participant in the Unit, for the Year by the Chief
Executive Officer of the Company upon the recommendation of the
Business Unit President and of the Corporate Office Planning Board and
with the approval of the Committee. Normally, the incentive
compensation awarded by the Chief Executive Officer under this Section
for good performance will be 25% of HAIC, but may vary from 0 to 50%
of HAIC.
3.5 Except as provided in this Section, no Incentive Compensation will be
earned in any Year for which Actual Net Income is negative. At the
discretion of the Committee, after a second consecutive Year in which
Actual Net Income is positive following a Year in which Actual Net
Income is negative, an evaluation may be made by the Committee of
performance during the Year of negative Actual Net Income immediately
preceding the first of such Years of positive Actual Net Income.
Performance for such Year shall be measured in the same manner as is
done for a profitable Year as provided in Sections 3.2, 3.3 and 3.4,
except that the HAIC percentage for such Year shall not, in the
aggregate, exceed 50%, and at the discretion of the Committee such
HAIC percentage may be reduced to zero. The resulting percentage of
HAIC, if any, will, at the discretion of the Committee, be paid, in
addition to the amounts earned for performance in such second
consecutive Year in which Actual Net Income is positive, to the
Participants who were Participants in the Plan during the relevant
Year of negative Actual Net Income.
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<PAGE>
Notwithstanding the preceding paragraph of this Section 3.5, in the
event that the Year 1995 is the second consecutive Year in which
Actual Net Income is positive following one or more Years in which
Actual Net Income is negative, Incentive Compensation will be paid
with respect to such Year(s) of negative Actual Net Income if and to
the extent that it would have been payable under this Plan as in
effect on December 31, 1993.
4. Adjustments
4.1 At the discretion of the Committee, the Incentive Compensation payable
to any Participant or for any Unit for any Year may be adjusted either
upward or downward to reflect extraordinary events or circumstances.
5. Payment of Incentive Compensation
5.1 The Incentive Compensation payable pursuant to this Plan shall be paid
as soon as practicable following the end of the Year and the
determination and approval of the amounts payable, except as provided
in Section 3.5.
6. Termination of Participation
6.1 If a Participant in the Plan ceases to be a Participant for any
reason, he shall have no right to any incentive payments under the
Plan. However, at the sole discretion of the Committee, he may be
granted a pro rata payment for the Year in which he ceased to be a
Participant.
7. No Creation of Employment Rights
7.1 Nothing contained herein shall provide any employee of any Business
Unit with any right to continued employment or in any way abridge the
rights of the Business Unit to determine the terms and conditions of
employment, and whether to terminate the employment, of any employee.
8. Authority
8.1 Except as otherwise expressly provided herein, full power and
authority to interpret and administer this Plan shall be vested in the
Committee. The Committee may, in their sole discretion, adopt, amend,
modify, suspend or terminate such rules and policies as they may
determine in connection with the performance of their responsibilities
under the Plan. The Committee may also, with respect to any Business
Unit, make such adjustments in the Incentive Compensation formulae of
Sections 3.2 and 3.3 as they determine to be appropriate for such Unit
and may, from time to time, establish different performance
measurements and goals for any Unit and an appropriate incentive
structure to reflect such goals. It is intended that any such
adjustments will, to the extent practicable, be made before or early
in the applicable Year and communicated to Business Unit management so
that they can be considered in the making and execution of business
plans.
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<PAGE>
9. Effective Date
9.1 This Plan, as amended and restated herein, shall be effective
beginning as of 1 January 1994.
10. Amendment and Termination
10.1 This Plan may be amended or terminated at any time at the sole
discretion of the Committee.
10 February 1994
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Exhibit 10(q)
CLARK EQUIPMENT COMPANY DEFERRED BENEFIT TRUST
12.27.94
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<PAGE>
CLARK EQUIPMENT COMPANY DEFERRED BENEFIT TRUST
THIS AGREEMENT, is made this 28th day of December, 1994 by and
between CLARK EQUIPMENT COMPANY, a Delaware corporation (sometimes referred
to as the "company"), and such subsidiaries of the company as become
parties to this agreement with its consent (the company and such
subsidiaries are referred to collectively as the "employers" and sometimes
individually as an "employer"), and WACHOVIA BANK OF NORTH CAROLINA, N.A.,
and its successor or successors and assigns in the trust hereby evidenced,
as trustee (the "trustee"),
WITNESSETH THAT:
WHEREAS, the employers have certain benefit obligations pursuant
to certain employment agreements which are provided for through the Clark
Equipment Company Supplemental Retirement Income Plan for Certain
Executives as set forth in Exhibit I to this agreement (the "plan") which
are provided on an unfunded basis for the benefit of certain employees of
the employers; and
WHEREAS, the company considers it desirable to establish a trust
for the purpose of providing a method for the orderly accumulation of
assets to be used to make certain payments payable under the plan except as
such assets are required to be used to satisfy the claims of the employers'
creditors; and
WHEREAS, the purpose of this agreement is to establish such a
trust (the "trust");
NOW, THEREFORE, in consideration of the mutual undertakings of
the parties hereto, IT IS AGREED by the company and the trustee, as
follows:
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<PAGE>
ARTICLE I
Introduction
1.1. The Trust, the Plan, Participants. This agreement and the
trust hereby evidenced shall be known as the "Clark Equipment Company
Deferred Benefit Trust." The trust is established for the benefit of those
current and former employees of the employers whose employment agreements
are listed in Schedule A to Exhibit I hereof and their beneficiaries, which
employees and beneficiaries are referred to as "participants." However,
the participants shall not have any right or security interest in any
specific asset of the trust or beneficial ownership in or preferred claim
on the assets of the trust, it being understood that the assets of
the trust shall be available for the claims of the employers' creditors as
provided in Article V and all rights created under the plan or the trust
shall be unsecured contractual rights against the employers. The provis-
ions of the plan as they may be amended from time to time are incorporated
into and form a part of this agreement and trust; provided, however, that
the trustee's duties shall be limited to those duties expressly provided
for herein without regard to the provisions of the plan.
1.2. Status of Trust. The trust shall be irrevocable. The
trust is intended to constitute a grantor trust under Sections 671-678 of
the Internal Revenue Code of 1986, as amended (the "Code"), and shall be
construed accordingly. The assets held in the trust for the benefit of an
employer shall constitute a separate trust under Sections 671-678 of the
Code for that employer.
1.3. Employer Deposits. The company and each other employer
will make contributions of cash or company owned life insurance policies
(collectively "approved assets") to the trust at such times and in such
amounts as such contributions are required by the terms of the plan. Such
amounts of approved assets shall be held, invested and distributed by the
trustee in accordance with the provisions of this agreement.
1.4. Acceptance. The trustee accepts the duties and obligations
of the "trustee" hereunder, agrees to accept delivery of funds delivered to
it by the employers pursuant to Section 1.3, and agrees to hold such funds
(and any proceeds from the investment of such funds) in trust in accordance
with this agreement.
1.5. The Committee. The Clark Equipment Company Employee
Retirement Income Security Act Committee, or such other committee as is
appointed by the Chief Executive Officer of the company, shall be the
committee that is responsible for the administration of the trust (the
committee"). The powers, rights and duties of the committee under this
agreement are described below. The Secretary of the company will certify
to the trustee from time to time the persons who are acting as the
committee. The trustee may rely on the latest certificate received without
further inquiry or verification.
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<PAGE>
ARTICLE II
Management of the Trust Fund
2.1. The Trust Fund. Unless the context clearly implies or
indicates otherwise, the term "trust fund" as of any date means all
property of every kind then held under this agreement by the trustee or any
custodian.
2.2. Trustee's General Powers, Rights and Duties. With respect
to the trust fund and subject only to the limitations expressly provided in
this agreement (including the powers reserved to the committee, investment
managers and custodians) or imposed by applicable law, the trustee shall
have the following powers, rights and duties in addition to those vested in
it elsewhere in this agreement or by law:
(a) To invest and reinvest part or all of the trust fund in any
real or personal property (including investments in any
stocks, bonds, debentures, mutual fund shares, notes,
commercial paper, treasury bills, options, commodities,
futures contracts, insurance policies, partnership
interests, venture capital investments, any common,
commingled or collective trust funds or pooled investment
funds described in Section 2.3, any interest bearing
deposits held by any bank or similar financial institution,
and any other real or personal property) and to diversify
such investments so as to minimize the risk of large losses
unless under the circumstances it is clearly prudent not to
do so; except that the trustee shall not directly invest in
any stock, bonds, debentures or other assets of the company
or any of its subsidiaries (other than company owned life
insurance policies).
(b) When directed by the committee, to apply for, pay premiums
on, maintain in force on the lives of participants, or any
other person, and dispose of individual ordinary or
individual or group term or universal life insurance
policies ("policies") for the benefit of the participants
and containing such provisions as the committee may approve
or direct; to acquire such a policy from an employer or from
the person on whose life the policy is issued, but only if
the trustee pays, transfers or otherwise exchanges for the
policy no more than the cash surrender value of the policy
and the policy is not subject to a mortgage or similar lien
which the trustee would be required to assume; to exchange
such a policy for cash from an employer but only if the cash
provided by the employer is equal to or greater than the
cash surrender value of the policy and to have with respect
to such policies all of the rights, powers, options,
privileges and benefits usually comprised in the term
"incidents of ownership" and normally vested in an insured
or owner of such policies.
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<PAGE>
(c) To retain in cash such amounts as the trustee considers
advisable and as are permitted by applicable law and to
deposit any cash so retained in any depository (including any
bank acting as trustee) which the trustee may select; provided
that such amounts shall at all times be held in one or more
interest-bearing accounts.
(d) To manage, sell, insure and otherwise deal with all real and
personal property held by the trustee on such terms and
conditions as the trustee shall decide.
(e) To vote stock and other voting securities personally or by
proxy (and to delegate the trustee's powers and discretions
with respect to such stock or other voting securities to such
proxy), to exercise subscription, conversion and other rights
and options (and make payments from the trust fund in
connection therewith), to take any action and to abstain from
taking any action with respect to any reorganization, consoli-
dation, merger, dissolution, recapitalization, refinancing and
any other program or change affecting any property
constituting a part of the trust fund (and in connection
therewith to delegate the trustee's discretionary powers and
to pay assessments, subscriptions and other charges from the
trust fund), to hold or register any property from time to
time in the trustee's name or in the name of a nominee or to
hold it unregistered or in such form that title shall pass by
delivery and to borrow from anyone, including any bank acting
as trustee, to the extent permitted by law, such amounts from
time to time as the trustee considers desirable to carry out
this trust (and to mortgage or pledge all or part of the trust
fund as security).
(f) When directed by an investment manager to acquire, retain or
dispose of such investments as the investment manager directs
in accordance with this agreement.
(g) To make payments from the trust fund to provide benefits that
have become payable under the plan pursuant to Section 4.5 or
that are required to be made to the creditors of an employer
pursuant to Section 5.2.
(h) To maintain in the trustee's discretion any litigation the
trustee considers necessary in connection with the trust fund.
(i) To withhold, if the trustee considers it advisable, all or any
part of any payment required to be made hereunder as may be
necessary and proper to protect the trustee or the trust fund
against any liability or claim on account of any estate,
inheritance, income or other tax or assessment attributable to
any amount payable hereunder, and to discharge any such
liability with any part or all of such payment so withheld,
provided that at least ten days prior to discharging any such
liability with any amount so withheld the trustee shall notify
the committee in writing of the trustee's intent to do so, and
the trustee shall
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<PAGE>
continue to withhold such payment if so directed by the committee
in writing before such liability is discharged.
(j) To maintain records reflecting all receipts and payments under
this agreement and such other records as the committee
specifies and the trustee agrees to, which records may be
audited from time to time by the committee or anyone named by
the committee.
(k) To report to the committee as of each valuation date (as
defined in Section 2.4), and at such other times as the
committee may request, the then net worth of the trust fund
(that is, the fair market value of all assets of each of the
investment funds and of any other assets of the trust, less
liabilities known to the trustee, other than liabilities to
participants and amounts payable from the trust fund to
creditors who are not entitled to benefits under the plan), on
the basis of such data and information as the trustee con-
siders reliable.
(l) To furnish periodic accounts to the committee for such periods
as the committee may specify, showing all investments,
receipts, disbursements and other transactions involving the
trust during the applicable period and the assets of each
investment fund and any other assets of the trust fund held at
the end of that period.
(m) To furnish the employers with such information in the
trustee's possession as the employers may need or desire for
tax or other purposes.
(n) To employ agents, attorneys, accountants, investment advisors
or managers and other persons (who also may be employed by the
employers, the committee or others), to delegate discretionary
powers to such persons and to reasonably rely upon information
and advice furnished by such persons; provided that each such
delegation and the acceptance thereof by each such person
shall be in writing; and provided further that the trustee may
not delegate its responsibilities as to the management or
control of the assets of the trust fund.
(o) To perform all other acts which in the trustee's judgment are
appropriate for the proper management, investment and
distribution of the trust fund to the extent such duties have
not been assigned to others as provided herein.
Notwithstanding any powers granted to the trustee pursuant to this Section
2.2 or pursuant to applicable law, the trustee shall not have any power that
could give this trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of Section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Code.
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<PAGE>
2.3. Collective Investment Trusts. The trustee or any investment
manager may invest any part or all of the trust assets for which it has
investment responsibility in any common, collective or commingled trust fund
or pooled investment fund that is maintained by a bank or trust company
(including a bank or trust company acting as trustee) provided such invest-
ments are consistent with applicable investment requirements and guidelines.
To the extent that any trust assets are invested in any such fund, the
provisions of the documents under which such common, collective or commingled
trust fund or pooled investment fund are maintained shall govern any invest-
ments therein.
2.4. Accounting. The committee shall maintain a bookkeeping
account in the name of each employer which, pursuant to rules established by
the committee, will reflect:
(I) deposits made by that employer to the trust fund
pursuant to Section 1.3;
(ii) income, losses, and appreciation or depreciation
in the value of trust assets resulting from
investment of the trust fund to the extent such
items are attributable to such employer's
deposits;
(iii) payments made from the trust fund to participants
employed or formerly employed by that employer (or
to their beneficiaries) in the form of benefits
payable to them under the plan, or to such
employer's creditors; and
(iv) any other amounts charged to that employer's
account, including its share of compensation and
expenses described in Section 4.9.
In addition, the committee shall maintain with each employer's bookkeeping
account a subaccount ("plan subaccount") for each participant employed by the
employer to reflect that portion of the employer's account attributable to
the obligations to such participant. As of each valuation date such accounts
and plan subaccounts shall be appropriately adjusted in accordance with such
rules to reflect the then net worth of the trust fund, as determined as of
that valuation date by the trustee and reported to the committee pursuant to
Section 2.2(k). A "valuation date" is each December 31 and such other date
or dates as the committee shall specify.
2.5. Common Fund. The trustee shall not be required to make any
separate investment of the trust fund for the account of the plan as applied
to the several employers and their respective employees in the absence of
direction by the committee and may administer and invest the deposits made to
the trust by all employers as one trust fund. If, for any purpose, it
becomes necessary to determine as of any date the portion of the trust fund
allocable to one of the employers, the committee shall specify such date as a
special valuation date and, after all adjustments required as of that date
have been made, such portion of the trust fund shall be an amount equal to
the employer's proportionate interest in the
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<PAGE>
trust fund, determined in accordance with Section 2.4 above and any such
determination by the committee shall be binding on all of the employers,
participants and all other persons. The trustee also shall not be required
to make any separate investment of the trust fund for the account of any
creditor of any employer prior to receipt of directions to make payments to
such creditor in accordance with Section 5.2.
ARTICLE III
Investment Funds, Investment Managers and Custodians
3.1. Investment Funds. From time to time the committee may direct
the trustee to establish one or more investment funds (the "investment
funds") for the purpose of reflecting the separate investment and
reinvestment of the trust fund. The trustee shall have responsibility for
the investment of the assets of an investment fund unless an investment
manager has been appointed with respect to that fund. All income, losses,
appreciation and depreciation attributable to the assets of an investment
fund shall be credited to that fund. Investments of each investment fund
shall be made in accordance with investment guidelines established by the
committee for that investment fund. The committee shall provide each
investment manager appointed with respect to an investment fund with the
investment guidelines for that fund and with any modifications in such
investment guidelines made from time to time by the committee. Notwithstand-
ing the fact that an investment manager may be appointed with responsibility
for the management of an investment fund, the trustee shall have the
responsibility for the investment of cash balances held by it from time to
time as a part of such investment fund in short term cash equivalents (such
as short term commercial paper, treasury bills and similar securities, and
for this purpose the trustee may invest in any appropriate common, commingled
or collective short term investment fund). In addition, the trustee shall
have the power, right and duty to sell any such short term investments as may
be necessary to carry out the instructions of the investment manager with
respect to the investment of the investment fund.
3.2. Investment Managers. The committee from time to time may
appoint one or more professional investment advisers other than the trustee
as an "investment manager" of the entire trust fund or any investment fund
maintained as a part of the trust fund. Any such appointment shall be made
by written notice to the investment manager and the trustee and shall specify
the portion of the trust fund to be managed by the investment manager and the
powers, rights and duties of the trustee that are allocated to the investment
manager with respect to such portion of the trust fund. Upon such notice
to the trustee of the appointment of an investment manager, the investment
manager shall be authorized to direct the trustee regarding the investment
and reinvestment of the assets of the portion of the trust fund subject to
management by the investment manager and the trustee shall receive, hold,
vote and transfer assets purchased or sold by the investment manager in
accordance with its directions. The appointment of an investment manager
shall continue in effect until the trustee receives written notice to the
contrary from the committee or the investment manager. An investment manager
may resign at any time upon thirty days' prior written notice to the commit-
tee and the trustee. The
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<PAGE>
committee may remove an investment manager at any time upon prior written
notice to the investment manager and the trustee. An investment manager
shall have complete investment responsibility for the assets of the trust
fund with respect to which it has been appointed as investment manager and,
except as otherwise provided by law or this agreement, the trustee shall have
no obligation as to the investment of such assets during the period they are
subject to management by an investment manager.
3.3. Custodians. If a national banking association or a state
bank is appointed by the committee as the investment manager of any
investment fund, the committee also may designate such bank to be employed by
the trustee as "custodian" of the assets from time to time forming part of
that investment fund. In such event, the trustee shall enter into an appro-
priate custodial agreement with the bank appointed as investment manager
naming the investment manager as custodian of the investment fund and
delegating the trustee's powers with respect to the management of the
investment fund to the custodian. Upon such an appointment the trustee shall
transfer the assets of the investment fund to the custodian and the custodian
shall have responsibility for the holding and administration of the assets of
the investment fund, as agent of the trustee, until its employment as
custodian is terminated, at which time the custodian shall return all assets
of the investment fund to the trustee. With respect to the appointment of
such custodian, the trustee shall be entitled to indemnification under
Section 4.8 notwithstanding that it has consented to the designation of a
custodian and notwithstanding any indemnity agreement in a custodial
agreement between the trustee and the custodian. In addition to its duties
as investment manager, each custodian shall maintain the records and accounts
and shall submit to the appropriate persons the periodic reports otherwise
required of the trustee with respect to the portion of the trust fund held by
the custodian.
ARTICLE IV
General Provisions
4.1. Restrictions on Reversion. Except as otherwise provided
herein, none of the employers shall have any right, title or interest in the
assets of the trust fund, nor will any part of the assets of the trust fund
revert or be repaid to any employer until all benefits due under the plan
have been paid pursuant to its terms; provided, however, that the assets of
the trust shall be available for the claims of the employers' creditors as
provided in Section 5.2. The employers may make withdrawals from the trust
only if and to the extent that such withdrawals are expressly permitted by
the terms of the plan. If an employer ceases to have any benefit obligations
under the plan, any balance remaining in such employer's plan subaccount
maintained pursuant to Section 2.4 after all benefits accrued under the plan
have been paid, shall revert to such employer.
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<PAGE>
4.2. Nonalienation of Trust Assets. To the extent permitted by
law, the rights or interests of any participants to any benefits or future
payments hereunder shall not be subject to attachment or garnishment or other
legal process by any creditor of any such participant, nor shall any such
participant have any right to alienate, anticipate, commute, pledge, encumber
or assign (either at law or in equity) any of the benefits or rights which he
may expect to receive (contingently or otherwise) under this agreement,
except as may be required by the tax withholding provisions of the Code or of
a state's income tax act.
4.3. Litigation. Any final judgment that is not appealed or
appealable and which may be entered in any action or proceeding regarding
this trust shall be binding and conclusive on the parties hereto and all
persons having or claiming to have an interest in the trust.
4.4. Trustee's Actions Conclusive. Except as otherwise provided
by law, the trustee's exercise or non-exercise of its powers and discretion
in good faith shall be conclusive on all persons. No one shall be obliged to
see to the application of any money paid or property delivered to the
trustee, except to the extent such person is acting as an investment manager
as respects such money or property. The certificate of the trustee that it
is acting in accordance with this agreement will fully protect all persons
dealing with the trustee. If there is a disagreement between the trustee and
anyone as to any act or transaction reported in any accounting, the trustee
shall have the right to a settlement of its account by any proper court.
4.5. Benefit Payments. Notwithstanding any other provisions of
the plan or of this agreement, the only benefits that are payable to
participants from the trust fund are the benefits payable pursuant to the
plan as set forth in Exhibit I to this agreement. The committee from time to
time shall direct the trustee in writing as respects the distribution from
the trust fund of benefits that have become payable, but that have not been
paid by an employer, under the plan to a participant (including any legal
fees and expenses that are payable under the plan), including the amount and
manner of payment of any such benefit. If a payment required under the terms
of the plan has not been made to a participant (whether due to the failure of
the committee to notify the trustee as required by this Section 4.5 or
otherwise), then the participant may notify the trustee in writing of the
amount (or a reasonable estimate of the amount) owed to him pursuant to the
plan, and the date or dates such amount was due and payable. The trustee
shall notify the committee and the participant's employer within 15 days of
the receipt of such payment request. If the committee or the employer does
not provide the trustee with a statement from an "independent party" as to
the proper amount due and payable to the participant within 30 days of the
date the trustee notified the committee and the employer of the payment
request or the trustee determines that the party providing the statement is
not "independent", the trustee shall make the payment or payments requested
by the participant from the trust fund and may conclusively rely on such
payment or payments being the appropriate amount. The trustee shall also
notify the committee and employer of any such payments. Payment shall be
made to a participant from the trust fund
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<PAGE>
in accordance with the terms of the plan until the earlier of: (i) all
payments due to the participant under the plan, as requested by the
participant in his notification to the trustee, have been satisfied; or (ii)
the committee or employer provide a statement as described above. If a
statement is so provided, appropriate adjustment, if any, in the amount paid
and to be paid to the participant shall be made. The trustee shall be fully
protected in acting without the committee's direction under this Section 4.5
and shall be indemnified and saved harmless as provided in Section 4.8. The
trustee shall make such distributions from the trust fund in accordance with
the provisions of this Section 4.5, subject to the provisions of Article V;
provided, however, that payments to a participant shall be made only from
assets of the trust that are attributable to the participant's former
employer (as reflected in the account maintained for that employer pursuant
to Section 2.4). If such assets are not sufficient that employer shall make
the balance of each such payment when due.
4.6. Missing Persons. If any payment directed to be made by the
trustee from the trust fund is not claimed by the person entitled thereto,
the trustee shall notify the committee of that fact. None of the employers,
the committee and the trustee shall have any obligation to search for or
ascertain the whereabouts of any payee under this trust.
4.7. Liabilities Mutually Exclusive. To the extent permitted by
law, each employer, the trustee, the committee and each investment manager
shall be responsible only for its or his own acts or omissions.
4.8. Indemnification. To the extent permitted by law, none of the
trustee, any present or former member of the committee, or any person who is
or was a director, officer, or employee of an employer, shall be personally
liable for any act done, or omitted to be done, in good faith in the adminis-
tration of this trust. Any person to whom the committee or the company has
delegated any portion of its responsibilities under the trust, any person who
is or was a director, officer or employee of an employer, or any present or
former member of the committee, and each of them, shall, to the extent
permitted by law, be indemnified and saved harmless by the employers (to the
extent not indemnified or saved harmless under any liability insurance or
other indemnification arrangement with respect to this trust) from and
against any and all liability or claim of liability to which they may be
subjected by reason of any act done or omitted to be done in good faith in
connection with the administration of the trust or the investment of the
trust fund, including all expenses reasonably incurred in their defense if
the employers fail to provide such defense after having been requested to do
so in writing. The trustee shall be indemnified and saved harmless by the
employers (to the extent not indemnified or saved harmless under any
liability insurance or other indemnification arrangement with respect to this
trust) only with respect to liability or claim of liability to which the
trustee shall be subjected by reason of its good faith compliance with any
directions given in accordance with the provisions of the trust by an
investment manager, the committee, or any person duly authorized by the
committee or the company, or by reason of its failure to take any action with
respect to any assets of the trust fund that are subject to investment direc-
tion from an investment manager in
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the absence of direction from the investment manager, or by reason of its
good faith compliance with the provisions of Section 4.5, including all
expenses reasonably incurred in the trustee's defense if the employers fail
to provide such defense after having been requested to do so in writing.
4.9. Compensation and Expenses. All costs, charges and expenses
incurred by the trustee pursuant to Section 2.2(n) shall be paid from the
trust fund to the extent not paid by the employers, and all other reasonable
compensation, costs, charges and expenses incurred in the administration of
this trust, as agreed upon between the committee and the trustee, or between
the committee and any investment manager or custodian, will, to the extent
not paid by the employers be paid from the trust fund as the committee shall
direct; provided that expenses incurred in connection with the sale,
investment and reinvestment of the trust fund (such as brokerage, postage,
express and insurance charges and transfer taxes) shall be paid from the
trust fund, which shall be reimbursed by the Company.
4.10. Action by Company. Any action required or permitted to be
taken by the Company under the Trust may be taken by the Chief Executive
Officer of the Company or his designee or as provided in the Company's
Program for Adoption and Administration of Employee Benefit Plans, as amended
from time to time.
4.11. Warranty. The employers warrant that all directions or
authorizations by the committee, whether for the payment of money or
otherwise, will comply with the provisions of the plan and this trust.
4.12. Evidence. Evidence required of anyone under this agreement
shall be signed, made or presented by the proper party or parties and may be
by certificate, affidavit, document or other information which the person
acting on it considers pertinent and reliable.
4.13. Waiver of Notice. Any notice required under this agreement
may be waived by the person entitled to such notice.
4.14. Counterparts. This agreement may be executed in two or more
counterparts, any one of which will be an original without reference to the
others.
4.15. Gender and Number. Where the context admits, words denoting
the masculine gender shall include the feminine and neuter genders, the
singular shall include the plural, and the plural shall include the singular.
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4.16. Scope of this Agreement. The plan and this trust will be
binding on all persons entitled to benefits hereunder and their respective
heirs and legal representatives, and upon the employers, the committee, the
trustee, and any investment managers and custodians, and their successors and
assigns.
4.17. Severability. If any provision of this agreement is held to
be illegal or invalid, such illegality or invalidity shall not affect the
remaining provisions of this agreement, and they shall be construed and
enforced as if such illegal or invalid provision had never been inserted
herein.
4.18. Statutory References. Any references in this agreement to a
section of the Code shall include any comparable section or sections of any
future legislation that amends, supplements or supersedes that section.
4.19. Applicable Law. The plan and the trust shall be construed
in accordance with the laws of the State of Indiana.
ARTICLE V
Insolvency
5.1. Insolvency. An employer shall be considered "insolvent" for
purposes of this trust if the employer is unable to pay its debts as they
become due or if its affairs become the subject of reorganization or
liquidation proceedings as a debtor under federal bankruptcy laws.
5.2. Payments During Insolvency. At all times during the
existence of this trust assets of the trust attributable to each employer (as
reflected in the account maintained for that employer pursuant to Section
2.4) shall be subject to the claims of its general creditors in the event of
the insolvency of the employer. Subject to the immediately following
sentence, the trustee shall have no duty to inquire as to whether or not any
employer is insolvent, but if the trustee has knowledge that an employer is
insolvent (as defined in Section 5.1), the trustee shall discontinue benefit
payments that otherwise would be charged to that employer's account and will
deliver or otherwise make available assets of the trust attributable to that
employer to satisfy the claims of that employer's creditors as directed by a
court of competent jurisdiction. If a person claiming to be a creditor of an
employer alleges in writing to the trustee that said employer has become
insolvent, the trustee shall determine whether said employer is insolvent,
and, pending such determination, the trustee shall discontinue payment of
benefits to participants employed or formerly employed by said employer (or
to their beneficiaries); the trustee may rely on such evidence concerning
said employer's insolvency as may be furnished to the trustee and that
provides the trustee with a reasonable basis for making a determination
concerning said employer's insolvency. If an employer becomes insolvent, the
Secretary of the
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employer shall have the duty to promptly inform the trustee of the employer's
insolvency. The committee shall have the same duty if and when it becomes
aware that an employer has become insolvent. Participants and their
beneficiaries shall not be granted greater rights to the trust fund by virtue
of their rights under the plan than other general creditors of the employers,
but no provision of the trust shall diminish the rights of a participant to
pursue his rights as a general creditor of an employer with respect to any
benefits he is entitled to under the plan, or otherwise. If the trustee
discontinues payment of benefits pursuant to this Section 5.2, the trustee
shall resume the payment of benefits only after determining that the employer
is not insolvent (or is no longer insolvent); the first payment following
such discontinuance shall include the aggregate amount of all payments due to
participants (or to their beneficiaries) for the period of such
discontinuance less the aggregate amount of any payments received by said
participants (or to their beneficiaries) during such period directly from
their employer in lieu of payments provided for under this agreement.
ARTICLE VI
Resignation or Removal of Trustee
6.1. Resignation or Removal of Trustee. The trustee may resign at
any time by giving thirty days' prior written notice to the employers, the
committee, and the investment managers and custodians. The committee may
remove a trustee by giving prior written notice to the trustee, the employers
and the investment managers and custodians provided that such removal shall
not become effective until the time immediately preceding the appointment of
a successor trustee pursuant to Section 6.2.
6.2. Successor Trustees. In the event of the resignation or
removal of the trustee, a successor trustee shall be appointed by the
committee in writing as soon as practicable. Any successor trustee must be a
bank or trust company which is established and operating under the laws of
the United States, or a state within the United States, and which has a
combined capital and surplus of a least $100,000,000. Written notice of such
appointment shall be given by the committee to the employers, the predecessor
trustee, and the investment managers and custodians.
6.3. Duties of Predecessor Trustee and Successor Trustee. A
trustee that resigns or is removed shall promptly furnish to the committee
and the successor trustee a final account of its administration of the trust.
A successor trustee shall succeed to the right and title of the predecessor
trustee in the assets of the trust fund and the predecessor trustee shall
deliver the property comprising the trust fund to the successor trustee
together with any instruments of transfer, conveyance, assignment and further
assurances as the successor trustee may reasonably require. Each successor
trustee shall have all the powers, rights and duties conferred by this
agreement as if named the initial trustee. Subject to applicable law, no
successor trustee shall be personally liable for any act or failure to act of
a predecessor trustee.
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ARTICLE VII
Amendment and Termination
7.1. Amendment. This trust may be amended from time to time by
the company, except as follows:
(a) The duties and liabilities of the committee, the trustee and
each investment manager and custodian under this agreement
cannot be changed substantially without their consent.
(b) Under no condition shall any amendment result in the return or
repayment to any employer or any other corporation or other
legal business entity related to an employer of any portion of
the trust fund or the income therefrom, or result in the
distribution of the trust fund for any purposes other than
payment of obligations of the employers to their creditors,
including participants.
(c) This trust may not be amended so as to cause the reduction or
cessation of any benefits a participant and his beneficiaries
would receive now or in the future under the current terms of
the plan as incorporated into and made a part of this
agreement, nor may the trust be amended to make the trust
revocable.
An insurance company may assume that this agreement has not been amended or
changed unless notice of such amendment is received by the insurance company
at its home office. Notwithstanding the foregoing provisions of this Article
VII, if a participant in the plan so requests and the Chief Executive Officer
of the company approves, a separate plan and trust shall be established for
such participant, with such terms as are agreed to by such participant and
the company, the liabilities of the plan with respect to such participant
shall be transferred to such new plan, and the proportion of the assets held
in the trust fund equal to the proportion of the liabilities so transferred,
shall be transferred to the separate trust for such participant under the new
plan.
7.2. Termination. This trust shall not terminate, and all the
rights, titles, powers, duties, discretions and immunities imposed on or
reserved to the trustee, each employer, the committee and any investment
managers and custodians shall continue in effect with respect to the trust,
until all benefits payable to participants under the plan have been paid and
all assets have been distributed by the trustee under the trust and the plan.
Notwithstanding any other provision of this trust, the trust shall terminate
one day prior to the expiration of a period of twenty-one years after the
death of the last to die of any current or future employee of the employers
who becomes a participant in the plan and who is alive on the day and year
first above written.
* * *
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IN WITNESS WHEREOF, the company and the trustee have caused this
agreement to be executed on their behalf and their respective seals to be
hereunto affixed and attested by their respective officers thereunto duly
authorized, the day and year first above written.
CLARK EQUIPMENT COMPANY
By /s/ William N. Harper
Its Vice President
ATTEST:
/s/ John J. Moran, Jr.
Its Assistant Secretary
(Seal)
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By /s/ Joe O. Long
Its Senior Vice President
ATTEST:
/s/ John N. Smith, III
Its Assistant Secretary
(Seal)
-16-
Exhibit 10(r)
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL RETIREMENT INCOME PLAN
FOR CERTAIN EXECUTIVES
12.27.94
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CLARK EQUIPMENT COMPANY
SUPPLEMENTAL RETIREMENT INCOME PLAN
FOR CERTAIN EXECUTIVES
SECTION 1
Introduction
1.1. Plan. CLARK EQUIPMENT COMPANY SUPPLEMENTAL RETIREMENT
INCOME PLAN FOR CERTAIN EXECUTIVES (the "Plan") is maintained by CLARK
EQUIPMENT COMPANY (the "Company"), for the benefit of a select group of
management and highly compensated employees of the Company and of those
affiliates of the Company which adopt the Plan. The Plan is not funded or
qualified for special tax treatment under the Internal Revenue Code of
1986, as amended from time to time (the "Code") and is intended to
constitute a "top-hat plan" for purposes of the Employee Retirement Income
Security Act ("ERISA").
1.2. Effective Date and Plan Year. The Plan is established as
of January 1, 1994. The "Plan Year" is the calendar year.
1.3. Employers. The Company and each other affiliate of the
Company which adopts the Plan with the consent of the Company is referred
to herein as an "Employer" and may be referred to collectively as the
"Employers."
1.4. Purpose and Employment Agreements. The Plan has been
established to provide certain supplemental retirement and separation
benefits to a select group of management and highly compensated employees
of the Company and affiliates of the Company that adopt the Plan. The
provisions of the employment agreements providing for the payment of the
benefit obligations listed in Schedule A and the terms of this document
shall be considered the Plan document for purposes of ERISA. The benefits
payable under the Plan are not intended to duplicate the payment of any
benefits under an employment agreement listed in Schedule A. The benefits
paid pursuant to the Plan shall be in satisfaction of, not in addition to,
any obligation of an Employer to make a payment pursuant to the terms of
any employment agreement between the Employer and a Participant covered by
the Plan.
SECTION 2
Participation and Supplemental Benefits
2.1. Participation. Each employee or former employee covered by
an employment agreement listed in Schedule A shall be a "Participant" in
the Plan upon entering into a participation agreement with the Company in a
form satisfactory to the Company. No additional Participants may be added
to the Plan. Each Participant shall continue to be a Participant until all
benefits accrued for him hereunder have been paid as provided herein.
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2.2. Supplemental Benefits. The benefits provided under the
Plan for each Participant are those specified in Schedule A and set forth
in the specified provisions of the employment agreement applicable to such
Participant, the terms and conditions of which are incorporated herein by
reference and form a part of the Plan (the "Supplemental Benefit").
2.3. Payment of Benefits. A Participant's Supplemental Benefit
shall become payable beginning on the date that he or his Beneficiary
becomes entitled to receive such benefit under the applicable employment
agreement. Notwithstanding the terms of the Participant's employment
agreement, payment of the Participant's Supplemental Benefit shall be made
either (a) in a lump sum equal to the present value of the Participant's
Supplemental Benefit as of the date such lump sum payment is made, or (b)
in a series of monthly installments during the period that the Participant
or his Beneficiary is entitled to payments pursuant to the employment
agreement. By filing a written election with the Administrator not later
than twelve months prior to the date that he is eligible to begin to
receive Supplemental Benefits under the Plan, a Participant who is an
active employee may elect the method in which his Supplemental Benefit
shall be paid. The present value of the Participant's Supplemental Benefit
shall be determined by using the mortality table then being used by the
Company's actuaries for valuation purposes for the Clark Equipment Company
Retirement Program for Salaried Employees (the "qualified plan") and the
interest rate specified in Code Section 411(a)(11)(B)(ii) (or any successor
section thereto) at the time the present value determination is made.
Unless the Participant elects payment in monthly installments at least
twelve months prior to the date that he is eligible to begin to receive
Supplemental Benefits under the Plan, the Supplemental Benefit shall be
payable in a lump sum on the date that Supplemental Benefits become
payable; provided, however, that Participants who have already retired from
the Company on the effective date of the Plan shall continue to receive
Supplemental Benefits on a monthly basis. Notwithstanding the foregoing
provisions of this subsection 2.3, a Participant, other than those who have
retired from the Company prior to the effective date of the Plan, (or his
Beneficiary) who is receiving Supplemental Benefits in monthly installments
may request the Administrator to pay the then present value of the
remaining balance of such benefits in a lump sum, and the Administrator
may, in its discretion, but only with the approval of the Chief Executive
Officer of the Company, grant such request and cause such lump sum payment
to be made in an amount determined as described in this subsection. In
addition, notwithstanding the foregoing provisions of this subsection 2.3,
if a Participant or, if applicable, his surviving spouse, who is receiving
Supplemental Benefits in monthly installments dies before the guaranteed
total of sixty monthly payments provided for in his employment agreement
have been paid, the present value of the balance of such sixty monthly
payments, calculated as described in this subsection, or such other amount
as is payable in such event under the terms of the employment agreement,
shall be paid in a single lump sum to his estate or such other Beneficiary
as is entitled to such payment under his employment agreement.
2.4. Benefits Provided by Employers. Benefits payable under
this Plan to a Participant or his Beneficiary shall be paid directly by the
Participant's Employer to the extent not paid by the trustee of the Clark
Equipment Company Deferred Benefit Trust from such trust. No Employer
shall be required to segregate any assets to be applied for the payment of
benefits under this Plan.
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2.5. Beneficiary. As used in the Plan, a Participant's
"Beneficiary" is any person, including a Participant's spouse, eligible to
receive benefits under the applicable employment agreement or this Plan by
reason of a Participant's service with an Employer.
SECTION 3
Provisions Regarding Funding
The Company has established and maintains the Clark Equipment
Company Deferred Benefit Trust (the "Trust") to accumulate and hold assets
to provide the benefits under the Plan, with the only exception being to
the extent that such assets are required to be used to satisfy the claims
of the Employers' creditors. The Company shall, subject to the right of
the Employers' creditors, make periodic contributions to the Trust (at
least annually) and maintain assets in the Trust to the extent necessary to
maintain a level of funding (the "Plan funding level") for the benefits
accrued under the Plan (regardless of whether such accrued benefits are
fully vested or subject to any risk of forfeiture) that is at least equal
to the actuarially determined value of those benefits (the "Plan benefit
value"). Such actuarial determination shall be made at least annually (and
in each case not more than twelve months after the last prior
determination) using the same mortality table used by the actuary of the
qualified plan for the purpose of determining funding requirements under
ERISA and the interest rate specified in Code Section 411(a)(11)(B)(ii) (or
any successor section thereto) at the time the Plan funding level deter-
mination is made. In making such actuarial determination, all accrued
benefits under the Plan which may become payable as a single lump sum shall
be calculated as of the valuation date and assumed to be paid as soon as
benefits could be paid if the Participant retired (if eligible) or
otherwise left employment as of the valuation date, except that the amount
of the benefits payable under the Plan for each Participant shall be
assumed to be at the projected highest amount that would be payable if the
Participant retired or otherwise terminated employment at any time during
the next succeeding twelve month period. In the event that after a lump
sum benefit settlement payment is made from the Trust to or on behalf of a
Participant, due to retirement or other termination of employment, transfer
of assets to a separate trust, or otherwise, the assets remaining in the
Trust are less than 90% of the remaining liabilities of the Trust (based on
the most recent valuation), a special actuarial determination of the Plan
benefit value shall be made as provided herein and the Company shall then
make such contributions to the Trust as are necessary to bring the Plan
funding level up to the Plan benefit value. In the event that the Plan
funding level exceeds 110% of the Plan benefit value, and the Company
provides to the Trustee a certification by the actuary for the qualified
plan of such funding status of the Plan, the Company may withdraw assets
from the Trust to the extent of the surplus in excess of 110% of the Plan
benefit value. The Company shall notify each Participant within thirty
days after its notification of any determination of the Plan funding level
if the accrued Plan benefits are not then fully funded, unless such funding
deficiency is cured within such thirty-day period. The Company shall take
all such actions as are necessary to assure that the type and quality of
the assets held in the Trust will be such that they have sufficient
liquidity to satisfy the ongoing cash needs of the Plan, and are subject to
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no more investment risk than the assets in the trust under the qualified
plan. The Company shall contribute only Company owned life insurance
policies or cash to the Trust. The Company shall provide to each
Participant a copy of the annual reports of both the actuary and the
independent public accountants regarding the adequacy of Plan funding, the
reasonableness of the assumptions used to determine such funding, and such
other matters as the Company requests be included in such reports. The
Company shall also provide to each Participant an annual statement showing
that Participant's accrued benefit amount, the amount funded, and the
future projected lump sum and annual benefit amounts expected at ages 55,
62 and 65.
SECTION 4
General
4.1. Administrator. This Plan will be administered by an
"Administrator" which shall be the Company, or at the Company's election,
one or more employees of the Company who are designated by the Chief
Executive Officer of the Company. No person who is an Administrator shall
be liable for any act or action, whether of commission or omission, taken
by any other person, or by any officer, agent, or employee; nor, except in
circumstances involving his bad faith, for anything done or omitted to be
done by himself; and the Company shall indemnify and hold each
Administrator harmless from any claims of such liability and all costs
(including attorney's fees) resulting therefrom.
4.2. Claims. Any claim for benefits or payments under the Plan
by a Participant or a Beneficiary shall be made in writing and delivered to
the Company. If the Participant, or any Beneficiary following the
Participant's death (collectively, the "Claimant"), notifies the Company in
writing that he believes he has been denied any benefit payable under this
Plan, either in total or by the payment of an amount less than the full
benefit or payment to which the Claimant would normally be entitled, the
Company shall advise the Claimant in writing of the amount of the benefit
if any, and the specific reasons for any denial of benefits. The Company
shall also furnish the Claimant at that time with a written notice con-
taining:
(a) Specific references to pertinent provisions of the
Plan;
(b) A description of any additional material or information
necessary for the Claimant to perfect the claim if
possible, and an explanation of why such material or
information is needed; and
(c) An explanation of the claim review procedure set forth
in this subsection 4.2.
Such written notice shall be sent to the Claimant within 90 days
of the date the claim is filed. This 90-day period may be extended by the
Administrator for an additional 90 days, provided a Claimant is notified of
the reason for the extension and a date on which the Claimant may expect to
receive a decision on his claim.
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Within 60 days of receipt of the information described above, a Claimant
shall, if further review is desired, file a written request for
reconsideration with the Administrator of the Plan. So long as the
Claimant's request for review is pending (including such 60-day period),
the Claimant or his duly authorized representative may review pertinent
documents and may submit issues and comments in writing to the
Administrator. A decision shall be made by the Administrator within 60
days of the filing by the Claimant of the request for reconsideration and
shall be conveyed to the Claimant in writing and shall include specific
reasons for the decision, which specifically reference the pertinent
provisions of the Plan on which the decision is based.
4.3. Interests Not Transferable. The Company shall have the
right to withhold from any payment under the Plan all taxes required to be
withheld under the laws of the United States or any State, county,
municipality or other taxing authority. Except as to any withholding of
tax under such laws, the interest of any Participant, his spouse, minor
children or other Beneficiary, under the Plan is not subject to the claims
of their creditors and may not be voluntarily or involuntarily sold,
transferred, assigned, alienated or encumbered.
4.4. Facility of Payment. Any amounts payable hereunder to any
person under legal disability or who, in the judgment of the Administrator,
is unable to properly manage his financial affairs may be paid to the legal
representative of such person or may be applied for the benefit of such
person in any manner which the Administrator may select.
4.5. Gender and Number. Where the context admits, words in the
masculine gender shall include the feminine gender, the plural shall
include the singular, and the singular shall include the plural.
4.6. Controlling Law. To the extent not superseded by the laws
of the United States, the laws of Indiana shall be controlling in all
matters relating to the Plan.
4.7. Successors. This Plan is binding on each Employer and will
bind and inure to the benefit of any successor of an Employer, whether by
way of purchase, merger, consolidation or otherwise.
4.8. Continued Employment. The establishment or existence of
this Plan shall not be construed to give any Participant the right to be
retained in the Employer's service.
4.9. Action by Company. Any action required or permitted to be
taken by the Company under the Plan may be taken by the Chief Executive
Officer of the Company or his designee or as provided in the Company's
Program for Adoption and Administration of Employee Benefit Plans, as
amended from time to time.
4.10. Plan Expenses. All expenses of the Plan and of the Trust
shall be paid by the Company. The Company shall promptly reimburse the
Trust for any costs, fees, charges or expenses that are initially paid from
the trust fund.
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SECTION 5
Amendment and Termination
The Plan may be amended or terminated by action of the Board of
Directors (or by the Human Effectiveness Committee or other duly authorized
committee of the Board of Directors) of the Company only if such amendment
or termination is consented to by all of those Participants and each
Beneficiary of each deceased Participant affected by the amendment or
termination, provided that in no event shall any Participant's Supplemental
Benefit accrued to the date of such amendment or termination be eliminated
or reduced by such action. If the Plan is terminated, all assets of the
Trust, after payment of expenses of administration and liquidation, will be
allocated and distributed to Participants and Beneficiaries to the extent
necessary to satisfy all liabilities payable under the Plan. Any assets
remaining in the Trust after satisfaction of all liabilities described
above will be distributed in accordance with the terms of the Trust.
Notwithstanding the foregoing provisions of this Section 5, if a
Participant in the Plan so requests and the Chief Executive Officer of the
Company approves, a separate plan and trust shall be established for such
Participant, with such terms as are agreed to by such Participant and the
Company, the liabilities of the Plan with respect to such Participant shall
be transferred to such new plan, and the proportion of the assets of the
Trust equal to the proportion of the liabilities so transferred, shall be
transferred to the separate trust for such Participant under the new plan.
IN WITNESS WHEREOF, the undersigned duly authorized officer of
Clark Equipment Company has caused the foregoing to be executed this 28th
day of December, 1994.
CLARK EQUIPMENT COMPANY
By /s/ William N. Harper
Its Vice President
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SCHEDULE A
Benefit Obligations Provided Under
Clark Equipment Company Supplemental Retirement
Income Plan For Certain Executives
1. Those benefit obligations provided pursuant to that certain amended
and restated employment agreement between Thomas C. Clarke and Clark
Equipment Company dated November 12, 1992 as may be amended from time
to time, including but not limited to the benefits provided for in
Sections 3.1, 3.2, 9.8, 11.2 and Exhibit A of said agreement, and any
lump sum payment of such benefit obligations as provided for in
Section 4 of said agreement, but excluding the benefits provided for
in Section 3.4 of said agreement.
2. Those benefit obligations provided pursuant to that certain amended
and restated employment agreement between Thomas L. Doepker and Clark
Equipment Company dated November 12, 1992 as may be amended from time
to time, including but not limited to the benefits provided for in
Sections 3.1, 3.2, 3.3, 3.5, 3.6, 4.3, 4.4, 4.5, 5.1, 5.2, 5.3, 6,
14.4, 14.7, 14.8, 16.2 and Exhibit A of said agreement, and any lump
sum payment of such benefit obligations as provided for in Section 7
of said agreement, but excluding the benefits provided for in Section
3.4 of said agreement.
3. Those benefit obligations provided pursuant to that certain amended
and restated employment agreement between William N. Harper and Clark
Equipment Company dated November 12, 1992 as may be amended from time
to time, including but not limited to the benefits provided for in
Sections 3.1, 3.2, 3.3, 3.5, 3.6, 4.3, 4.4, 4.5, 5.1, 5.2, 5.3, 6,
14.4, 14.7, 14.8, 16.2 and Exhibit A of said agreement, and any lump
sum payment of such benefit obligations as provided for in Section 7
of said agreement but excluding the benefits provided for in Section
3.4 of said agreement.
4. Those benefit obligations provided pursuant to that certain amended
and restated employment agreement between Bernard D. Henely and Clark
Equipment Company dated November 12, 1992 as may be amended from time
to time, including but not limited to the benefits provided for in
Sections 3.1, 3.2, 3.3, 3.5, 3.6, 4.3, 4.4, 4.5, 5.1, 5.2, 5.3, 6,
14.4, 14.7, 14.8, 16.2 and Exhibit A of said agreement, and any lump
sum payment of such benefit obligations as provided for in Section 7
of said agreement but excluding the benefits provided for in Section
3.4 of said agreement.
5. Those benefit obligations provided pursuant to that certain amended
and restated employment agreement between Leo J. McKernan and Clark
Equipment Company dated November 12, 1992 as may be amended from time
to time, including but not limited to the benefits provided for in
Sections 3.1, 3.3, 3.4, 12.4, 12.7, 12.8, 13, 20 and Exhibit A of said
agreement, and any lump sum payment of such benefit obligations as
provided for in Section 6 of said agreement but excluding the benefits
provided for in Section 3.2 of said agreement.
A-1<PAGE>
<PAGE>
6. Those benefit obligations provided pursuant to that certain amended
and restated employment agreement between F. M. Sims and Clark
Equipment Company dated November 12, 1992 as may be amended from time
to time, including but not limited to the benefits provided for in
Sections 3.6, 4.1, 4.2, 4.3, 5.2, 9, 20.4, 20.7, 20.8 and Exhibit A of
said agreement, and any lump sum payment of such benefit obligations
as provided for in Section 4.4 of said agreement.
7. Those benefit obligations provided pursuant to that certain amended
and restated employment agreement between Robert N. Spolum and Clark
Equipment Company dated September 1, 1992 as may be amended from time
to time, including but not limited to the benefits provided for in
Sections 3.1, 3.2, 4.2, 17.4, 17.7, 17.8 and Exhibit A of said
agreement, and any lump sum payment of such benefit obligations as
provided for in Section 3.5 of said agreement but excluding the
benefits provided for in Section 3.4 of said agreement.
A-2
Exhibit 10(s)
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL RETIREMENT INCOME PLAN FOR CERTAIN EXECUTIVES
AMENDMENT No. 1
WHEREAS, Clark Equipment Company (the "Company") previously
established the Clark Equipment Company Supplemental Retirement Income Plan
for Certain Executives (the "Plan"); and
WHEREAS, the Human Effectiveness Committee of the Board of Directors
of the Company has approved the amendment of the Plan as described below;
NOW, THEREFORE, the Plan is hereby amended effective as of
February 15, 1995 in the following respect:
1. Schedule A , Item 6, of the Plan is amended to read as follows:
"6. Those benefit obligations provided pursuant to that certain
amended and restated employment agreement between F. M. Sims and
Clark Equipment Company dated February 15, 1995 as may be amended
from time to time, including but not limited to the benefits
provided for in Sections 3.1, 3.2, 3.3, 3.5, 3.6, 9.4, 9.7, 11.2
and Exhibit A of said agreement, and any lump sum payment of such
benefit obligations as provided for in Section 4 of said
agreement, but excluding the benefits provided for in Section 3.4
of said agreement."
WHEREFORE, pursuant to the authority delegated by the Human
Effectiveness Committee of the Board of Directors of Clark Equipment
Company, this Amendment No. 1 is made and executed on this 6th day of March
1995, to become effective as specified herein.
CLARK EQUIPMENT COMPANY
By: /s/ Leo J. McKernan
Leo J. McKernan
Chairman, President and
Chief Executive Officer
Exhibit (10)(t)
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL RETIREMENT INCOME PLAN FOR CERTAIN EXECUTIVES
AMENDMENT No. 2
WHEREAS, Clark Equipment Company (the "Company") previously
established the Clark Equipment Company Supplemental Retirement Income Plan
for Certain Executives (the "Plan"); and
WHEREAS, the Human Effectiveness Committee of the Board of Directors
of the Company has approved the amendment of the Plan as described below;
NOW, THEREFORE, the Plan is hereby amended effective as of March 27,
1995 in the following respect:
1. Subsection 2.3 and Section 3 of the Plan are each amended by replacing
the phrase "the interest rate specified in Code Section
411(a)(11)(B)(ii) (or any successor section thereto)" with the phrase
"the interest rate that would be used by the Pension Benefit Guaranty
Corporation for purposes of determining the present value of a lump
sum distribution on the termination of a plan subject to Title IV of
the Employee Retirement Income Security Act of 1974, as amended,
formerly referred to in Section 411(a)(11)(B)(ii) of the Internal
Revenue Code of 1986".
WHEREFORE, pursuant to the authority delegated by the Human
Effectiveness Committee of the Board of Directors of Clark Equipment
Company, this Amendment No. 2 is made and executed on this 28th day of
March 1995, to become effective as specified herein.
CLARK EQUIPMENT COMPANY
By: /s/ Leo J. McKernan
Leo J. McKernan
Chairman, President and
Chief Executive Officer
Exhibit 10(u)
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT TRUST
12.27.94
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<PAGE>
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT TRUST
THIS AGREEMENT, is made this 28th day of December, 1994 by and
between CLARK EQUIPMENT COMPANY, a Delaware corporation (sometimes referred
to as the "company"), and such subsidiaries of the company as become
parties to this agreement with its consent (the company and such
subsidiaries are referred to collectively as the "employers" and sometimes
individually as an "employer"), and WACHOVIA BANK OF NORTH CAROLINA, N.A.,
and its successor or successors and assigns in the trust hereby evidenced,
as trustee (the "trustee"),
WITNESSETH THAT:
WHEREAS, the employers maintain the Clark Equipment Company
Supplemental Executive Retirement Plan (the "plan"), a copy of which is
attached hereto as Exhibit I, on an unfunded basis for the benefit of
certain current, future and former employees of the employers; and
WHEREAS, the company considers it desirable to establish a trust
for the purpose of providing a method for the orderly accumulation of
assets to be used to make certain payments payable under the plan except as
such assets are required to be used to satisfy the claims of the employers'
creditors; and
WHEREAS, the purpose of this agreement is to establish such a
trust (the "trust");
NOW, THEREFORE, in consideration of the mutual undertakings of
the parties hereto, IT IS AGREED by the company and the trustee, as
follows:
ARTICLE I
Introduction
1.1. The Trust, the Plan, Participants. This agreement and the
trust hereby evidenced shall be known as the "Clark Equipment Company
Supplemental Executive Retirement Trust." The trust is established for the
benefit of current, future and former employees of the employers who are or
become covered under the plan and their beneficiaries, as determined in
accordance with the provisions of the plan, which employees and bene-
ficiaries are referred to as "participants." However, the participants
shall not have any right or security interest in any specific asset of the
trust or beneficial ownership in or preferred claim on the assets of the
trust, it being understood that the assets of the trust shall be available
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for the claims of the employers' creditors as provided in Article V and all
rights created under the plan or the trust shall be unsecured contractual
rights against the employers. The provisions of the plan as they may be
amended from time to time are incorporated into and form a part of this
agreement and trust; provided, however, that the trustee's duties shall be
limited to those duties expressly provided for herein without regard to the
provisions of the plan.
1.2. Status of Trust. The trust shall be irrevocable. The
trust is intended to constitute a grantor trust under Sections 671-678 of
the Internal Revenue Code of 1986, as amended (the "Code"), and shall be
construed accordingly. The assets held in the trust for the benefit of an
employer shall constitute a separate trust under Sections 671-678 of the
Code for that employer.
1.3. Employer Deposits. The company and each other employer
will make contributions of cash or company owned life insurance policies
(collectively "approved assets") to the trust at such times and in such
amounts as such contributions are required by the terms of the plan. Such
amounts of approved assets shall be held, invested and distributed by the
trustee in accordance with the provisions of this agreement.
1.4. Acceptance. The trustee accepts the duties and obligations
of the "trustee" hereunder, agrees to accept delivery of funds delivered to
it by the employers pursuant to Section 1.3, and agrees to hold such funds
(and any proceeds from the investment of such funds) in trust in accordance
with this agreement.
1.5. The Committee. The Clark Equipment Company Employee
Retirement Income Security Act Committee, or such other committee as is
appointed by the Chief Executive Officer of the company, shall be the
committee that is responsible for the administration of the trust (the
committee"). The powers, rights and duties of the committee under this
agreement are described below. The Secretary of the company will certify
to the trustee from time to time the persons who are acting as the com-
mittee. The trustee may rely on the latest certificate received without
further inquiry or verification.
ARTICLE II
Management of the Trust Fund
2.1. The Trust Fund. Unless the context clearly implies or
indicates otherwise, the term "trust fund" as of any date means all
property of every kind then held under this agreement by the trustee or any
custodian.
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2.2. Trustee's General Powers, Rights and Duties. With respect
to the trust fund and subject only to the limitations expressly provided in
this agreement (including the powers reserved to the committee, investment
managers and custodians) or imposed by applicable law, the trustee shall
have the following powers, rights and duties in addition to those vested in
it elsewhere in this agreement or by law:
(a) To invest and reinvest part or all of the trust fund in any
real or personal property (including investments in any
stocks, bonds, debentures, mutual fund shares, notes,
commercial paper, treasury bills, options, commodities,
futures contracts, insurance policies, partnership
interests, venture capital investments, any common, com-
mingled or collective trust funds or pooled investment funds
described in Section 2.3, any interest bearing deposits held
by any bank or similar financial institution, and any other
real or personal property) and to diversify such investments
so as to minimize the risk of large losses unless under the
circumstances it is clearly prudent not to do so; except
that the trustee shall not directly invest in any stock,
bonds, debentures or other assets of the company or any of
its subsidiaries (other than company owned life insurance
policies).
(b) When directed by the committee, to apply for, pay premiums
on, maintain in force on the lives of participants, or any
other person, and dispose of individual ordinary or
individual or group term or universal life insurance
policies ("policies") for the benefit of the participants
and containing such provisions as the committee may approve
or direct; to acquire such a policy from an employer or from
the person on whose life the policy is issued, but only if
the trustee pays, transfers or otherwise exchanges for the
policy no more than the cash surrender value of the policy
and the policy is not subject to a mortgage or similar lien
which the trustee would be required to assume; to exchange
such a policy for cash from an employer but only if the cash
provided by the employer is equal to or greater than the
cash surrender value of the policy and to have with respect
to such policies all of the rights, powers, options,
privileges and benefits usually comprised in the term
"incidents of ownership" and normally vested in an insured
or owner of such policies.
(c) To retain in cash such amounts as the trustee considers
advisable and as are permitted by applicable law and to
deposit any cash so retained in any depository (including
any bank acting as trustee) which the trustee may select;
provided that such amounts shall at all times be held in one
or more interest-bearing accounts.
(d) To manage, sell, insure and otherwise deal with all real and
personal property held by the trustee on such terms and
conditions as the trustee shall decide.
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(e) To vote stock and other voting securities personally or by
proxy (and to delegate the trustee's powers and discretions
with respect to such stock or other voting securities to
such proxy), to exercise subscription, conversion and other
rights and options (and make payments from the trust fund in
connection therewith), to take any action and to abstain
from taking any action with respect to any reorganization,
consolidation, merger, dissolution, recapitalization,
refinancing and any other program or change affecting any
property constituting a part of the trust fund (and in
connection therewith to delegate the trustee's discretionary
powers and to pay assessments, subscriptions and other
charges from the trust fund), to hold or register any
property from time to time in the trustee's name or in the
name of a nominee or to hold it unregistered or in such form
that title shall pass by delivery and to borrow from anyone,
including any bank acting as trustee, to the extent per-
mitted by law, such amounts from time to time as the trustee
considers desirable to carry out this trust (and to mortgage
or pledge all or part of the trust fund as security).
(f) When directed by an investment manager to acquire, retain or
dispose of such investments as the investment manager
directs in accordance with this agreement.
(g) To make payments from the trust fund to provide benefits
that have become payable under the plan pursuant to Section
4.5 or that are required to be made to the creditors of an
employer pursuant to Section 5.2.
(h) To maintain in the trustee's discretion any litigation the
trustee considers necessary in connection with the trust
fund.
(i) To withhold, if the trustee considers it advisable, all or
any part of any payment required to be made hereunder as may
be necessary and proper to protect the trustee or the trust
fund against any liability or claim on account of any
estate, inheritance, income or other tax or assessment
attributable to any amount payable hereunder, and to
discharge any such liability with any part or all of such
payment so withheld, provided that at least ten days prior
to discharging any such liability with any amount so with-
held the trustee shall notify the committee in writing of
the trustee's intent to do so, and the trustee shall
continue to withhold such payment if so directed by the
committee in writing before such liability is discharged.
(j) To maintain records reflecting all receipts and payments
under this agreement and such other records as the committee
specifies and the trustee agrees to, which records may be
audited from time to time by the committee or anyone named
by the committee.
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(k) To report to the committee as of each valuation date (as
defined in Section 2.4), and at such other times as the
committee may request, the then net worth of the trust fund
(that is, the fair market value of all assets of each of the
investment funds and of any other assets of the trust, less
liabilities known to the trustee, other than liabilities to
participants and amounts payable from the trust fund to
creditors who are not entitled to benefits under the plan),
on the basis of such data and information as the trustee
considers reliable.
(l) To furnish periodic accounts to the committee for such
periods as the committee may specify, showing all
investments, receipts, disbursements and other transactions
involving the trust during the applicable period and the
assets of each investment fund and any other assets of the
trust fund held at the end of that period.
(m) To furnish the employers with such information in the
trustee's possession as the employers may need or desire for
tax or other purposes.
(n) To employ agents, attorneys, accountants, investment
advisors or managers and other persons (who also may be
employed by the employers, the committee or others), to
delegate discretionary powers to such persons and to
reasonably rely upon information and advice furnished by
such persons; provided that each such delegation and the ac-
ceptance thereof by each such person shall be in writing;
and provided further that the trustee may not delegate its
responsibilities as to the management or control of the
assets of the trust fund.
(o) To perform all other acts which in the trustee's judgment
are appropriate for the proper management, investment and
distribution of the trust fund to the extent such duties
have not been assigned to others as provided herein.
Notwithstanding any powers granted to the trustee pursuant to this Section
2.2 or pursuant to applicable law, the trustee shall not have any power
that could give this trust the objective of carrying on a business and
dividing the gains therefrom, within the meaning of Section 301.7701-2 of
the Procedure and Administrative Regulations promulgated pursuant to the
Code.
2.3. Collective Investment Trusts. The trustee or any
investment manager may invest any part or all of the trust assets for which
it has investment responsibility in any common, collective or commingled
trust fund or pooled investment fund that is maintained by a bank or trust
company (including a bank or trust company acting as trustee) provided such
investments are consistent with applicable investment requirements and
guidelines. To the extent that any trust assets are invested in any such
fund, the provisions of the documents under which such common, collective
or commingled trust fund or pooled investment fund are maintained shall
govern any investments therein.
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2.4. Accounting. The committee shall maintain a bookkeeping
account in the name of each employer which, pursuant to rules established
by the committee, will reflect:
(I) deposits made by that employer to the trust
fund pursuant to Section 1.3;
(ii) Income, losses, and appreciation or
depreciation in the value of trust assets
resulting from investment of the trust fund to
the extent such items are attributable to such
employer's deposits;
(iii) payments made from the trust fund to
participants employed or formerly employed by
that employer (or to their beneficiaries) in
the form of benefits payable to them under the
plan, or to such employer's creditors; and
(iv) any other amounts charged to that employer's
account, including its share of compensation
and expenses described in Section 4.9.
In addition, the committee shall maintain within each employer's
bookkeeping account a subaccount ("plan subaccount") in the name of each
participant to reflect that portion of the employer's account attributable
to such participant. As of each valuation date such accounts and plan
subaccounts shall be appropriately adjusted in accordance with such rules
to reflect the then net worth of the trust fund, as determined as of that
valuation date by the trustee and reported to the committee pursuant to
Section 2.2(k). A "valuation date" is each December 31 and such other date
or dates as the committee shall specify.
2.5. Common Fund. The trustee shall not be required to make any
separate investment of the trust fund for the account of the plan as
applied to the several employers and their respective employees in the
absence of direction by the committee and may administer and invest the
deposits made to the trust by all employers as one trust fund. If, for any
purpose, it becomes necessary to determine as of any date the portion of
the trust fund allocable to one of the employers, the committee shall
specify such date as a special valuation date and, after all adjustments
required as of that date have been made, such portion of the trust fund
shall be an amount equal to the employer's proportionate interest in the
trust fund, determined in accordance with Section 2.4 above and any such
determination by the committee shall be binding on all of the employers,
participants and all other persons. The trustee also shall not be required
to make any separate investment of the trust fund for the account of any
creditor of any employer prior to receipt of directions to make payments to
such creditor in accordance with Section 5.2.
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ARTICLE III
Investment Funds, Investment Managers and Custodians
3.1. Investment Funds. From time to time the committee may
direct the trustee to establish one or more investment funds (the
"investment funds") for the purpose of reflecting the separate investment
and reinvestment of the trust fund. The trustee shall have responsibility
for the investment of the assets of an investment fund unless an investment
manager has been appointed with respect to that fund. All income, losses,
appreciation and depreciation attributable to the assets of an investment
fund shall be credited to that fund. Investments of each investment fund
shall be made in accordance with investment guidelines established by the
committee for that investment fund. The committee shall provide each
investment manager appointed with respect to an investment fund with the
investment guidelines for that fund and with any modifications in such
investment guidelines made from time to time by the committee. Notwith-
standing the fact that an investment manager may be appointed with
responsibility for the management of an investment fund, the trustee shall
have the responsibility for the investment of cash balances held by it from
time to time as a part of such investment fund in short term cash
equivalents (such as short term commercial paper, treasury bills and
similar securities, and for this purpose the trustee may invest in any
appropriate common, commingled or collective short term investment fund).
In addition, the trustee shall have the power, right and duty to sell any
such short term investments as may be necessary to carry out the
instructions of the investment manager with respect to the investment of
the investment fund.
3.2. Investment Managers. The committee from time to time may
appoint one or more professional investment advisers other than the trustee
as an "investment manager" of the entire trust fund or any investment fund
maintained as a part of the trust fund. Any such appointment shall be made
by written notice to the investment manager and the trustee and shall
specify the portion of the trust fund to be managed by the investment
manager and the powers, rights and duties of the trustee that are allocated
to the investment manager with respect to such portion of the trust fund.
Upon such notice to the trustee of the appointment of an investment
manager, the investment manager shall be authorized to direct the trustee
regarding the investment and reinvestment of the assets of the portion of
the trust fund subject to management by the investment manager and the
trustee shall receive, hold, vote and transfer assets purchased or sold by
the investment manager in accordance with its directions. The appointment
of an investment manager shall continue in effect until the trustee
receives written notice to the contrary from the committee or the
investment manager. An investment manager may resign at any time upon
thirty days' prior written notice to the committee and the trustee. The
committee may remove an investment manager at any time upon prior written
notice to the investment manager and the trustee. An investment manager
shall have complete investment responsibility for the assets of the trust
fund with respect to which it has been appointed as investment manager
and, except as otherwise provided by law or this agreement, the trustee
shall have no obligation as to the investment of such assets during the
period they are subject to management by an investment manager.
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3.3. Custodians. If a national banking association or a state
bank is appointed by the committee as the investment manager of any
investment fund, the committee also may designate such bank to be employed
by the trustee as "custodian" of the assets from time to time forming part
of that investment fund. In such event, the trustee shall enter into an
appropriate custodial agreement with the bank appointed as investment
manager naming the investment manager as custodian of the investment fund
and delegating the trustee's powers with respect to the management of the
investment fund to the custodian. Upon such an appointment the trustee
shall transfer the assets of the investment fund to the custodian and the
custodian shall have responsibility for the holding and administration of
the assets of the investment fund, as agent of the trustee, until its
employment as custodian is terminated, at which time the custodian shall
return all assets of the investment fund to the trustee. With respect to
the appointment of such custodian, the trustee shall be entitled to indem-
nification under Section 4.8 notwithstanding that it has consented to the
designation of a custodian and notwithstanding any indemnity agreement in a
custodial agreement between the trustee and the custodian. In addition to
its duties as investment manager, each custodian shall maintain the records
and accounts and shall submit to the appropriate persons the periodic
reports otherwise required of the trustee with respect to the portion of
the trust fund held by the custodian.
ARTICLE IV
General Provisions
4.1. Restrictions on Reversion. Except as otherwise provided
herein, none of the employers shall have any right, title or interest in
the assets of the trust fund, nor will any part of the assets of the trust
fund revert or be repaid to any employer until all benefits due under the
plan have been paid pursuant to its terms; provided, however, that the
assets of the trust shall be available for the claims of the employers'
creditors as provided in Section 5.2. The employers may make withdrawals
from the trust only if and to the extent that such withdrawals are
expressly permitted by the terms of the plan. If an employer ceases to
have any benefit obligations under the plan, any balance remaining in such
employer's plan subaccount maintained pursuant to Section 2.4 after all
benefits accrued under the plan have been paid, shall revert to such
employer.
4.2. Nonalienation of Trust Assets. To the extent permitted by
law, the rights or interests of any participants to any benefits or future
payments hereunder shall not be subject to attachment or garnishment or
other legal process by any creditor of any such participant, nor shall any
such participant have any right to alienate, anticipate, commute, pledge,
encumber or assign (either at law or in equity) any of the benefits or
rights which he may expect to receive (contingently or otherwise) under
this agreement, except as may be required by the tax withholding provisions
of the Code or of a state's income tax act.
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4.3. Litigation. Any final judgment that is not appealed or
appealable and which may be entered in any action or proceeding regarding
this trust shall be binding and conclusive on the parties hereto and all
persons having or claiming to have an interest in the trust.
4.4. Trustee's Actions Conclusive. Except as otherwise provided
by law, the trustee's exercise or non-exercise of its powers and discretion
in good faith shall be conclusive on all persons. No one shall be obliged
to see to the application of any money paid or property delivered to the
trustee, except to the extent such person is acting as an investment
manager as respects such money or property. The certificate of the trustee
that it is acting in accordance with this agreement will fully protect all
persons dealing with the trustee. If there is a disagreement between the
trustee and anyone as to any act or transaction reported in any accounting,
the trustee shall have the right to a settlement of its account by any
proper court.
4.5. Benefit Payments. Notwithstanding any other provisions of
the plan or of this agreement, the only benefits that are payable to
participants from the trust fund are the benefits payable pursuant to the
plan. The committee from time to time shall direct the trustee in writing
as respects the distribution from the trust fund of benefits that have
become payable, but that have not been paid by an employer, under the plan
to a participant (including any legal fees and expenses that are payable
under the plan), including the amount and manner of payment of any such
benefit. If a payment required under the terms of the plan has not been
made to a participant (whether due to the failure of the committee to
notify the trustee as required by this Section 4.5 or otherwise), then the
participant may notify the trustee in writing of the amount (or a
reasonable estimate of the amount) owed to him pursuant to the plan, and
the date or dates such amount was due and payable. The trustee shall
notify the committee and the participant's employer within 15 days of the
receipt of such payment request. If the committee or the employer does not
provide the trustee with a statement from an "independent party" as to the
proper amount due and payable to the participant within 30 days of the date
the trustee notified the committee and the employer of the payment request
or the trustee determines that the party providing the statement is not
"independent", the trustee shall make the payment or payments requested by
the participant from the trust fund and may conclusively rely on such
payment or payments being the appropriate amount. The trustee shall also
notify the committee and employer of any such payments. Payment shall be
made to a participant from the trust fund in accordance with the terms of
the plan until the earlier of: (i) all payments due to the participant
under the plan, as requested by the participant in his notification to the
trustee, have been satisfied; or (ii) the committee or employer provide a
statement as described above. If a statement is so provided, appropriate
adjustment, if any, in the amount paid and to be paid to the participant
shall be made. The trustee shall be fully protected in acting without the
committee's direction under this Section 4.5 and shall be indemnified and
saved harmless as provided in Section 4.8. The trustee shall make such
distributions from the trust fund in accordance with the provisions of this
Section 4.5, subject to the provisions of Article V; provided, however,
that payments to a participant shall be made only from assets of the trust
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that are attributable to the participant's former employer (as reflected in
the account maintained for that employer pursuant to Section 2.4). If such
assets are not sufficient that employer shall make the balance of each such
payment when due.
4.6. Missing Persons. If any payment directed to be made by the
trustee from the trust fund is not claimed by the person entitled thereto,
the trustee shall notify the committee of that fact. None of the
employers, the committee and the trustee shall have any obligation to
search for or ascertain the whereabouts of any payee under this trust.
4.7. Liabilities Mutually Exclusive. To the extent permitted by
law, each employer, the trustee, the committee and each investment manager
shall be responsible only for its or his own acts or omissions.
4.8. Indemnification. To the extent permitted by law, none of
the trustee, any present or former member of the committee, or any person
who is or was a director, officer, or employee of an employer, shall be
personally liable for any act done, or omitted to be done, in good faith in
the administration of this trust. Any person to whom the committee or the
company has delegated any portion of its responsibilities under the trust,
any person who is or was a director, officer or employee of an employer, or
any present or former member of the committee, and each of them, shall, to
the extent permitted by law, be indemnified and saved harmless by the
employers (to the extent not indemnified or saved harmless under any
liability insurance or other indemnification arrangement with respect to
this trust) from and against any and all liability or claim of liability
to which they may be subjected by reason of any act done or omitted to be
done in good faith in connection with the administration of the trust or
the investment of the trust fund, including all expenses reasonably
incurred in their defense if the employers fail to provide such defense
after having been requested to do so in writing. The trustee shall be
indemnified and saved harmless by the employers (to the extent not indemni-
fied or saved harmless under any liability insurance or other indemni-
fication arrangement with respect to this trust) only with respect to
liability or claim of liability to which the trustee shall be subjected by
reason of its good faith compliance with any directions given in accordance
with the provisions of the trust by an investment manager, the committee,
or any person duly authorized by the committee or the company, or by reason
of its failure to take any action with respect to any assets of the trust
fund that are subject to investment direction from an investment manager in
the absence of direction from the investment manager, or by reason of its
good faith compliance with the provisions of Section 4.5, including all
expenses reasonably incurred in the trustee's defense if the employers fail
to provide such defense after having been requested to do so in writing.
4.9. Compensation and Expenses. All costs, charges and expenses
incurred by the trustee pursuant to Section 2.2(n) shall be paid from the
trust fund to the extent not paid by the employers, and all other
reasonable compensation, costs, charges and expenses incurred in the
administration of this trust, as agreed upon between the committee and the
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trustee, or between the committee and any investment manager or custodian,
will, to the extent not paid by the employers be paid from the trust fund
as the committee shall direct; provided that expenses incurred in con-
nection with the sale, investment and reinvestment of the trust fund (such
as brokerage, postage, express and insurance charges and transfer taxes)
shall be paid from the trust fund, which shall be reimbursed by the
Company.
4.10. Action by Company. Any action required or permitted to be
taken by the Company under the Trust may be taken by the Chief Executive
Officer of the Company or his designee or as provided in the Company's
Program for Adoption and Administration of Employee Benefit Plans, as
amended from time to time.
4.11. Warranty. The employers warrant that all directions or
authorizations by the committee, whether for the payment of money or
otherwise, will comply with the provisions of the plan and this trust.
4.12. Evidence. Evidence required of anyone under this
agreement shall be signed, made or presented by the proper party or parties
and may be by certificate, affidavit, document or other information which
the person acting on it considers pertinent and reliable.
4.13. Waiver of Notice. Any notice required under this
agreement may be waived by the person entitled to such notice.
4.14. Counterparts. This agreement may be executed in two or
more counterparts, any one of which will be an original without reference
to the others.
4.15. Gender and Number. Where the context admits, words
denoting the masculine gender shall include the feminine and neuter
genders, the singular shall include the plural, and the plural shall
include the singular.
4.16. Scope of this Agreement. The plan and this trust will be
binding on all persons entitled to benefits hereunder and their respective
heirs and legal representatives, and upon the employers, the committee, the
trustee, and any investment managers and custodians, and their successors
and assigns.
4.17. Severability. If any provision of this agreement is held
to be illegal or invalid, such illegality or invalidity shall not affect
the remaining provisions of this agreement, and they shall be construed and
enforced as if such illegal or invalid provision had never been inserted
herein.
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<PAGE>
4.18. Statutory References. Any references in this agreement to
a section of the Code shall include any comparable section or sections of
any future legislation that amends, supplements or supersedes that section.
4.19. Applicable Law. The plan and the trust shall be construed
in accordance with the laws of the State of Indiana.
ARTICLE V
Insolvency
5.1. Insolvency. An employer shall be considered "insolvent"
for purposes of this trust if the employer is unable to pay its debts as
they become due or if its affairs become the subject of reorganization or
liquidation proceedings as a debtor under federal bankruptcy laws.
5.2. Payments During Insolvency. At all times during the
existence of this trust assets of the trust attributable to each employer
(as reflected in the account maintained for that employer pursuant to
Section 2.4) shall be subject to the claims of its general creditors in the
event of the insolvency of the employer. Subject to the immediately
following sentence, the trustee shall have no duty to inquire as to whether
or not any employer is insolvent, but if the trustee has knowledge that an
employer is insolvent (as defined in Section 5.1), the trustee shall
discontinue benefit payments that otherwise would be charged to that
employer's account and will deliver or otherwise make available assets of
the trust attributable to that employer to satisfy the claims of that
employer's creditors as directed by a court of competent jurisdiction. If
a person claiming to be a creditor of an employer alleges in writing to the
trustee that said employer has become insolvent, the trustee shall
determine whether said employer is insolvent, and, pending such determi-
nation, the trustee shall discontinue payment of benefits to participants
employed or formerly employed by said employer (or to their beneficiaries);
the trustee may rely on such evidence concerning said employer's insolvency
as may be furnished to the trustee and that provides the trustee with a
reasonable basis for making a determination concerning said employer's
insolvency. If an employer becomes insolvent, the Secretary of the
employer shall have the duty to promptly inform the trustee of the
employer's insolvency. The committee shall have the same duty if and when
it becomes aware that an employer has become insolvent. Participants and
their beneficiaries shall not be granted greater rights to the trust fund
by virtue of their rights under the plan than other general creditors of
the employers, but no provision of the trust shall diminish the rights of a
participant to pursue his rights as a general creditor of an employer with
respect to any benefits he is entitled to under the plan, or otherwise. If
the trustee discontinues payment of benefits pursuant to this Section 5.2,
the trustee shall resume the payment of benefits only after determining
that the employer is not insolvent (or is no longer insolvent); the first
payment following such discontinuance shall include the aggregate amount of
all payments due to participants (or to their beneficiaries) for the period
of such discontinuance less the aggregate amount of any payments received
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<PAGE>
by said participants (or to their beneficiaries) during such period
directly from their employer in lieu of payments provided for under this
agreement.
ARTICLE VI
Resignation or Removal of Trustee
6.1. Resignation or Removal of Trustee. The trustee may resign
at any time by giving thirty days' prior written notice to the employers,
the committee, and the investment managers and custodians. The committee
may remove a trustee by giving prior written notice to the trustee, the
employers and the investment managers and custodians provided that such
removal shall not become effective until the time immediately preceding the
appointment of a successor trustee pursuant to Section 6.2.
6.2. Successor Trustees. In the event of the resignation or
removal of the trustee, a successor trustee shall be appointed by the
committee in writing as soon as practicable. Any successor trustee must be
a bank or trust company which is established and operating under the laws
of the United States, or a state within the United States, and which has a
combined capital and surplus of at least $100,000,000. Written notice of
such appointment shall be given by the committee to the employers, the
predecessor trustee, and the investment managers and custodians.
6.3. Duties of Predecessor Trustee and Successor Trustee. A
trustee that resigns or is removed shall promptly furnish to the committee
and the successor trustee a final account of its administration of the
trust. A successor trustee shall succeed to the right and title of the
predecessor trustee in the assets of the trust fund and the predecessor
trustee shall deliver the property comprising the trust fund to the
successor trustee together with any instruments of transfer, conveyance,
assignment and further assurances as the successor trustee may reasonably
require. Each successor trustee shall have all the powers, rights and
duties conferred by this agreement as if named the initial trustee.
Subject to applicable law, no successor trustee shall be personally liable
for any act or failure to act of a predecessor trustee.
ARTICLE VII
Amendment and Termination
7.1. Amendment. This trust may be amended from time to time by
the company, except as follows:
(a) The duties and liabilities of the committee, the trustee and
each investment manager and custodian under this agreement
cannot be changed substantially without their consent.
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<PAGE>
(b) Under no condition shall any amendment result in the return
or repayment to any employer or any other corporation or
other legal business entity related to an employer of any
portion of the trust fund or the income therefrom, or result
in the distribution of the trust fund for any purposes other
than payment of obligations of the employers to their
creditors, including participants.
(c) This trust may not be amended so as to cause the reduction
or cessation of any benefits a participant and his
beneficiaries would receive now or in the future under the
current terms of the plan as incorporated into and made a
part of this agreement, nor may the trust be amended to make
the trust revocable.
An insurance company may assume that this agreement has not been amended or
changed unless notice of such amendment is received by the insurance
company at its home office. Notwithstanding the foregoing provisions of
this Article VII, if a participant in the plan so requests and the Chief
Executive Officer of the company approves, a separate plan and trust shall
be established for such participant, with such terms as are agreed to by
such participant and the company, the liabilities of the plan with respect
to such participant shall be transferred to such new plan, and the pro-
portion of the assets held in the trust fund equal to the proportion of the
liabilities so transferred, shall be transferred to the separate trust for
such participant under the new plan.
7.2. Termination. This trust shall not terminate, and all the
rights, titles, powers, duties, discretions and immunities imposed on or
reserved to the trustee, each employer, the committee and any investment
managers and custodians shall continue in effect with respect to the trust,
until all benefits payable to participants under the plan have been paid
and all assets have been distributed by the trustee under the trust and the
plan. Notwithstanding any other provision of this trust, the trust shall
terminate one day prior to the expiration of a period of twenty-one years
after the death of the last to die of any current or future employee of the
employer who becomes a participant in the plan and who is alive on the day
and year first above written.
* * *
IN WITNESS WHEREOF, the company and the trustee have caused this
agreement to be executed on their behalf and their respective seals to be
hereunto affixed and attested by their respective officers thereunto duly
authorized, the day and year first above written.
CLARK EQUIPMENT COMPANY
By /s/ William N. Harper
Its Vice President
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<PAGE>
ATTEST:
/s/ John J. Moran, Jr.
Its Assistant Secretary
(Seal)
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By /s/ Joe O. Long
Its Senior Vice President
ATTEST:
/s/ John N. Smith, III
Its Assistant Secretary
(Seal)
-16-
Exhibit 10(v)
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
12.27.94
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<PAGE>
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
SECTION 1
Introduction
1.1. Plan. CLARK EQUIPMENT COMPANY SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN (the "Plan") is maintained by CLARK EQUIPMENT COMPANY (the
"Company") for the benefit of eligible employees of the Company and of
those affiliates of the Company which adopt the Plan for the benefit of
their eligible employees. The Plan is not funded or qualified for special
tax treatment under the Internal Revenue Code of 1986, as amended from time
to time (the "Code"), and is maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees.
1.2. Effective Date and Plan Year. The Plan is established as
of January 1, 1994. The "Plan Year" is the calendar year.
1.3. Employers. The Company and each other affiliate of the
Company which adopts the Plan with the consent of the Company is referred
to herein as an "Employer" and may be referred to collectively as the
"Employers."
1.4. Purpose and Employment Agreements. The Plan has been
established to supplement benefits provided by the Clark Equipment Company
Retirement Program for Salaried Employees (the "qualified plan"), a plan
which is intended to meet the requirements for qualification under Section
401(a) of the Code. To the extent benefits are limited under the qualified
plan either (1) by application of the provisions of Code Section 401(a)(17)
or Code Section 415, or by any other provision of the Code or other law or
regulation that limits either the amount of pension benefits or the amount
of compensation that can be used to determine pension benefits, or (2) by
the fact that the compensation used for the calculation of benefits under
the qualified plan does not include cash bonus amounts paid pursuant to the
Company's Incentive Compensation Plan for Corporate Office Management, the
Company's Incentive Compensation Plan for Business Unit Management, or any
other cash incentive compensation plan applicable to officers or executives
of the Company (collectively, the "Company's incentive compensation
plans"), "Supplemental Benefits" are provided under the terms and condi-
tions of this Plan. The Supplemental Benefits payable under the Plan are
not intended to duplicate the payment of any Supplemental Benefits (as
defined herein) pursuant to the terms of any employment agreement between
the Employer and a Participant covered under the Plan. Accordingly, the
Supplemental Benefits paid pursuant to the Plan shall be in satisfaction
of, not in addition to, any obligation of an Employer to make such payments
pursuant to an employment agreement with a Participant covered by the Plan.
Schedule A to the Plan lists the employment agreement obligations to
provide Supplemental Benefits that will be provided through the Plan.
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<PAGE>
SECTION 2
Participation and Supplemental Benefits
2.1. Eligibility and Participation. To be eligible and become a
Participant in the Plan, a person must, on or after the effective date of
the Plan, be both (1) either an employee of an Employer or one of the
Retired Executives specified herein and (2) a participant in the qualified
plan whose benefits are limited as described in this subsection 2.1 and
enter into a participation agreement with the Company in a form
satisfactory to the Company. No additional Participants may be added to
the Plan after March 31, 1995 unless at the time they become Participants
their accrued benefits are fully funded as provided in Section 3. Each
eligible employee of an Employer will become a Participant hereunder as of
the first day of the first plan year under the qualified plan for which the
benefits of such employee that would otherwise accrue or be payable under
such plan are not accrued or payable because such benefits are limited
either (1) in accordance with Code Section 415, Code Section 401(a)(17), or
by any other provision of the Code or other law or regulation that limits
either the amount of pension benefits or the amount of compensation that
can be used to determine pension benefits or (2) by the fact that the com-
pensation used for the calculation of benefits under the qualified plan
does not include cash bonus amounts paid (either before or after the
effective date of the Plan) pursuant to the Company's incentive
compensation plans, and thereafter the employee shall be eligible for
benefits in accordance with subsection 2.2 as a "Participant" hereunder. In
addition, as of the effective date of the Plan, Thomas C. Clarke and
Robert N. Spolum, both retired executives of the Company (the "Retired
Executives") shall be considered "Participants" in the Plan, but only to
the extent of the Company's obligations to them for Supplemental Benefits
(as defined herein) pursuant to the employment agreements identified in
Schedule A hereof. Not-withstanding the foregoing provisions of this
subsection 2.1, Frank M. Sims shall not be a Participant in the Plan. A
person who becomes a Participant in the Plan shall continue to be a
Participant until all benefits accrued for him hereunder have been paid as
provided herein.
2.2. Supplemental Benefits. At the time that a Participant or
his Beneficiary is entitled to benefits under the qualified plan, the
Participant or Beneficiary shall be entitled to the "Supplemental Benefit"
accrued for him hereunder. As of any date a Participant's accrued
Supplemental Benefit shall be (A) the full amount of the benefit computed
for such Participant using the pension formula under the qualified plan as
of such date (based on total credited service under the qualified plan)
except that, for such calculation, (1) the limitations of Code Section 415
and Code Section 401(a)(17), and of any other provision of the Code or
other law or regulation that limits either the amount of pension benefits
or the amount of compensation that can be used to determine pension
benefits, are disregarded and (2) except with respect to the Retired
Executives and those Participants who are not officers of the Company, the
Participant's cash bonus payments received from an Employer pursuant to the
Company's incentive compensation plans, regardless of whether paid before
or after the effective date of the Plan, are included in his basic annual
compensation rate (as defined in the qualified plan) as of January 1 of the
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<PAGE>
year in which each such bonus payment is made, less (B) the maximum amount
of the benefit that can be provided under the terms of the qualified plan
after application of the limitations imposed by the Code or other laws or
regulations. For the purpose of the Plan, the term "officers of the
Company" means the Chairman, President and Chief Executive Officer and all
Vice Presidents. In computing the Supplemental Benefit, all offsets
against the benefits payable under the qualified plan due to benefits
payable from the Clark Equipment Company Leveraged Employee Stock Ownership
Plan shall be disregarded. The Supplemental Benefit shall include all of
the surviving spouse and optional forms of benefits available with respect
to benefits payable from the qualified plan, and be subject to the same
adjustment factors applicable to such forms of benefits. In determining
the Supplemental Benefit for either of the Retired Executives and for
Participants who are not officers of the Company, the cash bonus payments
received by them from an Employer pursuant to the Company's incentive
compensation plan shall not be included in the calculation. Notwithstanding
the foregoing provisions of this subsection 2.2 or any other provisions of
the Plan, with respect to a Participant who is a party to an employment
agreement listed in Schedule A hereto, if at the time of the death of such
Participant the Section of such employment agreement first identified in such
Schedule A does not provide for the payment of Supplemental Benefits to the
surviving spouse of such Participant, no Supplemental Benefits shall be payable
to such spouse under the Plan.
2.3. Payment of Benefits. A Participant's Supplemental Benefit
shall become payable beginning on the date that he or his Beneficiary
begins receiving benefits under the qualified plan. Payment of a
Participant's Supplemental Benefit shall be made either (a) in a lump sum
equal to the present value of the Participant's Supplemental Benefit as of
the date such lump sum payment is made, or (b) in a series of monthly in-
stallments during the period that the Participant or his Beneficiary is
entitled to payments from the qualified plan. If such payments are made in
monthly installments, the Supplemental Benefit shall be paid at the same
times and in the same form as the benefits payable to the Participant or
his Beneficiary from the qualified plan. By filing a written election with
the Administrator not later than twelve months prior to the date that he is
eligible to begin to receive Supplemental Benefits under the Plan, a
Participant may elect the method in which his Supplemental Benefit shall be
paid. The present value of the Participant's Supplemental Benefit shall be
determined by using the mortality table then being used by the Company's
actuaries for valuation purposes for the qualified plan and the interest
rate specified in Code Section 411(a)(11)(B)(ii) (or any successor section
thereto) at the time the present value determination is made. Unless the
Participant elects payment in monthly installments at least twelve months
prior to the date that he is eligible to begin to receive Supplemental
Benefits under the Plan, the Supplemental Benefit shall be payable in a
lump sum on the date that Supplemental Benefits become payable; provided,
however, the Retired Executives shall continue to receive Supplemental
Benefits on a monthly basis. Notwithstanding the foregoing provisions of
this subsection 2.3, a Participant other than the Retired Executives (or
his Beneficiary) who is receiving Supplemental Benefits in monthly
installments may request the Administrator to pay the then present value of
the remaining balance of such benefits in a lump sum, and the Administrator
may, in its discretion, but only with the approval of the Chief Executive
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<PAGE>
Officer of the Company, grant such request and cause such lump sum payment
to be made in an amount determined as described in this subsection. In
addition, notwithstanding the foregoing provisions of this subsection 2.3,
if a Participant who is receiving Supplemental Benefits in monthly
installments dies before the guaranteed number of monthly payments provided
for in an applicable optional form of benefits have been paid, the present
value of the balance of such guaranteed monthly payments, calculated as
described in this subsection, shall be paid in a single lump sum to his
estate or such other beneficiary as is entitled to such payment.
2.4. Benefits Provided by Employers. Benefits payable under
this Plan to a Participant or his Beneficiary shall be paid directly by the
Participant's Employer to the extent not paid by the trustee of the Clark
Equipment Company Supplemental Executive Retirement Trust from such trust.
No Employer shall be required to segregate any assets to be applied for the
payment of benefits under this Plan.
2.5. Beneficiary. As used in the Plan, a Participant's
"Beneficiary" is any person, including a Participant's spouse, eligible to
receive benefits under the qualified plan or this Plan by reason of a
Participant's service with an Employer. Unless the Participant has, in
accordance with rules established from time to time by the Administrator,
designated otherwise, his Beneficiary or Beneficiaries under this Plan
shall be the same person or persons as his Beneficiary or Beneficiaries
under the qualified plan.
SECTION 3
Provisions Regarding Funding
The Company has established and maintains the Clark Equipment
Company Supplemental Executive Retirement Trust (the "Trust") to accumulate
and hold assets to provide the benefits under the Plan, with the only
exception being to the extent that such assets are required to be used to
satisfy the claims of the Employers' creditors. The Company shall, subject
to the right of the Employers' creditors, make periodic contributions to
the Trust (at least annually) and maintain assets in the Trust to the
extent necessary to maintain a level of funding (the "Plan funding level")
for the benefits accrued under the Plan (regardless of whether such accrued
benefits are fully vested or subject to any risk of forfeiture) that is at
least equal to the actuarially determined value of those benefits (the
"Plan benefit value"). Such actuarial determination shall be made at least
annually (and in each case not more than twelve months after the last prior
determination) assuming earliest possible commencement of benefits and
using the same mortality table used by the actuary of the qualified plan
for the purpose of determining funding requirements under ERISA and the
interest rate specified in Code Section 411(a)(11)(B)(ii) (or any successor
section thereto) at the time the Plan funding level determination is made
provided, that with respect to the period, if any, from the valuation date
to the date a benefit could first become payable (solely because of Plan
provisions restricting benefit commencement) the interest rate used to
discount such benefits for such period shall be the interest rate then
being used by the Company's actuaries for the annual Code Section 412(a)
valuation of the qualified plan. In making such actuarial determination,
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all accrued benefits under the Plan which may become payable as a single
lump sum shall be calculated as of the valuation date and assumed to be
paid as soon as benefits could be paid if the Participant retired (if then
eligible) or otherwise left employment as of the valuation date, except
that the amount of the benefits payable under the Plan for each Participant
shall be assumed to be at the projected highest amount that would be
payable if the Participant retired or otherwise terminated employment at
any time during the next succeeding twelve-month period. In the event that
after a lump sum benefit settlement payment is made from the Trust to or on
behalf of a Participant, due to retirement or other termination of
employment, transfer of assets to a separate trust, or otherwise, the
assets remaining in the Trust are less than 90% of the remaining
liabilities of the Trust (based on the most recent valuation), a special
actuarial determination of the Plan benefit value shall be made as provided
herein and the Company shall then make such contributions to the Trust as
are necessary to bring the Plan funding level up to the Plan benefit value.
In the event that the Plan funding level exceeds 110% of the Plan benefit
value, and the Company provides to the Trustee a certification by the
actuary for the qualified plan of such funding status of the Plan, the
Company may withdraw assets from the Trust to the extent of the surplus in
excess of 110% of the Plan benefit value. The Company shall notify each
Participant within thirty days after its notification of any determination
of the Plan funding level if the accrued Plan benefits are not then fully
funded, unless such funding deficiency is cured within such thirty-day
period. The Company shall take all such actions as are necessary to assure
that the type and quality of the assets held in the Trust will be such that
they have sufficient liquidity to satisfy the ongoing cash needs of the
Plan, and are subject to no more investment risk than the assets in the
trust under the qualified plan. The Company shall contribute only Company
owned life insurance policies or cash to the Trust. The Company shall
provide to each Participant a copy of the annual reports of both the
actuary and the independent public accountants regarding the adequacy of
Plan funding, the reasonableness of the assumptions used to determine such
funding, and such other matters as the Company requests be included in such
reports. The Company shall also provide to each Participant an annual
statement showing that Participant's accrued benefit amount, the amount
funded, and the future projected lump sum and annual benefit amounts
expected at ages 55, 62 and 65.
SECTION 4
General
4.1. Administrator. This Plan will be administered by an
"Administrator" which shall be the Company, or at the Company's election,
one or more employees of the Company who are designated as "Administrator"
by the Chief Executive Officer of the Company. No person who is an
Administrator shall be liable for any act or action, whether of commission
or omission, taken by any other person, or by any officer, agent, or
employee; nor, except in circumstances involving his bad faith, for
anything done or omitted to be done by himself; and the Company shall
indemnify and hold each Administrator harmless from any claims of such
liability and all costs (including attorney's fees) resulting therefrom.
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<PAGE>
4.2. Claims. Any claim for benefits or payments under the Plan
by a Participant or a Beneficiary shall be made in writing and delivered to
the Company. If the Participant, or any Beneficiary following the
Participant's death (collectively, the "Claimant"), notifies the Company in
writing that he believes he has been denied any benefit payable under this
Plan, either in total or by the payment of an amount less than the full
benefit or payment to which the Claimant would normally be entitled, the
Company shall advise the Claimant in writing of the amount of the benefit
if any, and the specific reasons for any denial of benefits. The Company
shall also furnish the Claimant at that time with a written notice
containing:
(a) Specific references to pertinent provisions of the
Plan;
(b) A description of any additional material or information
necessary for the Claimant to perfect the claim if
possible, and an explanation of why such material or
information is needed; and
(c) An explanation of the claim review procedure set forth
in this subsection 4.2.
Such written notice shall be sent to the Claimant within 90 days
of the date the claim is filed. This 90-day period may be extended by the
Administrator for an additional 90 days, provided a Claimant is notified of
the reason for the extension and a date on which the Claimant may expect to
receive a decision on his claim. Within 60 days of receipt of the
information described above, a Claimant shall, if further review is
desired, file a written request for reconsideration with the Administrator
of the Plan. So long as the Claimant's request for review is pending
(including such 60-day period), the Claimant or his duly authorized repre-
sentative may review pertinent documents and may submit issues and comments
in writing to the Administrator. A decision shall be made by the
Administrator within 60 days of the filing by the Claimant of the request
for reconsideration and shall be conveyed to the Claimant in writing and
shall include specific reasons for the decision, which specifically
reference the pertinent provisions of the Plan on which the decision is
based.
4.3. Interests Not Transferable. The Company shall have the
right to withhold from any payment under the Plan all taxes required to be
withheld under the laws of the United States or any State, county,
municipality or other taxing authority. Except as to any withholding of
tax under such laws, the interest of any Participant, his spouse, minor
children or other Beneficiary, under the Plan is not subject to the claims
of their creditors and may not be voluntarily or involuntarily sold,
transferred, assigned, alienated or encumbered.
4.4. Facility of Payment. Any amounts payable hereunder to any
person under legal disability or who, in the judgment of the Administrator,
is unable to properly manage his financial affairs may be paid to the legal
representative of such person or may be applied for the benefit of such
person in any manner which the Administrator may select.
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4.5. Gender and Number. Where the context admits, words in the
masculine gender shall include the feminine gender, the plural shall
include the singular, and the singular shall include the plural.
4.6. Controlling Law. To the extent not superseded by the laws
of the United States, the laws of Indiana shall be controlling in all
matters relating to the Plan.
4.7. Successors. This Plan is binding on each Employer and will
bind and inure to the benefit of any successor of an Employer, whether by
way of purchase, merger, consolidation or otherwise.
4.8. Continued Employment. The establishment or existence of
this Plan shall not be construed to give any Participant the right to be
retained in the Employer's service.
4.9. Action by Company. Any action required or permitted to be
taken by the Company under the Plan may be taken by the Chief Executive
Officer of the Company or his designee or as provided in the Company's
Program for Adoption and Administration of Employee Benefit Plans, as
amended from time to time.
4.10. No Guarantee of Retirement Benefits. The Plan is intended
to pay benefits in addition to, and not in lieu of, any benefits to which a
Participant or Beneficiary may be entitled under the qualified plan. If
any benefits to which a Participant or Beneficiary may be entitled under
the qualified plan are not paid for any reason, including, but not limited
to, the lack of sufficient assets of the qualified plan to pay such
benefits, such benefits shall not be paid from the Plan.
4.11. Qualified Domestic Relations Order. In the event a
Participant's benefit under the qualified plan is subject to a qualified
domestic relations order as defined in Section 414(p) of the Code, the
Supplemental Benefit provided by this Plan shall be calculated and paid as
if no qualified domestic relations order was in existence.
4.12. Amendment or Termination of Qualified Plan. In no event
shall any amendment or the termination of the qualified plan after the
effective date of the Plan reduce or eliminate the benefits accrued for any
Participant in the Plan to the date of such amendment or termination.
4.13. Plan Expenses. All expenses of the Plan and of the Trust
shall be paid by the Company. The Company shall promptly reimburse the
Trust for any costs, fees, charges or expenses that are initially paid from
the trust fund.
SECTION 5
Amendment and Termination
The Plan may be amended or terminated by action of the Board of
Directors (or by the Human Effectiveness Committee or other duly authorized
committee of the Board of Directors) of the Company only if such amendment
or termination is consented to by all of those Participants and each
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Beneficiary of each deceased Participant affected by the amendment or
termination, provided that in no event shall any Participant's Supplemental
Benefit accrued to the date of such amendment or termination be eliminated
or reduced by such action. If the Plan is terminated, all assets of the
Trust, after payment of expenses of administration and liquidation, will be
allocated and distributed to Participants and Beneficiaries to the extent
necessary to satisfy all liabilities payable under the Plan. Any assets
remaining in the Trust after satisfaction of all liabilities described
above will be distributed in accordance with the terms of the Trust. Not-
withstanding the foregoing provisions of this Section 5, if a Participant
in the Plan so requests and the Chief Executive Officer of the Company
approves, a separate plan and trust shall be established for such
Participant, with such terms as are agreed to by such Participant and the
Company, the liabilities of the Plan with respect to such Participant shall
be transferred to such new plan, and the proportion of the assets of the
Trust equal to the proportion of the liabilities so transferred, shall be
transferred to the separate trust for such Participant under the new plan.
IN WITNESS WHEREOF, the undersigned duly authorized officer of
Clark Equipment Company has caused the foregoing to be executed this 28th
day of December, 1994.
CLARK EQUIPMENT COMPANY
By /s/ William N. Harper
Its Vice President
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SCHEDULE A
Employment Agreement Benefit Obligations Provided under
Clark Equipment Company Supplemental
Executive Retirement Plan
1. Those benefit obligations provided pursuant to Section 3.4 of that
certain amended and restated employment agreement between Thomas C.
Clarke and Clark Equipment Company dated November 12, 1992 as may be
amended from time to time, and any lump sum payment of such benefit
obligations as provided for in Section 4 of said agreement.
2. Those benefit obligations provided pursuant to Section 3.4 of that
certain amended and restated employment agreement between Thomas L.
Doepker and Clark Equipment Company dated November 12, 1992 as may be
amended from time to time, and any lump sum payment of such benefit
obligations as provided for in Section 7 of said agreement.
3. Those benefit obligations provided pursuant to Section 3.4 of that
certain amended and restated employment agreement between William N.
Harper and Clark Equipment Company dated November 12, 1992 as may be
amended from time to time, and any lump sum payment of such benefit
obligations as provided for in Section 7 of said agreement.
4. Those benefit obligations provided pursuant to Section 3.4 of that
certain amended and restated employment agreement between Bernard D.
Henely and Clark Equipment Company dated November 12, 1992 as may be
amended from time to time, and any lump sum payment of such benefit
obligations as provided for in Section 7 of said agreement.
5. Those benefit obligations provided pursuant to Section 3.2 of that
certain amended and restated employment agreement between Leo J.
McKernan and Clark Equipment Company dated November 12, 1992 as may be
amended from time to time, and any lump sum payment of such benefit
obligations as provided for in Section 6 of said agreement.
6. Those benefit obligations provided pursuant to Section 3.4 of that
certain amended and restated employment agreement between Robert N.
Spolum and Clark Equipment Company dated September 1, 1992 as may be
amended from time to time, and any lump sum payment of such benefit
obligations as provided for in Section 3.5 of said agreement.
A-1
Exhibit 10(w)
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDMENT No. 1
WHEREAS, Clark Equipment Company (the "Company") previously
established the Clark Equipment Company Supplemental Executive Retirement
Plan (the "Plan"); and
WHEREAS, the Human Effectiveness Committee of the Board of Directors
of the Company has approved the amendment of the Plan as described below;
NOW, THEREFORE, the Plan is hereby amended effective as of
February 15, 1995 in the following respects:
1. Subsection 2.1 of the Plan is amended by deleting the penultimate
sentence of such subsection, which had excluded Frank M. Sims from
being a Participant in the Plan.
2. Schedule A of the Plan is amended by adding thereto a new item 7
reading as follows:
"7. Those benefit obligations provided pursuant to Section 3.4 of
that certain amended and restated employment agreement between
Frank M. Sims and Clark Equipment Company dated February 15, 1995
as may be amended from time to time, and any lump sum payment of
such benefit obligations as provided for in Section 4 of said
agreement."
WHEREFORE, pursuant to the authority delegated by the Human
Effectiveness Committee of the Board of Directors of Clark Equipment
Company, this Amendment No. 1 is made and executed on this 6th day of March
1995, to become effective as specified herein.
CLARK EQUIPMENT COMPANY
By: /s/ Leo J. McKernan
Leo J. McKernan
Chairman, President and
Chief Executive Officer
Exhibit (10)(x)
CLARK EQUIPMENT COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
AMENDMENT No. 2
WHEREAS, Clark Equipment Company (the "Company") previously
established the Clark Equipment Company Supplemental Executive Retirement
Plan (the "Plan"); and
WHEREAS, the Human Effectiveness Committee of the Board of Directors
of the Company has approved the amendment of the Plan as described below;
NOW, THEREFORE, the Plan is hereby amended effective as of March 27,
1995 in the following respects:
1. Subsection 2.2 of the Plan is amended to read in its entirety as
follows:
"2.2. Supplemental Benefits. At the time that a
Participant or his Beneficiary is entitled to benefits under the
qualified plan, the Participant or Beneficiary shall be entitled to
the "Supplemental Benefit" accrued for him hereunder. As of any date
a Participant's accrued Supplemental Benefit shall be (A) the full
amount of the benefit computed for such Participant using the pension
formula under the qualified plan as of such date (based on total
credited service under the qualified plan) except that, for such
calculation, (1) the limitations of Code Section 415 and Code Section
401(a)(17), and of any other provision of the Code or other law or
regulation that limits either the amount of pension benefits or the
amount of compensation that can be used to determine pension benefits,
are disregarded and (2) except with respect to the Retired Executives
and any other Participants whose employment with the Company
terminated prior to March 1, 1995, the Participant's cash bonus
payments received from an Employer pursuant to the Company's incentive
compensation plans, regardless of whether paid before or after the
effective date of the Plan, are included in his basic annual
compensation rate (as defined in the qualified plan) as of January 1
of the year in which each such bonus payment is made, less (B) the
maximum amount of the benefit that can be provided under the terms of
the qualified plan after application of the limitations imposed by the
Code or other laws or regulations. In computing the Supplemental
Benefit, all offsets against the benefits payable under the qualified
plan due to benefits payable from the Clark Equipment Company
Leveraged Employee Stock Ownership Plan shall be disregarded. The
Supplemental Benefit shall include all of the surviving spouse and
optional forms of benefits available with respect to benefits payable
from the qualified plan, and be subject to the same adjustment factors
applicable to such forms of benefits. In determining the Supplemental
Benefit for either of the Retired Executives and any other
Participants whose employment with the Company terminated prior to
March 1, 1995, the cash bonus payments received by them from an
Employer pursuant to the Company's incentive compensation plan shall
not be included in the calculation. Notwithstanding the foregoing
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provisions of this subsection 2.2 or any other provisions of the Plan,
with respect to a Participant who is a party to an employment
agreement listed in Schedule A hereto, if at the time of the death of
such Participant the Section of such employment agreement first
identified in such Schedule A does not provide for the payment of
Supplemental Benefits to the surviving spouse of such Participant, no
Supplemental Benefits shall be payable to such spouse under the Plan."
2. Subsection 2.3 and Section 3 of the Plan are each amended by replacing
the phrase "the interest rate specified in Code Section
411(a)(11)(B)(ii) (or any successor section thereto)" with the phrase
"the interest rate that would be used by the Pension Benefit Guaranty
Corporation for purposes of determining the present value of a lump
sum distribution on the termination of a plan subject to Title IV of
the Employee Retirement Income Security Act of 1974, as amended,
formerly referred to in Section 411(a)(11)(B)(ii) of the Internal
Revenue Code of 1986".
3. Section 5 of the Plan is amended by inserting the word "adversely"
just before the word "affected" in the first sentence thereof.
WHEREFORE, pursuant to the authority delegated by the Human
Effectiveness Committee of the Board of Directors of Clark Equipment
Company, this Amendment No. 2 is made and executed on this 28th day of
March 1995, to become effective as specified herein.
CLARK EQUIPMENT COMPANY
By: /s/ Leo J. McKernan
Leo J. McKernan
Chairman, President and
Chief Executive Officer
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Exhibit (10)(y)
Clark Equipment Company
100 North Michigan Street
P.O. Box 7008
South Bend, IN 46634
PARTICIPATION AGREEMENT
January 10, 1995
Participant
Address
Dear Participant:
Clark Equipment Company ("CLARK") has established the Clark Equipment
Company Supplemental Retirement Income Plan For Certain Executives (the
"Plan"), effective as of January 1, 1994, to provide supplemental benefits
for certain executives of CLARK and its affiliates. In further
consideration of the future services to be rendered by you, CLARK proposes
to include you as a participant in the Plan, subject to the terms and
conditions described herein and the terms of the Plan.
Specifically, CLARK proposes the following:
1. Participation. You will become a participant in the Plan upon your
execution of this letter ("this Agreement").
2. Funding. CLARK has established the Clark Equipment Company Deferred
Benefit Trust (the "Trust") to accumulate and hold assets to provide
the benefits of the Plan. CLARK agrees that it will fund and maintain
assets in the Trust as provided in the Plan, subject to the terms of
the Plan and of the Trust including, without limitation, the
provisions of the Trust protecting the rights of CLARK's creditors in
the event of CLARK's insolvency.
3. No Employment Guarantee. Nothing contained in this Agreement shall
constitute an agreement, either by you or by CLARK, to continue your
employment with CLARK.
4. Plan and Trust Continuation. CLARK agrees that it will continue to
maintain, and will not amend or terminate, the Plan and the Trust
except as expressly permitted by the terms of the Plan and the Trust.
A copy of the Trust, which includes the Plan as Exhibit I, is attached.
If the foregoing is entirely satisfactory to you, please sign and return
the attached copy of this letter whereupon it shall constitute an agreement
between us as of the date first set forth above.
Very truly yours,
CLARK EQUIPMENT COMPANY
Accepted and Agreed to:
By /s/ Frank M. Sims
/s/ Participant Frank M. Sims
Senior Vice President
Attachment
(SRIPCE)
12.27.94
Exhibit (10)(z)
Clark Equipment Company
100 North Michigan Street
P.O. Box 7008
South Bend, IN 46634
PARTICIPATION AGREEMENT
January 10, 1995
Participant
Address
Dear Participant:
Clark Equipment Company ("CLARK") has established the Clark Equipment
Company Supplemental Executive Retirement Plan (the "Plan"), effective as
of January 1, 1994, to provide supplemental benefits for certain executives
of CLARK and its affiliates. In further consideration of the future
services to be rendered by you, CLARK proposes to include you as a
participant in the Plan, subject to the terms and conditions described
herein and the terms of the Plan.
Specifically, CLARK proposes the following:
1. Participation. You will become a participant in the Plan upon your
execution of this letter ("this Agreement").
2. Funding. CLARK has established the Clark Equipment Company
Supplemental Executive Retirement Trust (the "Trust") to accumulate
and hold assets to provide the benefits of the Plan. CLARK agrees
that it will fund and maintain assets in the Trust as provided in the
Plan, subject to the terms of the Plan and of the Trust including,
without limitation, the provisions of the Trust protecting the rights
of CLARK's creditors in the event of CLARK's insolvency.
3. No Employment Guarantee. Nothing contained in this Agreement shall
constitute an agreement, either by you or by CLARK, to continue your
employment with CLARK.
4. Plan and Trust Continuation. CLARK agrees that it will continue to
maintain, and will not amend or terminate, the Plan and the Trust
except as expressly permitted by the terms of the Plan and the Trust.
A copy of the Trust, which includes the Plan as Exhibit I, is attached.
If the foregoing is entirely satisfactory to you, please sign and return
the attached copy of this letter whereupon it shall constitute an agreement
between us as of the date first set forth above.
Very truly yours,
CLARK EQUIPMENT COMPANY
Accepted and Agreed to:
By /s/ Frank M. Sims
/s/ Participant Frank M. Sims
Attachment Senior Vice President
(SERP)
12.27.94
Exhibit (10)(aa)
CLARK EQUIPMENT COMPANY
RETIREMENT PLAN FOR OUTSIDE DIRECTORS
Adopted the 21st day of March, 1994, by action of the Human Effectiveness
Committee of the Board of Directors of Clark Equipment Company ("Clark").
1. Statement of Purpose
1.1 This Plan is adopted in order to encourage and reward long-term
service on the Board of Directors of Clark by those Directors who are
not employees of Clark and whose loyal service on the Board is of
great benefit to the Company.
2. Definitions
Whenever used in this Plan the following terms shall have the following
meanings:
2.1 "Board of Directors" or "Board" means the Board of Directors of the
Company.
2.2 "Company" means Clark Equipment Company.
2.3 "Director" means a member of the Board of Directors of the Company.
2.4 "Outside Director" means a Director who is not an employee of the
Company or any of its subsidiaries.
2.5 "Plan" means the Clark Equipment Company Retirement Plan for Outside
Directors, as set forth herein.
2.6 "Retired Director" means a Director who is eligible for Retirement
Benefits in accordance with the terms of the Plan.
2.7 "Retirement" means ceasing to be a Director and qualifying for
Benefits under the Plan.
2.8 "Retirement Benefits" or "Benefits" means the amounts payable under
the Plan to a Retired Director.
2.9 "Service" means the continuous period of time that the Director has
served as an Outside Director. Service will be credited at the rate
of 1/12 year for each month (or fraction of a month) served as an
Outside Director, including any such time accrued prior to the
effective date of this Plan. No service will accrue under this Plan
for any Outside Director who is entitled to any benefits from any
other pension plan sponsored, maintained or contributed to by the
Company or any of its subsidiaries.
3. Eligibility. In order to be eligible for Retirement Benefits, the
Director must, at the time that he or she ceases to be a Director, be
an Outside Director, be at least 65 years of age and have at least
five years of Service.
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4. Benefit Amount. The Retirement Benefits payable to a Director will be
paid monthly in installments equal to one-twelfth (1/12th) of the
annual cash retainer in effect for such Director (excluding Board and
Committee meeting fees) immediately preceding his or her separation
from service on the Board of Directors.
5. Benefit Commencement and Duration. The payment of Retirement Benefits
will begin with the first month following the later of the Director's
70th birthday or his or her separation from Service on the Board and
will continue until the earlier of (a) the completion of the payment
of the number of monthly payments equal to the number of months of
Service that the Director had at the time of his or her Retirement,
(b) the death of the Retired Director, or (c) such time as the Human
Effectiveness Committee of the Board reasonably determines that the
Retired Director has violated the provisions of Section 11 or
Section 12 of this Plan.
6. Source of Benefits. The Benefits payable under this Plan will be paid
by the Company to the Retired Director.
7. Interpretation and Administration. The Plan will be interpreted and
administered by the Human Effectiveness Committee of the Board, which
shall determine eligibility for and amount, and authorize the payment,
of Retirement Benefits.
8. Inalienability. The Benefits payable pursuant to this Plan are
payable solely to the eligible Retired Director. No right or title
to, or other interest in, such Benefits shall be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to so anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge shall be void.
9. Incompetency. In the event that a Retired Director shall be
determined by a court to be incompetent to look after his or her own
affairs, any Benefits payable under the Plan to such Retired Director
shall be paid to the guardian, conservator, committee or other legal
representative appointed for him or her by such court.
10. No Right to Continue. Nothing contained herein shall be construed to
confer on any Director the right to continue to be nominated as a
Director, or to serve as a Director, of the Company.
11. Confidentiality. No benefits will be payable pursuant to this Plan to
any Retired Director who uses, discloses, gives, sells, publishes or
otherwise divulges to any person, firm or corporation any confidential
information regarding the Company, VME Group N.V., or any of their
subsidiaries, affiliates or joint venture companies. The term
"confidential information" shall include but not be limited to any
aspect of such companies' business, trade secrets, strategies,
potential acquisitions or divestitures, discussions relating to
acquisitions or divestitures, financial statements or other financial
information, employee relations and employee compensation information,
forecasts, operations, business plans, product marketing and sales,
prices, discounts, products, product specifications, designs, plans,
processes, data and know-how, ideas, technical information and
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<PAGE>
intellectual property, except such information as is otherwise made
publicly available by such companies.
12. Non-Compete. No benefits will be payable pursuant to this Plan to any
Retired Director who engages in any manner in competition with the
Company, VME Group N.V., or any of their subsidiaries, affiliates or
joint venture companies anywhere in the world with respect to any
aspect of the business which at any time is being conducted by the
Company or any of such other companies (collectively, the "Business"),
including without limitation, the design, manufacture, sale or
distribution of products or the providing of services which are
similar to or competitive with those of any of such companies, or
becoming a director, employee or representative of any person, firm or
company which engages in such activity in competition with the
Business.
13. Effective Date. This Plan shall become effective when adopted by the
Human Effectiveness Committee of the Board and shall apply to those
eligible Outside Directors whose Service on the Board terminates on or
after such date.
3.9.94
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EXHIBIT 13
CLARK EQUIPMENT COMPANY
PORTIONS OF ANNUAL REPORT TO STOCKHOLDERS
INCORPORATED BY REFERENCE INTO FORM 10-K
MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL OVERVIEW
Organizational Changes
In the second quarter of 1994, the Company completed the sale of Clark
Automotive Products Corporation (CAPCO) through an initial public offering.
CAPCO manufactures transmissions, primarily for on-highway applications,
for sale in Brazil and North America. Clark sold approximately 91% of its
interest in CAPCO and received net proceeds of approximately $103 million.
A gain of approximately $33 million was realized on the sale. The results
of CAPCO have been deconsolidated to reflect its operations as discontinued
in the Statement of Income for all periods presented.
In May 1994, the Company purchased Blaw-Knox Construction Equipment
Corporation (Blaw-Knox). Blaw-Knox is a leading manufacturer of asphalt
pavers sold in North America and other world markets. The purchase price
was approximately $145 million. The balance sheet and the results of
operations of Blaw-Knox are included in the consolidated accounts of Clark
subsequent to the acquisition date. If Blaw-Knox had been consolidated with
Clark from January 1, 1993, pro forma sales would have been $984.6 million
in 1994 and $780.0 million in 1993. As reported by the Company on a Form
8-KA filed on July 27, 1994, the pro forma impact on Clark of the
acquisition of Blaw-Knox as of January 1, 1993, would have increased
full-year 1993 net income from continuing operations by $0.19 per share,
and would have increased first quarter 1994 net income from continuing
operations by $0.12 per share.
VME Group N.V. (VME) is a joint venture owned 50% by the Company and 50% by
AB Volvo of Sweden that manufactures and sells construction and
earth-moving equipment. On March 5, 1995, Clark agreed to sell its shares
in VME to Volvo for $573 million. VME is reflected as a discontinued
operation in the Statement of Income for all periods presented.
The Company sold its Clark Material Handling Company (CMHC) business unit
to Terex Corporation (Terex) on July 31, 1992, and recorded a gain of $8.5
million in the third quarter of 1992. The Statement of Income for 1992 has
deconsolidated CMHC, reflecting its operations as a discontinued operation.
Operational Review
Clark's continuing operations, consisting of the Melroe, Blaw-Knox, and
Clark-Hurth Components business units, improved substantially in 1994
compared with 1993, reflecting strong economic growth in the industries
served. Sales in 1994 increased 36.8% over 1993 and Clark reported net
income from continuing operations of $62.8 million, or $3.61
per share, compared with $21.6 million, or $1.24 per share, for 1993. The
sales increase was the result of improved sales levels at both Clark-Hurth
Components and Melroe, and includes incremental sales of approximately
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$65.6 million from the acquisition of Blaw-Knox in May 1994. The 1994
results included special items that, in aggregate, lowered net income by
$2.5 million, or $0.14 per share. These were: 1) an after-tax expense of
$7.0 million for stock incentive programs resulting from increases during
the year in the Company's stock price; 2) an after-tax gain of $2.7 million
on the sale of certain overseas bonds; and 3) an after-tax gain of $1.8
million on the sale of a facility in Atlanta, Georgia. Included in the
results for 1993 were several special items that, in aggregate, lowered net
income by $8.7 million, or $0.50 per share. They were: 1) a $3.3 million
after-tax charge for manpower reductions at Clark-Hurth Components; 2) an
after-tax expense of $9.7 million for stock incentive programs resulting
from an increase in the Company's stock price; 3) an after-tax refund of
$3.5 million from the U.S. Customs Service as settlement of a disputed
drawback claim; 4) a $2.2 million after-tax charge for the field retrofit
of one skid-steer loader model with an additional hydraulic lock-out system
to prevent potential misuse; and 5) a decrease in the Company's tax
provision by $3.0 million, reflecting the impact of the 1993 retroactive
increase in U.S. tax rates on recorded deferred tax assets.
Clark's results from discontinued operations increased to $99.1 million, or
$5.69 per share, in 1994 from $20.3 million, or $1.17 per share, in 1993.
VME reported significantly higher earnings of $64.9 million, or $3.73 per
share, in 1994 compared with $7.8 million, or $0.45 per share, in 1993.
This increase resulted from improved economic conditions and higher
operating margins resulting from past cost-containment efforts. Also
included in discontinued operations are the results of CAPCO, which in 1994
had income of $34.2 million, or $1.96 per share, primarily related to the
gain on the sale of CAPCO. This compared with $12.5 million, or $0.72 per
share, for CAPCO operations in 1993.
Net income, including continuing and discontinued operations and the
impacts of accounting changes, was $161.9 million, or $9.30 per share, in
1994 compared with $48.0 million, or $2.76 per share, in 1993. The 1993
results include a change in accounting for income taxes at VME, which
contributed $6.2 million, or $0.35 per share, to Clark's earnings.
In 1993, Clark's net results for continuing operations improved
approximately 79.6% compared with 1992 results, reflecting increased sales
and margins. Sales in 1993 increased 5.1% over 1992 and Clark reported net
income from continuing operations of $21.6 million compared with $12.0
million for 1992. The profitability of VME improved from 1992, reflecting
higher production, better price realization, savings from cost-reduction
activities, and the devaluation of the Swedish krona. Clark reported equity
income in VME operations of $7.8 million in 1993 compared with a loss of
$48.1 million in 1992. Clark's share of the 1992 loss included an $8.5
million restructuring charge to close VME's St. Thomas, Ontario, plant and
restructure its North American production operations. The charge
encompassed employee termination costs, the write-down of certain assets,
and moving and start-up costs for production transferred to Asheville,
North Carolina, from St. Thomas.
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In the years ended December 31, 1993 and 1992, the Company has reflected
accounting changes in the Statement of Income. Effective January 1, 1992,
the Company adopted the provisions of Statement of Financial Accounting
Standards (FAS) No. 109, "Accounting for Income Taxes." Adoption of this
Statement resulted in the recognition of a cumulative tax benefit of $92
million related to the recognition of previously unrecognized net deferred
tax assets. Effective January 1, 1993, VME adopted FAS No. 109. Clark's
share of the cumulative tax benefit resulting from this accounting change
was $6.2 million. At the same time, VME also adopted FAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions,"
and will recognize its estimated postretirement obligation for health and
life insurance benefits on a transitional basis over 20 years. A charge of
$1.4 million, which represents Clark's share, is included in the 1994 and
1993 VME results.
RESULTS OF OPERATIONS
Continuing Operations:
Sales in 1994 totaled $946.6 million, an increase of 36.8% from the 1993
level of $692.0 million. The 1993 sales increased 5.1% from the 1992 level
of $658.5 million. The 1994 sales increase of $254.6 million relates mostly
to volume improvement and includes incremental sales of $65.6 million from
the acquisition of Blaw-Knox in May 1994. Minor price increases also
contributed to the sales improvement. Favorable foreign currency
translation increased sales by about $0.5 million. Strength in North
American construction machinery markets was the primary cause of the 1994
sales increase. Selected European markets also showed some improvement.
Excluding Blaw-Knox sales, North American sales increased by $128.5
million, or 28.2%, in 1994 when compared with 1993, and overseas sales
increased $60.5 million, or 25.5%, when comparing the same period.
The 1993 sales increase of $33.5 million over 1992 related to volume and
price improvements and offset an unfavorable foreign currency translation
impact of about $29 million. North American sales increased $88.8 million,
or 24.3%, and overseas sales decreased $55.3 million, or 18.9%, when
comparing 1993 with 1992. The North American increase was mostly
volume-related, while about 53% of the overseas decrease was related to
changes in foreign currency translation rates.
Gross margins were $199.1 million, or 21.0% of sales, in 1994 compared with
$134.9 million, or 19.5% of sales, in 1993. The gross margin percentage
increased in 1994 over 1993 as a result of improved capacity utilization at
Clark-Hurth Components and the contribution of Blaw-Knox.
Gross margins were $114.2 million, or 17.3% of sales, in 1992. The
progressive improvement in each of these years relates to higher
utilization levels and realizing benefits from cost-containment programs
implemented beginning in 1990.
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The Company translates its financial statements in accordance with FAS No.
52. The impacts of foreign currency and exchange transactions included in
cost of goods sold were gains of $0.6 million in 1994 and losses of $0.8
million and $1.0 million in 1993 and 1992, respectively.
The Company exports certain products manufactured in the United States,
principally for sale in European countries. In addition, certain products
are manufactured in Europe for export sale, primarily in other European
countries. These sales are typically invoiced in the currency of the
country in which the products are sold. The relative strength or weakness
of the currency of the country in which the products are manufactured can
impact the profitability of these sales. The Company uses forward exchange
contracts to reduce some of the uncertainty related to these sales
transactions. Through use of forward exchange contracts, the Company is
able to predetermine the value it will receive for these sales in terms of
the currency where the product is manufactured. This enables the Company to
better estimate its gross margins relating to these sales and to take
appropriate steps in advance to improve margins through overall
cost-reduction or pricing actions.
The Company limits its use of forward exchange contracts so that it is
reasonably assured that the transactions it intends to protect will occur.
The Company has adopted a policy of reflecting these contracts at their
market value to the extent that significant unrealized gains or losses
exist. In accordance with this policy, a loss of approximately $0.8 million
was recorded at December 31, 1994. Prior to the adoption of this policy,
the Company followed a practice of recognizing significant losses currently
and reflecting market value gains as derivative transactions closed.
At December 31, 1994 and 1993, the Company had forward exchange contracts
of $82 million and $95 million, respectively. The 1994 contracts mature
periodically over the next 12 months and foreign-denominated sales
transactions are expected to occur coincidental with the expiration of
these instruments. The fair value of these contracts approximated the book
value, as adjusted at each of the reporting periods. The Company believes
that it has entered foreign exchange contracts covering about half of its
1995 expected cross-border sales. Cross-border sales transactions not
effectively covered by forward exchange contracts are subject to currency
fluctuations which could have an effect on future profit levels.
Research and development expenses of $15.6 million, $17.0 million, and
$14.7 million were included in cost of goods sold in 1994, 1993, and 1992,
respectively. The level of spending reflects the Company's commitment to
develop new products and further enhance the quality of existing products
through use of the latest technologies.
Due to reductions in domestic inventory levels, $1.8 million of LIFO income
was recorded as a reduction of cost of goods sold in the fourth quarter of
1992. LIFO adjustments were not material in 1994 or 1993.
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Selling and, general administrative expenses were $107.7 million, or 11.4%
of sales, in 1994 compared with $102.7 million, or 14.8% of sales, in 1993
and $87.9 million, or 13.4% of sales, in 1992. The 1994 increase in the
expenses from 1993 was principally related to volume- and
promotional-related selling expenses. It also includes incremental expense
of about $4.1 million due to the Blaw-Knox acquisition in May 1994,
partially offset by a reduction of $4.4 million in expense related to stock
incentive programs. The decrease as a percentage of sales resulted from
higher sales and the fixed nature of certain of these expenses. The 1993
increase in expenses from 1992 was related to higher sales volume, retiree
health care costs, and compensation-related matters, including stock
incentive programs, which accounted for essentially all of the overall
expense increase.
Operating income from continuing operations in 1994 increased about 184% to
$91.4 million from the 1993 level of $32.2 million. This compares with
$26.3 million in 1992. The increased level of operating income for 1994 and
1993 is attributable to higher sales and higher gross margins, partially
offset by increases in selling, general and administrative expenses.
Other income was $20.7 million in 1994, compared with $15.0 million in 1993
and $14.9 million in 1992. The 1994 increase of $5.7 million from 1993
resulted from gains of about $4.2 million on the sale of certain overseas
bonds and $2.8 million on the sale of a facility in Atlanta, Georgia. These
gains were partially offset by reduced miscellaneous revenues and a
decrease of $0.4 million in interest income. In August 1994, Melroe and
Marubeni Corporation, a Japanese firm, completed a joint venture agreement
to export Bobcat skid-steer loaders and attachments manufactured in North
Dakota and market them in Japan. The new company, which is owned equally by
Melroe and Marubeni, is headquartered in Yokohama, Japan. The Company's
investment at December 31, 1994, was $1.1 million and is accounted for by
the equity method. Clark has recorded an equity loss of $0.5 million for
its share of the 1994 partial year operation and has classified this loss in
other income. Other income in 1993 includes $1.7 million of interest from a
duty drawback refund received from the U.S. Customs Service and an
additional $1.8 million of interest resulting from the settlement of U.S.
tax audits for 1989 through 1991. Excluding these items from 1993 interest
income, the 1994 interest income was higher by $3.1 million, as a result of
higher interest rates on invested cash.
Interest expense was $20.0 million in 1994, compared with $21.4 million in
1993 and $23.5 million in 1992. The decrease in each year is due to lower
average debt balances outstanding in each succeeding period.
Pre-tax income from continuing operations was $92.1 million in 1994, $25.8
million in 1993, and $17.8 million in 1992. The year-to-year improvement
reflects higher sales, improved gross margins, and the impact of
expense-control actions taken in prior years, principally during 1991.
-5-<PAGE>
<PAGE>
Tax provisions of $29.3 million, $4.2 million, and $5.8 million were
recorded in 1994, 1993, and 1992, respectively. The effective tax rate in
1994 was 31.8%, which is somewhat less than the U.S. statutory rate as a
result of the utilization of certain previously unrecognized foreign net
operating loss carryforwards, which reduced the income tax provision by
$3.3 million, and the existence of certain components of U.S. income which
are not subject to tax. The 1993 effective tax rate was 16.3%. The U.S.
corporate income tax rate was increased from 34% to 35% retroactive to
January 1, 1993, and a tax credit of $3.0 million was recorded as net U.S.
deferred tax assets were revalued at the higher tax rate. Without this
item, the effective tax rate would have been 27.9% for 1993. The effective
tax rate for 1992 was 32.4%. The tax rates in both years have been reduced
by the utilization of capital loss carryforwards and other credits in the
United States and net operating loss carryforwards at certain foreign
locations. These impacts reduced the overall tax provisions by
approximately $1.2 million in 1993 and $1.9 million in 1992.
DISCONTINUED OPERATIONS
Results from discontinued operations were income of $99.1 million in 1994
and $20.3 million in 1993, and losses of $38.1 million in 1992. The
components of these results are as follows:
Amounts in millions
1994 1993 1992
Income (loss):
VME Group N.V. (50%) $64.9 $ 7.8 $(48.1)
CAPCO
operations 1.3 12.5 8.2
gain on sale 32.9
CMHC
operations (7.1)
gain on sale 8.5
Insurance subsidiary 0.4
$99.1 $20.3 $(38.1)
VME Group N.V.
Equity in the net results of VME, Clark's 50%-owned joint venture, was
income of $64.9 million and $7.8 million in 1994 and 1993, respectively,
and losses of $48.1 million in 1992. VME sales were $1,566 million in 1994,
compared with $1,240 million in 1993 and $1,357 million in 1992. The 1994
VME earnings improvements were driven by higher sales volumes, improved
price realization, and lower interest costs due to declining debt levels.
North American markets continued to show strength in all product lines and
certain markets in Western Europe, such as Great Britain and Scandinavia,
also improved. The 1993 improvement in operating performance over 1992 was
the result of higher capacity utilization; improved margins due to better
price realization, partially accounted for by the devaluation of the
Swedish krona; and savings from cost-reduction activities initiated in
1992. Clark's share of the 1992 loss was $48.1 million, and included the
impacts of Swedish currency devaluation of approximately $2.0 million and a
special charge of approximately $8.5 million to close VME's St. Thomas,
Ontario, plant and restructure its North American production operations.
-6-
<PAGE>
<PAGE>
The charge encompassed employee termination costs, the write-down of
certain assets, and moving and start-up costs for production transferred to
Asheville, North Carolina, from St. Thomas.
On November 17, 1993, VME and Hitachi Construction Machinery Co. Ltd., both
worldwide suppliers of construction and mining equipment, signed an
agreement to establish a joint venture company in the rigid hauler
business. The joint venture company, named Euclid-Hitachi Heavy Equipment
Inc., became operational on January 1, 1994. Its headquarters is located in
Cleveland, Ohio.
During 1992, the Company and AB Volvo each invested $15 million of
additional capital into VME, along with an additional $35 million in
subordinated loans.
Discontinued operations in 1992 included the results of an insurance
subsidiary which had been held for sale. The subsidiary continues to be
liquidated, and due to immateriality, these results have been reclassified
into other income in 1993 and 1994. The investment in this operation has
been classified on the Company's Balance Sheet in "other assets" for the
periods presented.
ACCOUNTING CHANGES
Effective January 1, 1992, the Company adopted FAS No. 109. This resulted
in the recognition of a cumulative net tax benefit of $92 million related
to the recognition of previously unrecognized net deferred tax assets. In
adopting FAS No. 109, the Company considered the cyclicality of its
business, the nature of its prior operating losses, and the probable
turnaround of temporary book and tax differences. Through this assessment,
management has concluded that with the restructuring actions undertaken in
prior years, including the sale of CMHC, Clark will be sufficiently
profitable in the long-term to realize the tax benefits related to its
temporary differences. In the adoption, Clark generally did not reflect
benefits related to foreign net operating loss carryforwards or U.S.
capital loss carryforwards, due to the limited nature of the carryforward
periods and limitations on use. The underlying business conditions
surrounding the operations that gave rise to the operating loss
carryforwards were also considered. At December 31, 1994, the Company is
continuing to follow a policy of recognizing the benefit of these
carryforwards when realized.
Effective January 1, 1993, VME adopted FAS No. 109;
Clark's share of the cumulative tax benefit resulting from this accounting
change was $6.2 million. VME also adopted FAS No. 106, effective January 1,
1993, and will recognize its estimated obligation on a transitional basis
over 20 years. A charge of $1.4 million, which represents Clark's share, is
included in the VME results in both 1994 and 1993.
-7-<PAGE>
<PAGE>
CONTINGENCIES
Environmental
The Company is involved in environmental clean-up activities or litigation
in connection with eight former waste disposal sites and four former plant
locations. The Company also is involved in an environmental clean-up action
at one current location. Additionally, the Company is a defendant in a
lawsuit filed by the United States Environmental Protection Agency (EPA)
that seeks civil penalties for alleged violations of the Clean Water Act,
arising out of the discharge of certain metal finishing wastewaters
generated at a current plant operating site.
At each of the eight waste disposal sites, Clark contracted with
independent waste disposal operators to properly handle the disposal of its
waste. The EPA also has identified other parties responsible for clean-up
costs at the waste disposal sites. The Company has and will continue to
accrue for these costs when the liability can be reasonably estimated. As
of December 31, 1994 and 1993, the Company had reserves of approximately
$16.0 million and $16.4 million, respectively, for potential future
environmental clean-up costs. The environmental reserves represent Clark's
current estimate of its liability for environmental clean-up costs and are
not reduced by any possible recoveries from insurance companies. The
Company's estimate of its liability is based upon: 1) the estimated costs
of investigating and remediating the environmental contamination at each
site and 2) the Company's estimated share of the liability at the site.
Estimated costs of remediation can change as the site investigation and
remediation progresses and additional information becomes available.
Further, these estimated costs can change if the selected remedial action
at a site is not effective and additional work is required. In addition,
the development of new remediation technologies could impact these costs.
In estimating its share of the potential liability at a site, the Company
takes into account the contributions to the clean-up costs that will be
paid by other potentially responsible parties. The Company's share of the
potential liability could therefore change if other potentially responsible
parties become financially insolvent or dispute their liability. As a
result of the possibility of changes in remedial cost estimates and in the
Company's share of liability, the Company continually monitors the adequacy
of its reserves and makes adjustments as necessary. Based upon the
information presently available to it, the Company does not believe that it
will incur any material costs in excess of the amount of its reserves as a
result of any such changes.
Although management cannot determine whether or not a material effect on
future operations is reasonably likely to occur, it believes that the
recorded reserve levels are appropriate estimates of its potential
liability for environmental clean-up costs. Further, management believes
that the additional maximum exposure level in excess of the recorded
reserve level would not be material to the financial condition of the
Company. Although settlement of the reserves will cause future cash
outlays, it is not expected that such outlays will materially impact the
Company's liquidity position. The Company's expenditures in 1994 and 1993
-8-
<PAGE>
<PAGE>
relating to environmental compliance and clean-up activities approximated
$2.1 million and $2.6 million, respectively.
Sale of CMHC
The Company sold its forklift truck business, CMHC, to Terex in 1992. As
part of the sale, Terex and CMHC assumed substantially all of the
obligations of the Company relating to CMHC operations, including: 1)
contingent liabilities of the Company with respect to floor plan and rental
repurchase agreements, 2) certain guarantees of obligations of third
parties, and 3) existing and future product liability claims involving CMHC
products. In the event that Terex and CMHC fail to perform or are unable to
discharge any of the assumed obligations, the Company could be required to
discharge such obligations.
Uncertainty exists as to the ultimate effect on Clark if Terex and CMHC
fail to perform these obligations and commitments. While the aggregate
losses associated with these obligations could be material, the Company
does not believe such an event would materially affect the Company's
ability to meet its cash requirements.
In their latest report on the financial statements that were filed as a
part of Terex's 10-K for 1992, Terex's independent accountants indicated
that Terex's recurring losses, its capital deficiency, and its inability to
borrow additional funds under a bank lending agreement raised doubts about
Terex's ability to continue as a going concern. Terex has filed its report
on Form 10-Q for the third quarter of 1994 which indicates that it has
reported net income for the three and nine month periods ended September
30, 1994, of $1.0 million and $.2 million, respectively. This compares with
losses of $15 million and $45 million for the three and nine month periods
ended September 30, 1993. The third quarter and nine month 1994 results
include $4.3 million and $29.1 million, respectively, of gains related to
sales of non-strategic assets. According to this Form 10-Q, cost-reduction
actions have been implemented during 1994 and additional asset sales are
expected to be completed in the fourth quarter of 1994. In its 10-Q, Terex
indicates that with its existing credit facilities and through its other
financing and cash-generating activities, it expects to be able to meet its
obligations on a timely basis.
Other
Clark has certain other contingent liabilities that have arisen in the
normal course of business. These, along with additional details on the sale
of CMHC, are discussed further in the Notes to Consolidated Financial
Statements, pages 34 to 38.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1994, the Company's cash and short-term investments
amounted to $228.6 million compared with $235.8 million at December 31,
1993. At December 31, 1994, the Company's current ratio was 2.4 to 1
compared with 2.2 to 1 at December 31, 1993. The decrease in cash is
-9-
<PAGE>
<PAGE>
principally due to the expenditure of approximately $145 million for the
acquisition of Blaw-Knox, partially offset by proceeds from the sale of
CAPCO of approximately $103 million and cash flow from all other activities
of approximately $35 million.
In the first quarter of 1993, the Company filed a shelf registration
statement with the SEC to register $150 million of medium-term notes. The
Company sold approximately $90 million of medium-term notes during the
second quarter of 1993. Approximately $60 million is available under this
registration statement for future issuance by the Company.
Cash provided by continuing operations was $92.0 million in 1994, compared
with $43.1 million in 1993 and $49.0 million in 1992. At the end of 1994,
working capital increased to $290.5 million from $255.0 million at the end
of 1993.
On April 6, 1994, the Company entered into a $100 million Master Credit
Agreement with nine banks. The new Agreement has a term of three years and
replaces a previous agreement of $66.2 million. There were no outstanding
borrowings under the respective credit facilities as of December 31, 1994
and 1993. On February 21, 1995, the Company extended the term of this
Agreement to April 6, 1998, and increased the amount available thereunder
to $200 million through February 20, 1996, at which time it will revert to
$100 million.
On February 3, 1995, the Company announced that it will make a tender offer
to purchase for cash all of the outstanding shares of Club Car, Inc., a
leading manufacturer of golf cars and light utility vehicles. The purchase
price is expected to aggregate approximately $237 million, plus transaction
costs. For the year ended September 30, 1994, Club Car reported sales of
approximately $186 million, and at September 30, 1994, had tangible net
worth of about $17 million. The Company expects to fund this acquisition
with its available cash, through use of its revolving credit facility, and
eventually through use of net proceeds from the sale of VME, which should
amount to about $430 million after payment of taxes and costs of the
transactions.
The Company also announced on February 3, 1995, that its Board of Directors
has authorized the repurchase of as many as 3 million shares of its common
stock. It is expected that proceeds from the VME sale will be partially
used to fund this repurchase program.
The Company believes that it has adequate liquidity either through cash
reserves, its line of credit, or through its access to public and private
markets to meet its operating needs and strategic objectives.
-10-<PAGE>
<PAGE>
CAPITAL INVESTMENT
Worldwide capital expenditures by continuing operations for facilities,
manufacturing equipment, and tooling were as follows:
Amounts in millions
1994 1993 1992
By Type
Capital facilities and
equipment. . . . . . $28.5 $20.9 $25.3
Tooling. . . . . . 7.1 4.6 6.1
Total expenditures. . . . . . $35.6 $25.5 $31.4
By Location
North America. . . . . . $25.3 $19.8 $19.0
Foreign locations. . . . . . 10.3 5.7 12.4
Total expenditures. . . . . . $35.6 $25.5 $31.4
Depreciation of fixed assets was $31.4 million in 1994, $28.5 million in
1993, and $29.8 million in 1992.
During the third quarter of 1994, the Melroe business unit announced plans
to expand its Bobcat skid-steer loader manufacturing facility in Gwinner,
North Dakota. The $15.0 million project is slated for completion in
mid-1995. It will add more than 160,000 square feet of space to the
existing 567,000-square-foot Gwinner plant, and include a new, 112,500-
square-foot building to house Bobcat loader assembly and a
50,000-square-foot fabrication shop addition.
CAPITALIZATION
At December 31, debt as a percent of total capitalization (total debt and
stockholders' equity) was 32.5% in 1994, 46.9% in 1993, and 47.9% in 1992.
The improvement in the ratio relates to increased stockholders' equity,
principally current year income of $161.9 million and favorability in the
cumulative translation adjustment account. Total debt at December 31, 1994,
decreased to $217.4 million from the December 31, 1993, level of $236.9
million.
Stockholders' equity at year-end was $452.2 million in 1994, $268.2 million
in 1993, and $252.6 million in 1992. At December 31, stockholders' equity
per share was $25.98 in 1994, $15.41 in 1993, and $14.56 in 1992.
OUTLOOK
The backlog from continuing operations at the end of 1994 was $221 million,
including $20 million for Blaw-Knox, compared with a backlog of $125
million at December 31, 1993.
Looking ahead, the Company believes the outlook for 1995 is excellent.
Demand for the first quarter is unusually strong. Given current order levels
and performance, the Company anticipates that first quarter 1995 sales and
earnings will offset the normal seasonal decline and exceed fourth quarter
1994 results. Overall, it is expected that 1995 will be another strong year
for Clark's businesses.
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<PAGE>
<PAGE>
<TABLE>
BALANCE SHEET
<CAPTION>
Amounts in thousands
December 31 1994 1993
ASSETS:
Current Assets:
<S> <C> <C>
Cash, cash equivalents and short-term investments $ 228,604 $ 235,828
Accounts and notes receivable, less allowances of
$6.0 million and $5.5 million, respectively 109,545 79,144
Refundable income taxes - 3,543
Inventories 123,728 104,841
Deferred tax assets net 24,384 29,202
Other current assets 8,862 9,213
TOTAL CURRENT ASSETS 495,123 461,771
Investments and advances associated companies 12,555 122,106
Investments and advances discontinued operations
VME Group N.V 195,943 -
Deferred tax assets-net 100,402 97,357
Property, plant and equipment-net 181,139 201,924
Assets held for sale - 6,765
Goodwill 167,272 67,461
Other assets 41,465 45,890
TOTAL ASSETS $1,193,899 $1,003,274
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Notes payable $ 11,944 $ 22,512
Accounts payable and accrued liabilities 157,128 150,142
Income taxes payable 1,547 4,139
Accrued postretirement benefits 21,132 19,560
Deferred income taxes 715 800
Current installments on long-term debt 12,140 9,612
TOTAL CURRENT LIABILITIES 204,606 206,765
Long-term borrowings 193,294 204,770
Other non-current liabilities 93,994 79,686
Accrued postretirement benefits 241,837 233,239
Deferred income taxes 8,008 10,661
TOTAL LIABILITIES 741,739 735,121
Contingencies (pages 34 to 38)
Stockholders' Equity:
Capital stock, common 143,960 143,958
Capital in excess of par value 180,107 179,582
Retained earnings 254,643 92,708
Cumulative translation and other adjustments (47,211) (67,083)
531,499 349,165
Less common stock held in treasury, at cost 53,470 49,728
Less value of LESOP shares 25,869 31,284
TOTAL STOCKHOLDERS' EQUITY 452,160 268,153
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,193,899 $1,003,274
<FN>
See Notes to Financial Statements
-12-
/TABLE
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF INCOME
<CAPTION>
Amounts in thousands,
except per share data
Years ended December 31 1994 1993* 1992*
<S> <C> <C> <C>
NET SALES $946,599 $ 692,022 $658,535
OPERATING COSTS AND EXPENSES:
Cost of goods sold 747,492 557,138 544,294
Selling, general and
administrative expenses 107,668 102,699 87,905
855,160 659,837 632,199
Operating income 91,439 32,185 26,336
Other income 20,671 15,016 14,934
Interest expense (19,966) (21,426) (23,481)
Pre-tax income from continuing operations 92,144 25,775 17,789
Provision for income taxes 29,329 4,196 5,773
Income from continuing operations 62,815 21,579 12,016
Discontinued operations:
Income (loss) from operations 66,236 20,290 (46,577)
Gain on sales 32,884 - 8,519
Income (loss) from discontinued operations 99,120 20,290 (38,058)
Income (loss) before effect of changes in
accounting principles 161,935 41,869 (26,042)
Effect of accounting changes income taxes - 6,150 92,000
NET INCOME $161,935 $ 48,019 $ 65,958
INCOME(LOSS) PER SHARE:
From continuing operations $ 3.61 $ 1.24 $ .69
From discontinued operations 5.69 1.17 (2.19)
From effect of accounting changes - .35 5.31
Net income $ 9.30 $ 2.76 $ 3.81
<FN>
See Notes to Financial Statements
*Restated to reflect the deconsolidation of the automotive business and reflect the
equity in net income of VME Group N.V. as a discontinued operation.
-13-
</TABLE>
<PAGE>
<PAGE>
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
Amounts in thousands
Years ended December 31 1994 1993* 1992*
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income $161,935 $ 48,019 $ 65,958
Less (income) loss from discontinued operations (66,236) (20,290) 46,577
Adjustments to reconcile net income to net cash
provided by operating activities:
Effect of accounting changes - (6,150) (92,000)
Depreciation 31,444 28,532 29,836
Amortization of intangibles 3,514 2,083 2,482
Net gain on sale of a business (32,884) - (8,519)
Exchange (gain) loss (608) 796 981
Employee benefit expense funded
with treasury stock 1,549 800 908
Loss of unconsolidated company 500 - -
Changes in assets and liabilities, net of the
effects of business dispositions and acquisition:
Decrease (increase) in receivables
and other current assets (19,604) (7,828) 11,643
Decrease (increase) in refundable
income taxes 3,543 (3,543) 7,400
Increase in inventory (14,889) (11,580) (1,921)
Decrease in net deferred tax assets 1,474 174 4,066
Increase (decrease) in payables and accruals 11,756 27,467 (25,432)
Decrease (increase) in other
non-current assets 6,868 2,059 (3,612)
Increase (decrease) in other
long-term liabilities 3,480 (17,624) 10,584
Other 193 172 78
Net cash provided by operating activities 92,035 43,087 49,029
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of businesses
(net of businesses' cash) 103,405 - 80,454
Cost of acquisition-net of cash acquired (145,363) - -
Additions to properties (35,571) (25,469) (31,438)
Sales of properties 10,309 1,040 556
Decrease (increase) in short-term investments 20,400 (79,700) (47,506)
Decrease (increase) in investments and
advances associated companies (1,938) (2) 45
Net cash provided (used) in investing activities (48,758) (104,131) 2,111
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to long-term borrowings - 91,006 -
Payments on long-term debt (8,062) (82,290) (21,929)
Increase (decrease) in notes payable current (12,888) 9,708 (21,442)
Proceeds from sale of stock under option plans 11 330 -
Other 2,454 129 311
Net cash provided (used) in financing activities (18,485) 18,883 (43,060)
Effect of exchange rate changes on cash 1,499 (2,162) (2,990)
Cash flows from discontinued operations (13,115) 8,527 (43,968)
Increase (decrease) in cash and cash equivalents 13,176 (35,796) (38,878)
Cash and cash equivalents at beginning of year 35,228 71,024 109,902
Cash and cash equivalents at end of year 48,404 35,228 71,024
Short-term investments (cost approximates market) 180,200 200,600 120,900
Cash, cash equivalents, and short-term investments $228,604 $235,828 $191,924
<FN>
See Notes to Financial Statements
*Restated to reflect the deconsolidation of previously owned businesses and
reflect VME Group N.V. as a discontinued operation.
</TABLE>
-14-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The financial statements of Clark
Equipment Company (Clark or the Company) include the accounts of
all majority-owned subsidiaries. All material intercompany balances
and transactions are eliminated. The Company's investments in
associated companies owned 20% or more are accounted for using the
equity method. Investments in companies owned less than 20% are
carried at cost.
Changes in Reporting Entity - In the second quarter of 1994, the
Company completed the sale of Clark Automotive Products Corporation
(CAPCO) through an initial public offering. CAPCO was a business
unit of Clark that manufactured transmissions, primarily for
on-highway applications, for sale in Brazil and North America.
Clark sold approximately 91% of its interest in CAPCO and received
net proceeds of approximately $103 million. A gain of approximately
$33 million was realized on the sale. The results of CAPCO have
been deconsolidated to reflect the operations of this segment on a
discontinued basis in the Statement of Income for all periods
presented. The notes pertaining to the Statement of
Income do not include amounts related to CAPCO.
On May 13, 1994, the Company purchased Blaw-Knox Construction
Equipment Corporation (Blaw-Knox). Blaw-Knox is a leading
manufacturer of asphalt pavers sold in North America and other
world markets. The purchase price was approximately $145 million.
The balance sheet and the results of operations of Blaw-Knox are
included in the consolidated accounts of Clark subsequent to the
acquisition date. If Blaw-Knox had been consolidated with Clark
from January 1, 1993, pro forma sales (unaudited) would have been
$984.6 million in 1994 and $780.0 million in 1993. As reported by
the Company on a Form 8-KA filed on July 27, 1994, the pro forma
impact (unaudited) on Clark of the acquisition of Blaw-Knox as of
January 1, 1993, would have increased full-year 1993 net income
from continuing operations by $0.19 per share, and would have
increased first quarter 1994 net income from continuing operations
by $0.12 per share.
VME Group N.V. (VME) is a joint venture owned 50% by the Company
and 50% by AB Volvo of Sweden that manufactures and sells
construction and earth-moving equipment. On March 5, 1995, Clark
agreed to sell its shares in VME to Volvo for $573 million. VME is
reflected as a discontinued operation in the Statement of Income for
all periods presented.
The Company sold its Clark Material Handling Company (CMHC)
business unit to Terex Corporation (Terex) on July 31, 1992, and
recorded a gain of $8.5 million in the third quarter of 1992. The
Statement of Income for 1992 has deconsolidated CMHC, reflecting
its operations as a discontinued operation. Due to the reporting of
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<PAGE>
<PAGE>
CMHC on a discontinued basis, the notes pertaining to the Statement
of Income do not include amounts related to CMHC.
Currency Translation-Financial statements of subsidiaries operating
outside of the United States are translated into U.S. dollar
equivalents in accordance with Statement of Financial Accounting
Standards (FAS) No. 52.
Foreign currency exchange results reflected in the Statement of
Income were gains of $3.7 million in 1994 (including gains of $3.1
million from equity investments), losses of $9.2 million in 1993
(including losses of $8.4 million from equity investments), and
losses of $10.8 million in 1992 (including losses of $9.8 million
from equity investments).
Revenue Recognition-The Company's policy is to recognize sales at
the time of shipment. The Company allows dealers to return a
certain level of parts under formal parts return programs. The
estimated liability for these programs approximated $1.2 million in
1994 and $0.9 million in 1993, and is accrued in the Balance Sheet.
Cash, Cash Equivalents, and Short-Term Investments-Cash equivalents
and short-term investments include temporary investments of $208.1
million and $231.3 million at December 31, 1994 and 1993,
respectively. Temporary investments are recorded at cost plus
accrued interest, which approximates market value.
Statement of Cash Flows - For purposes of the Statement of Cash
Flows, the Company considers all highly liquid investments with a
maturity of three months or less from the purchase date to be cash
equivalents. The Company's cash flows from continuing operations
were reduced by cash paid for interest of $19.4 million, $18.8
million, and $19.2 million and income taxes of $28.1 million, $10.8
million, and $5.0 million during 1994, 1993, and 1992,
respectively.
The Statement of Cash Flows for all years presented has been
prepared based on the continuing operations of the Company. As
such, the discontinued cash flows of CAPCO, VME, and CMHC have been
reflected separately within the Statement of Cash Flows.
Fair Value of Financial Instruments-The Company estimates the fair
value of all financial instruments where the face value differs
from the fair value, primarily long-term debt and forward exchange
contracts, based upon quoted amounts or the current rates available
for similar financial instruments. If fair value accounting had
been used at December 31, 1994 and 1993, instead of the historic
basis of accounting used in the financial statements, long-term
debt would exceed the reported level by approximately $4 million
and $20 million, respectively, and the value of forward exchange
contracts would approximate the amounts reflected in the financial
statements.
-16-<PAGE>
<PAGE>
Inventories-Inventories at December 31, 1994 and 1993, net of
valuation allowances of $13.3 million and $12.1 million,
respectively, are classified as follows:
Amounts in millions
1994 1993
Raw materials $ 37.1 $ 38.9
Work in process and finished goods 86.6 65.9
$123.7 $104.8
Inventories are valued at the lower of cost or market by the
last-in, first-out (LIFO) method for substantially all domestic
inventories and by the first-in, first-out (FIFO) method for all
foreign inventories.
If the FIFO method of inventory accounting had been used worldwide,
inventories would have increased by $28.4 million at December 31,
1994, and $27.2 million at December 31, 1993. Inventory subject to
LIFO approximates 65% of total inventory at December 31, 1994.
During 1992, certain domestic inventory quantities were reduced.
These reductions resulted in the liquidation of LIFO inventory
quantities carried at lower costs prevailing in prior years. The
effect decreased cost of goods sold related to continuing
operations by approximately $1.8 million in the fourth quarter of
1992. LIFO adjustments were not material in 1994 or 1993.
Properties and Depreciation-Property, plant and equipment are
carried at cost. Expenditures for maintenance and repairs are
charged to expense as incurred. Expenditures for major renewals and
betterments are capitalized. The Company generally uses the
straight-line method of depreciation. Depreciation lives generally
range from eight to 50 years for land improvements, eight to 50
years for buildings, and three to 25 years for machinery and
equipment. Properties retired or sold are removed from the property
accounts, with gains or losses on disposal included in income.
The year-end property, plant and equipment balances for the past
two years are classified as follows:
Amounts in millions
1994 1993
Land $ 10.5 $ 6.9
Land improvements 4.9 5.5
Buildings 76.0 75.6
Machinery and equipment 291.0 399.3
382.4 487.3
Accumulated depreciation (201.3) (285.4)
$181.1 $201.9
Assets Held for Sale - Assets held for sale at December 31, 1993,
represented one of CMHC's former manufacturing facilities. This
facility was sold in 1994 for an amount approximating the value
reflected in the 1993 balance sheet.
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Goodwill Amortization - The Company is generally amortizing
goodwill on a straight-line method over a 40-year period. Goodwill
shown in the consolidated financial statements relates to: 1) the
Company's 1990 acquisition of Hurth Axle S.p.A., an Italy-based
company, which is remeasured into U.S. dollars using current
exchange rates (current balance: $68.9 million); and 2) the
Company's 1994 acquisition of Blaw-Knox (current balance: $98.4
million). The amortization recorded for 1994, 1993, and 1992 was
$3.5 million, $2.1 million, and $2.5 million, respectively.
Accumulated amortization at December 31, 1994 and 1993, was $11.4
million and $7.9 million, respectively.
The Company periodically reviews the value of its goodwill to
determine if an impairment has occurred. The Company measures the
potential impairment of recorded goodwill by the undiscounted value
of expected future operating cash flows in relation to its net
capital investment in the subsidiary. Based on its review, the
Company does not believe that an impairment of its goodwill has
occurred.
Costs and Expenses - Provisions are made currently for estimated
future costs under present product warranties. The costs of health
and life insurance postretirement benefits are accrued and charged
against income as earned in accordance with the provisions of FAS
No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions." Annual expenses under the provisions of this
Statement represent a combination of the interest and service cost
provisions of the annual accrual, along with the actual benefits
provided and paid for active employees. Benefits provided and paid
on behalf of retirees are charged directly against the established
reserve. The accounting for health care benefits anticipates future
cost-sharing changes that are consistent with the Company's
expressed intent. Effective January 1, 1993, VME adopted FAS No.
106 and will recognize its estimated obligation on a transitional
basis over 20 years.
Income Taxes - Prior to 1992, the Company accounted for income
taxes using Accounting Principles Board Opinion No. 11. Effective
January 1, 1992, the Company adopted FAS No. 109, "Accounting for
Income Taxes." This adoption resulted in the recognition of a
cumulative net tax benefit of $92 million related to the
recognition of previously unrecognized net deferred tax assets.
Effective January 1, 1993, VME also adopted FAS No. 109, and
Clark's share of the cumulative tax benefit resulting from this
accounting change was $6.2 million.
The tax cost on foreign earnings remitted to the United States in
1994 and 1992 was $1.0 million and $0.6 million in the respective
years. There was no cost on 1993 remittances. The Company considers
undistributed earnings of its foreign subsidiaries at December 31,
1994, to be permanently invested.
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Guarantees and Contingencies - Guarantees and contingencies are
accrued when a loss is considered probable and the amount is
measurable.
Income Per Share - Income per share amounts are based on the
weighted average number of shares and the dilutive common
equivalent shares outstanding during the years.
Derivative Instruments - The Company uses forward exchange
contracts to reduce some of the uncertainty related to the currency
impacts surrounding certain cross-border sales transactions.
Through use of these forward exchange contracts, the Company is
able to predetermine the value it will receive for these sales in
terms of the currency where the product is manufactured. This
enables the Company to better estimate its gross margins relating
to these sales and to take appropriate steps in advance to improve
margins through overall cost-reduction or pricing actions.
The Company limits its use of forward exchange contracts so that it
is reasonably assured that the transactions it intends to protect
will occur. The Company has adopted a policy of reflecting these
contracts at their market value to the extent that significant
unrealized gains or losses exist. In accordance with this policy, a
loss of approximately $0.8 million was recorded at December 31,
1994. Prior to the adoption of this policy, the Company followed a
practice of recognizing significant losses currently and reflecting
market value gains as derivative transactions closed.
At December 31, 1994 and 1993, the Company had forward exchange
contracts of $82 million and $95 million, respectively. The 1994
contracts mature periodically over the next 12 months, and
foreign-denominated sales transactions are expected to occur
coincidental with the expiration of these instruments. The fair
value of these contracts approximated the adjusted face value at
each of the reporting periods. The Company believes that it has
entered forward exchange contracts covering about half of its
anticipated 1995 cross-border sales. Cross-border sales
transactions not effectively covered by forward exchange contracts
are subject to currency fluctuations, which could have an effect on
future profit levels.
The Company also has entered into an interest rate swap contract to
convert $10 million of fixed rate debt to a floating rate
instrument. The differential impact of this swap contract is
settled routinely with the corresponding financial institution, and
the interest costs included in the Financial Statements reflect the
floating rate implicit in the swap contract.
DISCONTINUED OPERATIONS
As previously mentioned on page 15, on March 5, 1995, Clark agreed
to sell its shares in VME to AB Volvo of Sweden. In the preparation
of these financial statements, the operations of VME have been
reflected on a discontinued basis in the Statement of Income for all
years presented.
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VME Group N.V.
The Company's investments in VME were $195.9 million and $122.1
million in 1994 and 1993, respectively. VME is a joint venture
owned 50% each by the Company and AB Volvo of Sweden. Following are
condensed financial data of VME:
Amounts in millions
Year ended December 31, 1994 1993 1992
Net sales $1,566 $1,240 $1,357
Gross profit 424 281 188
Net income (loss) 132 30 (94)
As at December 31, 1994 1993
Current assets $ 660 $ 531
Non-current assets 293 258
Current liabilities 409 314
Non-current liabilities
and deferred taxes 164 247
The $6.8 million difference between the Company's investment and
its equity in VME net assets at December 31, 1994, relates
primarily to additional equity contributions made in prior years,
which are treated as goodwill. Goodwill amortization approximated
$1.1 million in each year presented. During the second half of
1992, the Company and AB Volvo each invested $15 million in VME's
capital, and each made subordinated loans of an additional $35
million. The subordinated loans bear interest of 1.3% over LIBOR
and mature in January 1996.
Effective January 1, 1993, VME adopted FAS No. 109, "Accounting for
Income Taxes," and recorded a benefit of $12.3 million. VME also
adopted FAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions," effective January 1, 1993, and will
recognize its estimated obligation on a transitional basis over 20
years. A charge of $2.8 million is included in VME's 1994 and 1993
net income related to this change in accounting. Clark's share of
each of these accounting changes is consistent with its 50%
ownership position in VME.
Transactions with VME are conducted on the basis of normal
commercial relationships, at prevailing market prices, and are
considered immaterial.
CAPCO
As previously mentioned on page 15, the initial public offering of
CAPCO was completed in the second quarter of 1994. In the
preparation of these financial statements, the results of CAPCO
have been deconsolidated to reflect the operations of this segment
on a discontinued basis in the Statement of Income
for all years presented.
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Condensed income statement information related to CAPCO for the
first four months of 1994 and the two years ended December 31, 1993
and 1992, follows:
Amounts in millions
1994 1993 1992
Net sales $54.2 $184.4 $145.5
Pre-tax income from operations 2.3 20.7 12.8
Net income from operations 1.3 12.5 8.2
Gain on sale 32.9
Included in CAPCO's pre-tax income from operations is a foreign
loss of $3.3 million in 1994 and income of $8.4 million and $2.0
million in 1993 and 1992, respectively. Net income in 1993 and 1992
benefited from the utilization of operating loss carryforwards in
Brazil in the respective amounts of $3.7 million and $1.3 million.
Included in the gain on the sale of this business is a tax
provision of $3.0 million.
CMHC
In July 1992, the Company sold its material handling business,
Clark Material Handling Company (CMHC). This business has been
classified in the Statement of Income as a discontinued operation
for all years presented. Condensed income statement information
related to CMHC through July 31, 1992, follows:
Amounts in millions
1992
Net sales $248.5
Pre-tax loss from operations (11.2)
Net loss from operations (7.0)
Gain on sale 8.5
Included in the pre-tax loss from operations is foreign income of
$2.6 million. Included in the gain on the sale of CMHC is a tax
benefit of $7.6 million.
Other
Discontinued operations in 1992 include the results of an insurance
subsidiary which had been held for sale. The subsidiary continues
to be liquidated, and due to immateriality, these results have been
reclassified to other income in 1993 and 1994. The investment in
this operation has been reclassified on the Company's Balance Sheet
to "other assets" for both periods presented.
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INVESTMENTS AND ADVANCES
ASSOCIATED COMPANIES
Marubeni Bobcat Sales Company
In August 1994, Melroe Company, a business unit of Clark, and
Marubeni Corporation, a Japanese firm, completed a joint venture
agreement to export Bobcat skid-steer loaders and attachments
manufactured in North Dakota and market them in Japan. The new
company, which is owned equally by Melroe and Marubeni, is
headquartered in Yokohama, Japan. The Company's investment at
December 31, 1994, was $1.1 million and is accounted for by the
equity method. Clark has recorded an equity loss of $0.5 million
for its share of the 1994 losses and has classified this loss in
other income.
Investment in CAPCO
In the second quarter of 1994, the Company sold approximately 91%
of its interest in CAPCO to the public through an initial public
offering. The Company's remaining 9% investment, which is classified
as available for sale, is valued at $11.4 million at December 31,
1994, and includes an adjustment of $4.6 million to increase the
cost basis of the investment to fair market value in accordance
with FAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."
ACCRUED LIABILITIES
Accounts payable and accrued liabilities include
the following:
Amounts in millions
1994 1993
Trade payables $ 87.1 $ 65.0
Accrued payrolls
and related taxes 30.3 34.8
Accrued warranty 12.1 15.5
Accrued pension 4.6 12.5
Other 23.0 22.3
$157.1 $150.1
Other non-current liabilities include the following:
Amounts in millions
1994 1993
Accrued pension $16.5 $ 2.4
Accrued product liability 17.1 14.8
Environmental 13.7 13.5
Income taxes payable 15.2 15.4
Discontinued operations reserves 8.5 9.6
Other 23.0 24.0
$94.0 $79.7
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<PAGE>
OTHER INCOME
Following is a summary of the major elements of other income for
the years ended December 31:
Amounts in millions
1994 1993 1992
Interest income $11.0 $11.4 $10.6
Gain on sale of assets 7.0 - -
Sundry items, net 2.7 3.6 4.3
$20.7 $15.0 $14.9
The 1994 gain on sale of assets relates to the sale of certain
overseas bonds of $4.2 million and the sale of a parts facility in
Atlanta, Georgia, for $2.8 million.
The 1993 interest income includes income of $1.7 million from a
duty drawback refund received from the U.S. Customs Service, and
interest of $1.8 million due from the settlement of U.S. tax audits
for 1989 through 1991. Interest income received on the subordinated
loan to VME amounted to $2.0 million in 1994 and $1.6 million in
1993.
SUPPLEMENTARY INCOME STATEMENT
INFORMATION
Amounts in millions
1994 1993 1992
Maintenance and repairs $18.0 $16.3 $16.9
Taxes, other than payroll
and income taxes 9.7 7.7 8.4
Rents 4.4 4.8 5.0
Advertising costs 6.3 6.0 6.7
Research and
development costs 15.6 17.0 14.7
INCOME TAXES
Following is a segregation of pre-tax income from continuing operations
as reported by U.S. and foreign companies:
Amounts in millions
1994 1993 1992
Pre-tax income (loss)
Continuing operations:
United States $78.0 $27.0 $12.7
Foreign 14.1 (1.2) 5.1
$92.1 $25.8 $17.8
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<PAGE>
The elements of the provision for income taxes are as follows:
Amounts in millions
1994 1993 1992
Current income taxes:
Federal $19.9 $2.1 $(1.1)
Foreign 2.1 1.7 2.4
State 2.5 .3 .6
Total current 24.5 4.1 1.9
Deferred (prepaid)
income taxes:
United States
recurring 4.1 4.5 4.5
change in tax rates - (3.0) -
Foreign .7 (1.4) (.6)
Total deferred 4.8 .1 3.9
Provision for income
taxes on continuing operations $29.3 $4.2 $ 5.8
The U.S. corporate income tax rate increased from 34% to 35% in
1993. A tax credit of $3.0 million was recorded in 1993 as net U.S.
deferred tax assets were revalued at the higher tax rate.
Deferred tax assets before valuation allowances approximate $148
million as of December 31, 1994, and $160 million as of December
31, 1993. These assets consist of:
Amounts in millions
1994 1993
Expected future tax
benefits relating to
postretirement benefits $ 97 $ 94
Self-insurance and
warranty reserves 10 11
Environmental reserves 6 6
Pension and deferred
compensation commitments 15 15
Loss and credit carryforwards 17 27
Other items 3 7
Gross deferred tax assets 148 160
Valuation allowances (23) (33)
Net deferred tax assets $125 $127
Valuation allowances relate largely to net operating foreign tax
credit and capital loss carryforwards. A valuation allowance of
approximately $6 million also has been established related to
certain temporary differences for which deferred tax assets have
been provided but for which the ultimate realization of tax
benefits is not certain.
Deferred tax liabilities as of December 31, 1994 and 1993, of $8.7
million and $11.5 million, respectively, are comprised of
differences in the recorded book and tax basis of assets.
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As of December 31, 1994, the Company has foreign net operating
loss, U.S. capital loss, and foreign tax credit carryforwards, the
tax benefits of which approximate $7 million, $8 million, and $2
million, respectively, for which no financial statement benefit has
been recognized. Approximately $1.6 million of these operating loss
benefits expire by 1998, while the remainder have an indefinite
carryforward period. The capital loss expires in 1997. The foreign
tax credit carryforward expires in 1996. Benefit relating to these
carryforwards has not been reflected because of the limited
carryforward periods and the limitations on their use. Future
benefit may occur to the extent capital gains or foreign-sourced
income are recognized prior to the expiration of the carryforwards.
During 1993 and 1992, pre-tax capital gain income relating to
continuing operations of approximately $3.0 million and $1.8
million, respectively, was earned, favorably impacting the
Company's tax provision.
At the time of the adoption of FAS No. 109, no net benefit was
given to the foreign operating loss carryforwards because of the
limited carryforward periods and/or the uncertain business
conditions relating to the operations giving rise to such
carryforwards. With respect to these carryforwards, the Company at
December 31, 1994, has continued to follow the policy that the
benefit of these carryforwards will be recognized when realized. As
such, future recognition of these carryforwards will be reflected
if the foreign entities have sufficient earnings before the
expiration periods of the respective loss carry-forwards. The 1994
tax provision has been reduced by $3.3 million as a result of the
utilization of such carryforwards. Future tax benefits of these
carryforwards could aggregate $7 million if all such carryforwards
become realizable.
The deferred tax asset valuation reserve was approximately $23
million at December 31, 1994, compared with $33 million at December
31, 1993 and $31 million at December 31, 1992. The reduction in the
1994 balance resulted principally from the utilization of net
operating and capital loss carryforwards. A tax benefit of
approximately $8 million was realized as a result of the
utilization of capital loss carryforwards in conjunction with the
sale of CAPCO in May 1994.
The increase in the 1993 valuation allowance compared with the
level at December 31, 1992, was the result of additional net
operating loss carry-forwards at certain locations, a revised
estimate of the capital loss carryforward, and a revision of
foreign tax credit carryforwards resulting from an Internal Revenue
Service audit. The reserve was reduced by $3.7 million as a result
of the realization of net operating loss carryforwards at CAPCO's
Brazilian operations.
The valuation allowance at December 31, 1992, of $31 million was
$22.3 million less than that originally provided at the time of the
adoption of FAS No. 109. Approximately $19.5 million of this
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difference relates to the temporary differences of CMHC, net of the
unrealized capital loss benefit. Valuation reserves for future tax
benefits of CMHC were provided at the time of the adoption of FAS
No. 109 because it was expected that such benefits would accrue to
the purchaser. The remaining difference reflects the domestic
utilization of capital loss carryforward benefits and the
utilization of operating loss carryforwards at certain foreign
locations in 1992.
A reconciliation of the net effective tax rate for continuing
operations to the U.S. statutory federal income tax rate for the
three years ended December 31, 1994, is as follows:
Amounts in millions
1994 1993 1992
U.S. federal statutory rate 35.0% 35.0% 34.0%
Increase (decrease) in rate
resulting from:
Revaluation of deferred
tax assets for change
in U.S. tax rates - (11.6) -
Utilization of net
operating and capital
loss carryforwards
and other credits (3.6) (4.5) (10.9)
Higher foreign taxes 2.0 2.7 7.2
Change in reserve for
potential disallowances (2.3) - -
Foreign distributions, net
of foreign tax credits 1.1 - 2.6
Income not subject to tax (2.0) (3.1) (2.4)
Other, net 1.6 (2.2) 1.9
Net effective tax rate 31.8% 16.3% 32.4%
Undistributed earnings and basis differentials approximate $45.3
million at December 31, 1994. Any future dividends declared and
remitted are expected to be solely from the current earnings of the
respective operations. Undistributed earnings and existing basis
differentials will become subject to tax in the event that they are
remitted or if the Company should sell such operations. It is not
expected that the additional tax that would be required if earnings
were to be distributed would be material.
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LONG-TERM AND SHORT-TERM DEBT
Following is a summary of long-term debt of the Company and its
consolidated subsidiaries due after one year, as of December 31:
Amounts in millions
1994 1993
Medium-term notes having
maturities ranging from
June 14, 1995, to May 15, 2023,
and interest rates ranging
from a floating LIBOR plus
.55% to a fixed 8.35%
(face amount $90,250,000) $ 79.7 $ 89.6
9 3/4% notes due March 1, 2001
(face amount $100,000,000) 99.7 99.7
6% industrial development
revenue bonds, payable
$400,000 in 1998 and $900,000
annually in 1999 to 2002 4.0 4.0
Hurth obligations due in periods
ranging from 1995 to 2000,
at an average rate of 9.5% 9.9 11.5
$193.3 $204.8
Required payments on long-term debt are $12.1 million in 1995,
$23.2 million in 1996, $1.9 million in 1997, $12.3 million in 1998,
$2.8 million in 1999, and $153.1 million thereafter.
In the second quarter of 1993, the Company issued approximately $90
million of medium-term notes under a $150 million shelf
registration statement. These include $50 million of 30-year notes
at an average rate of approximately 8.20%. The remaining notes have
maturities ranging from June 14, 1995, to July 1, 1998, at rates
ranging from a floating LIBOR plus .55% to a fixed 6.25%.
On April 6, 1994, the Company entered into a $100 million Master
Credit Agreement with nine banks. The new Agreement has a term of
three years and replaces a previous agreement of $66.2 million. The
Agreement carries restrictions on minimum net worth and
debt-to-capitalization ratios. At December 31, 1994 and 1993, there
were no amounts outstanding under the respective credit facilities
and the Company was in compliance with the facility requirements.
On February 21, 1995, the Company extended the term of this
Agreement to April 6, 1998, and increased the amount available
thereunder to $200 million through February 20, 1996, at which time
it will revert to $100 million.
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At December 31, worldwide short-term bank lines of credit, subject
to cancellation upon notice by the bank or the Company, were:
Amounts in millions
1994 1993 1992
Lines of credit $56.2 $46.2 $44.3
Unused lines of credit 44.3 23.7 31.1
Maximum borrowings
during year 26.7 22.5 42.7
Average borrowings 16.0 18.2 27.0
Average rate on foreign
borrowings outstanding
at December 31 5.9% 8.2% 9.6%
Daily weighted average
interest rate 7.4% 11.2% 10.8%
CAPITAL STOCK
The Company has authorization for 40,000,000 shares of $7.50 par
value Common Stock. There were 17,400,975 shares and 17,401,903
shares outstanding at December 31, 1994 and 1993, respectively.
These shares include 2,053,996 shares held in the LESOP trust.
Shares held as treasury stock were 1,793,709 shares and 1,792,431
shares at the respective year-ends. The Company also has
authorization for 3,000,000 shares of $1.00 par value Preferred
Stock, none of which have been issued.
In 1987, the Board of Directors adopted a Rights Plan, which was
amended in 1990 and will expire in 1997. The Rights Plan may become
operative in the event that certain change of control conditions
occur.
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STOCK OPTIONS
Following is a summary of the changes in options under the 1975 and
1985 stock option plans for each of the last three years:
1994 1993 1992
Outstanding at
January 1, at
an average price per
share of $18.57,
$20.08, and $25.05,
respectively 172,151 306,030 114,662
Options granted
at an average price
per share of
$18.50 in 1992 - - 219,581
Canceled or lapsed (500) (40,002) (28,213)
Exercise of
previously granted
options at an
average grant price
per share of
$18.58 and $19.71,
respectively (59,632) (29,278) -
Exercise of
options with
appreciation rights (104,281) (64,599) -
Outstanding at
December 31, at an
average price per
share of $18.50,
$18.57, and $20.08,
respectively 7,738 172,151 306,030
In addition to the above options, there were performance units
outstanding at December 31 of 259,951 in 1994, 492,840 in 1993, and
568,776 in 1992, which had average exercise prices of $20.57,
$19.58, and $21.88 in the respective years. These performance units
are equivalent to free-standing stock appreciation rights. When the
performance units are surrendered, the grantee receives a cash
payment for each unit surrendered, equal to the amount by which the
price of Clark stock on the date of surrender exceeds the exercise
price. The accrued liability of the options with stock appreciation
rights and the performance units at December 31 was $6.7 million in
1994, $11.9 million in 1993, and less than $0.1 million in 1992.
The related expense was $11.1 million, $15.5 million, and less than
$0.1 million in each of the respective years.
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On May 10, 1994, the stockholders of the Company approved the 1994
Long-Term Incentive Plan (LTIP), which provides for certain
stock-based compensation plans, including stock options and stock
appreciation rights. The stockholders authorized 850,000 shares for
issuance under the LTIP. As of December 31, 1994, no options have
been granted under the LTIP.
PENSION COSTS
The Company has non-contributory defined benefit pension plans
covering certain of its U.S. employees and certain employees and
retirees of previously owned businesses. The plans covering
salaried employees provide benefits based upon years of service and
final average compensation. The plans covering hourly employees
provide monthly benefits based upon a flat rate and years of
service.
Assets of the U.S. plans are invested primarily in U.S. government
and agency bonds, equities, fixed income securities, and insurance
contracts. The Company's funding policy for its qualified plans
generally is to contribute no less than the minimum amount required
by law and no more than the maximum amount that can be deducted for
federal income tax purposes.
Some of the Company's foreign subsidiaries also have defined
benefit pension arrangements. These plans are not required to
report to governmental agencies pursuant to ERISA, and do not
otherwise determine the actuarial value of accumulated benefits or
net assets available for benefits.
Consolidated worldwide 1994 pension expense for defined benefit
plans was $11.5 million, compared with $9.2 million in 1993 and
$6.8 million in 1992. The components of pension expense for each of
these years is as follows:
Amounts in millions
1994 1993 1992
Current service cost $ 3.6 $ 2.9 $ 3.1
Interest cost 25.6 25.2 24.9
Return anticipated on
plan assets for the year
(actual $2.8 million,
$70.9 million, and
$10.4 million for the
respective years) (23.8) (22.7) (23.6)
Other components of
pension expense, net 4.8 2.7 1.4
U.S. pension expense 10.2 8.1 5.8
Non-U.S. pension expense 1.3 1.1 1.0
$11.5 $ 9.2 $ 6.8
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The following tables reconcile the funded status of the Company's
U.S. pension plans and the amounts recognized on the Company's
Balance Sheet:
Amounts in millions
Assets Accumulated
Exceed Benefits
Accumulated Exceed
December 31, 1994 Benefits Assets
Accumulated benefit obligation, including
non-vested benefits of $11.3 million. . . . . $ 81.5 $229.9
Projected benefit obligation. . . . . . . . . $ 96.8 $232.4
Unrecognized past service cost. . . . . . . . .7 (5.7)
Unrecognized net loss from past experience
different from that assumed. . . . . . . . . (16.5) (34.6)
Unrecognized transition asset. . . . . . . . . 1.1 .3
Plan assets at fair value (121.2) (178.9)
Adjustment required to recognize
minimum liability. . . . . . . . . . . . . . 37.8
Accrued (prepaid) pension cost . . . . . . . $(39.1) $ 51.3
December 31, 1993
Accumulated benefit obligation, including
non-vested benefits of $13.5 million. . . . . $ 90.9 $237.0
Projected benefit obligation. . . . . . . . . $110.0 $237.0
Unrecognized past service cost. . . . . . . . - (1.2)
Unrecognized net loss from past experience
different from that assumed . . . . . . . . . (34.6) (30.0)
Unrecognized transition asset . . . . . . . . 1.4 .4
Plan assets at fair value . . . . . . . . . . (111.5) (194.8)
Adjustment required to recognize
minimum liability . . . . . . . . . . . . 30.8
Accrued (prepaid) pension cost . . . . . . . . $(34.7) $ 42.2
The discount rates used to determine the projected benefit
obligation were 8.25% in 1994 and 7.25% in 1993. The rate of
increase in future compensation for determining the projected
benefit obligation was 5.4%. The expected rate of return on plan
assets ranged from 8.25% to 8.5% in 1994 and from 8.75% to 8.85% in
1993.
-31-
<PAGE>
<PAGE>
Balance sheet liabilities for worldwide pensions totaled $21.1
million and $14.9 million at December 31, 1994 and 1993,
respectively. Of these figures, U.S. plans accounted for $12.2
million and $7.5 million in 1994 and 1993, respectively, while
foreign plans accounted for $8.9 million and $7.4 million in 1994
and 1993, respectively.
The Company also has certain defined contribution plans in the
United States and Italy. Expense relating to these plans totaled
$4.4 million, $2.9 million, and $4.0 million in 1994, 1993, and
1992, respectively.
POSTRETIREMENT HEALTH CARE AND LIFE
INSURANCE BENEFITS
The Company provides certain health care and life insurance
benefits for retired employees, including certain retirees of
previously owned businesses, including CAPCO. Substantially all of
the Company's U.S. employees may become eligible for these benefits
upon retirement. The coverage is provided on a non-contributory
basis for most retirees who retired prior to August 1986, and on a
contributory basis for post-August 1986 retirees and all active
employees.
The Company does not fund its postretirement benefit plans. The
following table presents a reconciliation of the Accumulated
Postretirement Benefit Obligation (APBO) to the liability for such
costs recognized on the Company's Balance Sheet as of December 31,
1994 and 1993:
Amounts in millions
1994 1993
Accumulated Postretirement
Benefit Obligation (APBO):
Retirees $229.8 $251.5
Fully eligible active
participants 15.4 12.8
Other active participants 23.5 20.3
Total APBO 268.7 284.6
Unrecognized past
service cost 10.3 11.6
Unrecognized loss from
changes in assumptions (16.0) (43.4)
Accrued postretirement
benefit cost $263.0 $252.8
-32-<PAGE>
<PAGE>
Net periodic postretirement benefit expense for each of the three years
ended December 31 was comprised of the following components:
Amounts in millions
1994 1993 1992
Service cost of benefit earned $ 1.9 $ 1.3 $ 1.4
Interest cost on APBO 21.0 21.5 21.2
Other (.6) (.6)
Net periodic postretirement
benefit expense $22.9 $22.2 $22.0
In measuring the projected APBO for 1994, 1993, and 1992, medical
inflation trend rates were initially assumed at 13%, 13%, and 13%,
with such rates trending downward to 5%, 5%, and 5%, respectively,
by 2000. The weighted average discount rates used in each year were
8.5%, 7.5%, and 8.25%. If the health care cost trend rate were to
be increased by 1%, the APBO as of December 31, 1994, would
increase by approximately $24.9 million, and the net periodic
postretirement expense would increase by approximately $2.3
million.
LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN
The Company has a Leveraged Employee Stock Ownership Plan (LESOP)
for eligible U.S. employees. The Company loaned the LESOP $85
million, which the LESOP used to purchase 2,741,936 shares of Clark
Common Stock from the Company. Clark has agreed to make future
contributions to the LESOP to service this debt. The related
obligation offsets the note due from the LESOP in Clark's Balance
Sheet.
The Clark Common Stock purchased with the loan proceeds is held by
the LESOP trustee as collateral for the loan owed to Clark. Each
year, the Company makes contributions to the LESOP which in turn
are used to make loan principal and interest payments. With each
principal and interest payment, the LESOP allocates a portion of
the Common Stock to participating employees. As of December 31,
1994 and 1993, there were 1,905,212 and 1,730,551 shares,
respectively, allocated to participants.
The LESOP is designed to fund the Company's contributions to the
Clark Savings and Investment Plan and the Clark Retirement Program
for Salaried Employees. Currently, the Plan is only being used to
fund the salaried retirement program.
The benefits of the LESOP are integrated with those of the Clark
Retirement Program for Salaried Employees, a defined benefit
pension plan. Benefits accrued by each participant under the
pension plan after 1984 are offset by the value (converted to a
pension equivalent basis) of his or her account in the LESOP, so
that the LESOP satisfies part or all of the benefit obligation and
reduces the funding requirements of the pension plan. In the event
that a participant's LESOP account exceeds the pension benefit after
1984, the participant is entitled to the full LESOP benefit.
-33-<PAGE>
<PAGE>
The outstanding balance of the loan from Clark to the LESOP is
repayable in semi-annual installments of $2.6 million, with the
aggregate amount then remaining unpaid to be paid on July 1, 2001.
Interest is payable quarterly at a rate equal to LIBOR plus .25%
for the period October 1, 1992, through final maturity. The
outstanding balance under the loan as of December 31, 1994, was
$35.2 million.
At the time the LESOP was established, the value of shares
purchased was established as an offset to Clark's equity. This
offset is reduced as shares are allocated to participants in
conjunction with Clark's annual contributions to the LESOP.
CONTINGENCIES
Environmental
The Company is involved in environmental clean-up activities or
litigation in connection with eight former waste disposal sites and
four former plant locations. The Company also is involved in an
environmental clean-up action at one current location.
Additionally, the Company is a defendant in a lawsuit filed by the
United States Environmental Protection Agency (EPA) that seeks
civil penalties for alleged violations of the Clean Water Act,
arising out of the discharge of certain metal finishing wastewaters
generated at a current plant operating site.
At each of the eight waste disposal sites, Clark contracted with
independent waste disposal operators to properly handle the
disposal of its waste. The EPA also has identified other parties
responsible for clean-up costs at the waste disposal sites. The
Company has and will continue to accrue for these costs when the
liability can be reasonably estimated. As of December 31, 1994 and
1993, the Company had reserves of approximately $16.0 million and
$16.4 million, respectively, for potential future environmental
clean-up costs. The environmental reserves represent Clark's
current estimate of its liability for environmental clean-up costs
and are not reduced by any possible recoveries from insurance
companies. The Company's estimate of its liability is based upon:
1) the estimated costs of investigating and remediating the
environmental contamination at each site and 2) the Company's
estimated share of the liability at the site. Estimated costs of
remediation can change as the site investigation and remediation
progresses and additional information becomes available. Further,
these estimated costs can change if the selected remedial action at
a site is not effective and additional work is required. In
addition, the development of new remediation technologies could
impact these costs.
In estimating its share of the potential liability at a site, the
Company takes into account the contributions to the clean-up costs
that will be paid by other potentially responsible parties. The
Company's share of the potential liability could therefore change
-34-
<PAGE>
<PAGE>
if other potentially responsible parties become financially
insolvent or dispute their liability. As a result of the
possibility of changes in remedial cost estimates and in the
Company's share of liability, the Company continually monitors the
adequacy of its reserves and makes adjustments as necessary. Based
upon the information presently available to it, the Company does
not believe that it will incur any material costs in excess of the
amount of its reserves as a result of any such changes.
Although management cannot determine whether or not a material
effect on future operations is reasonably likely to occur, it
believes that the recorded reserve levels are appropriate estimates
of its potential liability for environmental clean-up costs.
Further, management believes that the additional maximum exposure
level in excess of the recorded reserve level would not be material
to the financial condition of the Company. Although settlement of
the reserves will cause future cash outlays, it is not expected
that such outlays will materially impact the Company's liquidity
position. The Company's expenditures in 1994 and 1993 relating to
environmental compliance and clean-up activities approximated $2.1
million and $2.6 million, respectively.
Sale of CMHC
The Company sold its forklift truck business, CMHC, to Terex in
1992. As part of the sale, Terex and CMHC assumed substantially all
of the obligations of the Company relating to CMHC operations,
including: 1) contingent liabilities of the Company with respect to
floor plan and rental repurchase agreements, 2) certain guarantees
of obligations of third parties, and 3) existing and future product
liability claims involving CMHC products. In the event that Terex
and CMHC fail to perform or are unable to discharge any of the
assumed obligations, the Company could be required to discharge
such obligations.
1) Repurchase Agreements
At the time of the sale, the Company had agreed with an independent
finance company to repurchase approximately $220 million of CMHC
dealer floor plan and rental inventory in the event of a default by
individual dealers for whom the inventory was financed. Since the
sale, dealer floor plan and rental inventory obligations have been
liquidating in the normal course of business and stand at
approximately $42 million at December 31, 1994. These obligations
will continue to liquidate in an orderly fashion. The Company will
not be required to perform these repurchase obligations unless the
dealer defaults on the underlying obligations and Terex and CMHC
default on their repurchase obligations. Should that occur, the
collateral value securing the obligations should be sufficient to
reduce any loss to an immaterial amount.
-35-<PAGE>
<PAGE>
2) Third-Party Guarantees
The Company has guaranteed approximately $16 million of obligations
of third parties relating to the CMHC operation. Approximately $10
million of these guarantees relate to national account rental
arrangements with a number of large, creditworthy customers.
Approximately $6 million relate to capital loans given by a finance
company to independent CMHC dealers, which are secured by a lien on
substantially all of the dealer's assets. These guaranteed
obligations are expected to liquidate over time. The Company
believes, based on past experience, that the national account
customers and dealers, who are the primary obligors, will meet
their obligations, resulting in immaterial losses to the Company
regardless of whether CMHC and Terex are able to perform their
obligations.
3) Product Liability Claims
CMHC had approximately $45 million of reserves relating to existing
product liability claims at the time of the sale. Future accidents
are likely to occur, which could result in increased product
liability exposure over time. The Company could incur losses
relating to these product liability claims if CMHC and Terex fail
to perform their obligations. The impact of any such losses would
be mitigated by available tax benefits and by insurance coverage
that is available for catastrophic losses. Cash settlement of
product liability claims are generally made over extended periods
of time, thereby significantly reducing the impact on cash flow in
any one year.
Uncertainty exists as to the ultimate effect on Clark if Terex and
CMHC fail to perform these obligations and commitments. While the
aggregate losses associated with these obligations could be
material, the Company does not believe such an event would
materially affect the Company's ability to meet its cash.
requirements.
In their latest report on the financial statements that were filed
as a part of Terex's 10-K for 1992, Terex's independent accountants
indicated that Terex's recurring losses, its capital deficiency,
and its inability to borrow additional funds under a bank lending
agreement raised doubts about Terex's ability to continue as a
going concern. Terex has filed its report on Form 10-Q for the
third quarter of 1994 which indicates that it has reported net
income for the three and nine month periods ended September 30,
1994, of $1.0 million and $.2 million, respectively. This compares
with losses of $15 million and $45 million for the three and nine
month periods ended September 30, 1993. The third quarter and nine
month 1994 results include $4.3 million and $29.1 million,
respectively, of gains related to sales of non-strategic assets.
According to this Form 10-Q, cost-reduction actions have been
implemented during 1994 and additional asset sales are expected to
-36-
<PAGE>
<PAGE>
be completed in the fourth quarter of 1994. In its 10-Q, Terex
indicates that with its existing credit facilities and through its
other financing and cash-generating activities, it expects to be
able to meet its obligations on a timely basis.
Other
The Company is self-insured with respect to product liability risk,
although insurance coverage is obtained for catastrophic losses.
The Company has pending approximately 57 claims, with respect to
which approximately 30 suits have been filed alleging damages for
injuries or deaths arising from accidents involving products
manufactured by the Company's continuing operations. In the
aggregate, these claims could be material to the Company. At
December 31, 1994 and 1993, the Company had reserves of
approximately $19.1 and $16.6 million, respectively, related to
product liability exposures for known claims and for claims
anticipated to have been incurred that have not yet been reported.
The reserves, which have been determined based upon actuarial
calculations using historical claims experience, have been grossed
up by expected recoveries from insurance companies of $5.7 million
and $5.0 million, respectively.
The Company is involved in numerous other lawsuits arising out of
the ordinary conduct of its business. These lawsuits pertain to
various matters, including warranties, civil rights, and other
issues. The ultimate results of these claims and proceedings at
December 31, 1994, are subject to a high degree of estimation and
cannot be determined with complete precision. However, in the
opinion of management, either adequate provision for anticipated
costs have been made through insurance coverage or accruals, or the
ultimate costs will not materially affect the consolidated
financial position of the Company.
The Company has given certain guarantees to third parties and has
entered into certain repurchase arrangements relating to product
distribution and product financing activities involving the
Company's continuing operations. As of December 31, 1994,
guarantees are approximately $25 million and repurchase
arrangements relating to product financing by an independent
finance company approximate $82 million. It is not practicable to
determine the additional amount subject to repurchase solely under
dealer distribution agreements.
Under the repurchase arrangements relating to product distribution
and product nancing activities, when dealer terminations do occur,
a newly selected dealer generally acquires the assets of the prior
dealer and assumes any related financial obligation. Accordingly,
the risk of loss to Clark is minimal, and historically Clark has
incurred only immaterial losses relating to these arrangements.
The Company enters into forward exchange contracts to protect
margins on projected future sales denominated in foreign
currencies. Settlement dates on executed contracts are generally
not more than 18 months in advance of the original execution date.
-37-
<PAGE>
<PAGE>
At December 31, 1994, forward exchange contracts of approximately
$82 million were outstanding. Maximum risk of loss on these
contracts is limited to the amount of the difference between the
spot rate at the date of contract delivery and the contracted rate.
The Company believes that future sales revenue will generate
sufficient foreign currency to meet these commitments.
BUSINESS SEGMENT INFORMATION
The business conducted by the Company's continuing operations is
the design, manufacture, and sale of skid-steer loaders, highway
paving and construction equipment, and axles and transmissions for
off-highway equipment. Sales to the U.S. government account for
less than 1% of total sales.
The Company operates in one industry segment, that being
"off-highway" products in the capital goods industry. Melroe
produces skid-steer loaders, compact excavators, and a limited
number of agricultural products. Blaw-Knox manufactures asphalt
pavers. Clark-Hurth Components produces off-highway axles and
transmissions used principally in construction, mining, and
material handling applications.
Sales and operating profit reflect amounts sourced from the
identified geographic areas.
Identifiable assets are those that are used in the Company's
operations in each geographic area. Corporate assets are
principally cash, short-term investments, equity investments,
deferred tax assets, and fixed assets maintained for general
corporate purposes.
Unallocated corporate and other expenses include certain continuing
costs related to previously disposed businesses. These are
principally "interest" costs related to discounted pension and
retiree health care liabilities.
There was no single customer from which at least 10% of total
revenue was derived during 1992-1994. In addition to the European
sales reflected on page 42 that are manufactured and sourced from
European locations, Clark manufactures in the United States and
exports to Europe and other foreign locations. These amounts are as
follows:
Amounts in millions
1994 1993 1992
Canada $ 31.5 $ 23.2 $ 19.2
Europe 125.1 108.1 136.2
South America 18.0 11.5 9.5
Asia/Pacific 27.3 17.2 13.7
$201.9 $160.0 $178.6
-38-
<PAGE>
<PAGE>
<TABLE>
GEOGRAPHIC SEGMENTS
Amounts in millions
<CAPTION>
Sales Operating Profit Identifiable Assets
1994 1993 1992 1994 1993 1992 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SOURCE:
North America $763.3 $562.3 $501.4 $116.5 $64.9 $55.5 $436.7 $251.5 $228.7
Europe 183.3 129.7 157.1 15.9 4.2 3.9 244.2 200.5 238.4
Transfers between areas:
North America 26.5 16.3 15.0
Europe 26.8 12.0 10.9
Eliminations (53.3) (28.3) (25.9) (10.6) (7.9) (6.8)
946.6 692.0 658.5 132.4 69.1 59.4 670.3 444.1 460.3
Unallocated corporate
and other (20.3) (21.9) (18.1) 327.7 341.2 269.4
Interest expense (20.0) (21.4) (23.5)
Continuing
operations* $946.6 $692.0 $658.5 $ 92.1 $25.8 $17.8 998.0 785.3 729.7
Discontinued
operations 195.9 218.0 229.0
Total $1,193.9 $1,003.3 $958.7
<FN>
*Pre-tax income and assets from continuing operations.
-39-
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CHANGES IN STOCKHOLDERS' EQUITY
Amounts in millions, except share data
<CAPTION>
Retained Fair Market
Capital in Earnings Value of Cumulative Value
Capital Excess of (Accumulated LESOP Treasury Translation Pension Adjustment-
Stock Par Value Deficit) Shares Stock Adjustment Adjustment CAPCO Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, DECEMBER 31, 1991 $143.9 $179.0 $(20.9) $(40.6) $(52.0) $41.5 $(13.4) $ - $237.5
Net income 66.0 66.0
LESOP shares allocated
to employees 4.9 4.9
Pension liability in excess of
unrecognized prior service
cost, net of tax-Clark (.5) (.5)
Pension liability in excess of
unrecognized prior service
cost, net of tax-VME. (4.0) (4.0)
Shares issued-treasury
(39,647 shares) (.2) 1.1 .9
Amortization of unearned
restricted stock .2 .2
Effect of exchange rates (52.4) (52.4)
Balance, DECEMBER 31, 1992 143.9 179.2 44.9 (35.7) (50.9) (10.9) (17.9) - 252.6
Net income 48.0 48.0
LESOP shares allocated
to employees 4.4 4.4
Pension liability in excess of
unrecognized prior service
cost, net of tax-Clark (6.8) (6.8)
Pension liability in excess of
unrecognized prior service
cost, net of tax-VME (6.3) (6.3)
Shares issued-treasury
(48,164 shares) .1 .3 (.2) 1.2 1.4
Amortization of unearned
restricted stock .1 .1
Effect of exchange rates (25.2) (25.2)
Balance, DECEMBER 31, 1993 144.0 179.6 92.7 (31.3) (49.7) (36.1) (31.0) - 268.2
Net income 161.9 161.9
LESOP shares allocated
to employees 5.4 5.4
Pension liability in excess of
unrecognized prior service
cost, net of tax-Clark (3.1) (3.1)
Reclassification of
pension liability in excess of
unrecognized prior service
cost, net of tax-VME 12.3 12.3
Shares issued-treasury
(78,744 shares) .7 1.5 2.2
Stock purchase
plan awards (.2) (.2)
LESOP forfeiture
(80,022 shares) (5.3) (5.3)
Effect of exchange rates 6.2 6.2
Unrecognized gain on invest-
ment available for sale 4.6 4.6
Balance, DECEMBER 31,1994 $144.0 $180.1 $254.6 $(25.9) $(53.5) $(29.9) $(21.8) $ 4.6 $452.2
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</TABLE>
<PAGE>
<PAGE>
<TABLE>
QUARTERLY INFORMATION (UNAUDITED)
Amounts in millions, except per share data
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year
1994 1993 1993 1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales* $205.2 $163.0 $242.5 $187.4 $249.2 $167.1 $249.7 $174.5 $946.6 $692.0
Gross profit* 43.1 33.8 52.5 40.3 53.2 30.7 50.3 30.1 199.1 134.9
Income before
effect of a change in
accounting principle 26.9 2.5 62.5 10.8 32.3 10.1 40.2 18.4 161.9 41.8
Effect of
accounting change 6.2 6.2
Net income 26.9 8.7 62.5 10.8 32.3 10.1 40.2 18.4 161.9 48.0
Information per share
of Common Stock:
Income before effect
of a change in accounting
principle $1.54 $.15 $3.59 $.62 $1.86 $.58 $2.31 $1.06 $9.30 $2.41
Effect of
accounting change. .35 .35
Net income. 1.54 .50 3.59 .62 1.86 .58 2.31 1.06 9.30 2.76
Common Stock prices:
High 65 5/8 24 1/8 69 1/8 34 3/4 71 1/8 48 1/2 70 3/4 53 3/4 71 1/8 53 3/4
Low 50 1/8 19 5/8 55 3/4 22 1/2 59 1/4 34 1/4 51 1/8 45 1/8 50 1/8 19 5/8
<FN>
*The first quarter of 1994 and all the periods of 1993 have been restated to reflect the
deconsolidation of the automotive business. The principal market on which the Company's
Common Stock is traded is the New York Stock Exchange. The high and low sales prices of
the Common Stock shown in the preceding table are prices as reported in the Composite
Transaction Reporting System. The approximate number of stockholders totaled 2,076 and
2,331 at December 31, 1994 and 1993, respectively. No cash dividends were paid on the
Company's Common Stock during 1994 or 1993.
-41-
/TABLE
<PAGE>
<PAGE>
SUBSEQUENT EVENTS
On February 3, 1995, the Company announced that it will make a tender offer
to purchase for cash all of the outstanding shares of Club Car, Inc., a
leading manufacturer of golf cars and light utility vehicles. The purchase
price is expected to aggregate approximately $237 million,plus transaction
costs. For the year ended September 30, 1994, Club Car reported sales of
approximately $186 million, and at September 30, 1994, had tangible net
worth of about $17 million. The Company expects to fund this acquisition
with its available cash, through use of its revolving credit facility, and
eventually through use of net proceeds from the sale of VME, which should
amount to about $430 million after payment of taxes and costs of the
transactions.
The Company also announced on February 3, 1995, that its Board of Directors
has authorized the repurchase of as many as 3 million shares of its common
stock. It is expected that proceeds from the VME sale will be partially
used to fund this repurchase program.
-42-
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
Stockholders and Board of Directors
Clark Equipment Company
South Bend, Indiana
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and of cash flows present fairly,
in all material respects, the financial position of Clark Equipment Company
and its consolidated subsidiaries at December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards, which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in the Notes to the Consolidated Financial Statements,
effective January 1, 1992, the Company changed its method of accounting for
income taxes and effective January 1, 1993, the Company's 50%-owned joint
venture, VME Group, N.V., changed its methods of accounting for income
taxes and postretirement health care and life insurance benefits.
/S/ Price Waterhouse LLP
Price Waterhouse LLP
South Bend, Indiana
March 6, 1995
-43-
<PAGE>
REPORT BY MANAGEMENT
The preceding financial statements have been prepared by management in
conformity with generally accepted accounting principles appropriate in the
circumstances. In the preparation of this report, some estimates are
necessary and they are made based on currently available information and
judgment of current conditions and circumstances. Management is also
responsible for all other information contained in this report.
Management maintains and depends upon the Company's system of internal
controls in meeting its responsibilities for reliable financial statements.
This system is designed to provide reasonable assurance that assets are
safeguarded and that transactions are properly recorded and executed in
accordance with management's authorization. Judgments are required to
assess and balance the relative cost and expected benefits of these
controls.
The financial statements have been audited by the independent accounting
firm, Price Waterhouse LLP. Their role is to render an independent
professional opinion on management's financial statements to the extent
required by generally accepted auditing standards. In addition to the use
of independent accountants, the Company also utilizes an independent
professional staff of internal auditors who conduct operational and special
audits.
The Board of Directors elects an Audit Committee from among its members, no
member of which is an employee of the Company. The Audit Committee is
responsible to the Board for reviewing the accounting and auditing
procedures and financial practices of the Company and for recommending
appointment of the independent accountants. The
Audit Committee meets periodically with management, professional internal
auditors, and the independent accountants to review the work of each and
satisfy itself that they are properly discharging their responsibilities.
Both the independent accountants and the independent professional internal
auditors have free access to the Committee, without the presence of
management, to discuss their observations on internal controls and to
review the quality of financial reporting.
-44-
<PAGE>
<PAGE>
<TABLE>
FINANCIAL REVIEW
The following are certain selected financial data of Clark Equipment Company
and its consolidated subsidiaries for the five years ended December 31, 1994.
(Dollars in thousands, except per share data.)
<CAPTION>
1994 1993* 1992* 1991* 1990*
<S> <C> <C> <C> <C> <C>
NET SALES $ 946,599 $ 692,022 $ 658,535 $ 589,186 $ 673,198
OPERATING COSTS AND EXPENSES:
Cost of goods sold 747,492 557,138 544,294 524,740 555,247
Selling, general and
administrative expenses 107,668 102,699 87,905 88,249 89,931
855,160 659,837 632,199 612,989 645,178
Operating income (loss) 91,439 32,185 26,336 (23,803) 28,020
Other income, net. 20,671 15,016 14,934 12,196 15,721
Interest expense (19,966) (21,426) (23,481) (23,841) (18,880)
Pre-tax income (loss) from
continuing operations 92,144 25,775 17,789 (35,448) 24,861
Provision (credit) for
income taxes 29,329 4,196 5,773 (4,988) 12,166
Income (loss) from
continuing operations 62,815 21,579 12,016 (30,460) 12,695
Discontinued operations:
Income (loss) from
discontinued operations 66,236 20,290 (46,577) (62,878) 36,767
Gain on sales 32,884 - 8,519 - -
Income (loss) from
discontinued operations 99,120 20,290 (38,058) (62,878) 36,767
Income (loss) before extraordinary
credit and effect of changes in
accounting principles 161,935 41,869 (26,042) (93,338) 49,462
Income tax benefit from
loss carryforward - - - 718 10,837
Effect of accounting changes:
Postretirement benefits - - - (244,900) -
Income taxes - 6,150 92,000 - -
NET INCOME (LOSS) $ 161,935 $ 48,019 $ 65,958 $(337,520) $ 60,299
INCOME (LOSS) PER SHARE:
From continuing operations $ 3.61 $ 1.24 $ .69 $ (1.76) $ .74
From discontinued operations 5.69 1.17 (2.19) (3.64) 2.13
Extraordinary credit - - - .04 .63
From effect of accounting changes - .35 5.31 (14.16) -
Net income (loss) $ 9.30 $ 2.76 $ 3.81 $ (19.52) $ 3.50
Cash dividends per share - - - - -
Average number of shares used to
compute net income per share 17,412,484 17,421,013 17,333,516 17,292,945 17,237,448
Total assets $1,193,899 $1,003,274 $958,691 $1,119,950 $1,100,274
Long-term debt 193,294 204,770 186,629 216,949 129,562
<FN>
*Restated to reflect the deconsolidation of previously owned businesses, and to reflect the equity in net
results of VME Group N.V. as a discontinued operation.
-45-
</TABLE>
<PAGE>
EXHIBIT (22)
SUBSIDIARIES OF CLARK EQUIPMENT COMPANY (CLARK)
Except as otherwise indicated below, the following corporations are
wholly owned subsidiaries of Clark.
Jurisdiction of
Name (1) Incorporation
Automotive Products Company Delaware
Blaw-Knox Construction Equipment Corporation Delaware
Clark Equity Company Delaware
Clark Industries Company Delaware
Blaw-Knox Company (3) England
Club Car, Inc. Delaware
Club Car International, Inc. Guam
Club Car Limited New Zealand
Clark Business Services Corporation Michigan
Celfor Insurance Co., Ltd. Bermuda
Clark Distribution Services Inc. Michigan
CDS Midwest, Inc. Michigan
Clark Equipment Belgium N.V. Belgium
Clark Equipment of Canada Ltd. Canada
Clark Foreign Sales Corporation Barbados
Clark-Hurth Components S.p.A. Italy
Clark-Hurth Components S.A.R.L. (2) France
Clark-Hurth Components Marketing Company Delaware
Clark-Hurth Components Vertriebs GmbH West Germany
Melroe Equipment Limited Canada
Melroe Parts Trading GmbH West Germany
(1) Where the name of a subsidiary is indented, it is wholly owned by its
immediate parent listed at the margin above it, unless otherwise
indicated.
(2) 95% owned by Clark-Hurth Components S.p.A. and 5% owned by Clark
Business Services Corporation.
(3) 99% owned by Clark Industries Company and 1% owned by Clark Equity
Company.
EXHIBIT (23)(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (No. 33-60062) and on Form S-8 (Nos. 33-56611,
33-56609, 33-56607, 33-44275, 33-36188, 33-28226, 33-13081, 2-99369,
2-77136,2-67529, 2-61096, 2-53948, 2-39610, 2-24730, 2-17758 and 2-16146)
of Clark Equipment Company of our report dated March 6, 1995 appearing in
the 1994 Annual Report to Stockholders of Clark Equipment Company which is
incorporated in this Annual Report on Form l0-K. We also consent to the
incorporation by reference of our reports on the Consolidated Financial
Statements and the Financial Statement Schedule of VME Group N.V.,
both of which are included in this Form 10-K.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
South Bend, Indiana
March 28, 1995
EXHIBIT (23)(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to incorporation by reference in the Clark Equipment Company
Registration Statements on Form S-3 No. 33-60062 and on Form S-8 (Nos.
33-28226, 33-13081, 2-99369, 2-77136, 2-67529, 2-61096, 2-53948, 2-39610,
2-24730, 2-17758, 2-16146, 33-36188, 33-44275, 33-56607, 33-56609 and
33-56611) of our report dated February 27, 1995 relating to the
consolidated financial statements of VME Holding Sweden AB and subsidiaries
and the related financial statement schedules as of December 31, 1994 and
1993, and for each of the years in the three-year period ended December 31,
1994, which report is included in the 1994 Annual Report on Form 10-K of
Clark Equipment Company.
Gothenburg, Sweden
March 20, 1995
/s/ KPMG Bohlins AB
KPMG Bohlins AB
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT (27)
This schedule contains summary financial information
extracted from the financial statements of Clark Equipment
Company for the year ended December 31,1994 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 48,404
<SECURITIES> 180,200
<RECEIVABLES> 115,561
<ALLOWANCES> 6,016
<INVENTORY> 123,728
<CURRENT-ASSETS> 495,123
<PP&E> 383,758
<DEPRECIATION> 202,619
<TOTAL-ASSETS> 1,193,899
<CURRENT-LIABILITIES> 204,606
<BONDS> 193,294
<COMMON> 324,067
0
0
<OTHER-SE> 128,093
<TOTAL-LIABILITY-AND-EQUITY> 1,193,899
<SALES> 946,200
<TOTAL-REVENUES> 946,599
<CGS> 748,716
<TOTAL-COSTS> 748,716
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,224
<INTEREST-EXPENSE> 19,966
<INCOME-PRETAX> 92,144
<INCOME-TAX> 29,329
<INCOME-CONTINUING> 62,815
<DISCONTINUED> 99,120
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 161,935
<EPS-PRIMARY> 9.30
<EPS-DILUTED> 9.30
</TABLE>
EXHIBIT (99)
CLARK EQUIPMENT COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN MILLIONS)
Twelve Months
1994
Earnings Before Tax:
Clark-From Continuing Consolidated Operations $ 92.1
Clark's 50% Share of VME (Net of Clark Goodwill
Amortization and Other VME Related Expenses) 98.0
Total Pre-Tax Earnings (1) $ 190.1
Fixed Charges:
Clark:
Interest Expense $ 20.0
Interest Portion of Rent Expense 1.6
Clark's Share of VME:
Interest Expense 9.0
Interest Portion of Rent Expense 3.4
Total Fixed Charges (2) $ 34.0
Earnings from Continuing Operations Before
Taxes and Fixed Charges (1 Plus 2) $ 224.1
Ratio of Earnings to Fixed Charges 6.59
=======
NOTE:
Earnings to Fixed Charges have been determined based on Continuing
Operations and have been computed by dividing Earnings before Income Taxes
and Fixed Charges by Fixed Charges. Earnings before Income Tax includes
the pre-tax income from Clark's Consolidated Continuing Operations and
Clark's 50% share of VME's pre-tax income, net of Clark Goodwill
Amortization related to its VME investment, and other expenses directly
related to VME. Fixed Charges include Interest Expense relating to Clark's
Consolidated Continuing Operations and Clark's 50% share of VME's interest.
Fixed Charges also includes one-third of Clark Rentals for Consolidated
Continuing Operations and Clark's 50% share of one-third of the VME
Rentals. The Company believes that one-third of such Rentals constitutes a
representative interest factor. Capitalized Interest has been excluded
from Fixed Charges as it is immaterial.
