<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended AUGUST 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______.
Commission File No. 1 - 11288
APPLIED POWER INC.
(Exact name of Registrant as specified in its charter)
WISCONSIN 39-0168610
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13000 WEST SILVER SPRING DRIVE
BUTLER, WISCONSIN 53007
MAILING ADDRESS: P.O. BOX 325, MILWAUKEE, WISCONSIN 53201
(Address of principal executive offices)
(414) 781-6600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
CLASS A COMMON STOCK, NEW YORK STOCK EXCHANGE
$.20 PAR VALUE PER SHARE -----------------------
------------------------ (Name of each exchange on
(Title of each class) which registered)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by 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, 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. [ ]
As of November 16, 1994, the aggregate market value of Common Stock held by
non-affiliates was $306.2 million, and there were 13,226,842 shares of the
Registrant's Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on January 9, 1995 are incorporated by reference into
Part III hereof.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL DEVELOPMENT OF THE COMPANY
Applied Power Inc. (the "Company"), a Wisconsin corporation incorporated in
1910, is a diversified global company engaged in the business of providing
tools, equipment, systems and consumable items to a variety of end-users and
original equipment manufacturers in the manufacturing, construction,
transportation, natural resource, aerospace, defense and other industries.
The Company's operations are segmented into two business groups and one
company:
Distributed Products Group ("DPG") Products
- - ----------------------------------- --------
Enerpac Hydraulic high force tools, production
automation components and accessories.
GB Electrical Electrical contractor tools, consumable
products for electrical construction,
repair and remodeling
Engineered Solutions Group ("ESG")
- - -----------------------------------
Power-Packer Hydraulic actuation systems for the
transportation, medical equipment and
agricultural equipment markets.
APITECH Electro-hydraulic control valves and
systems for transportation and mobile
equipment manufacturers.
Barry Controls Standard and engineered shock,
vibration and noise reduction components
and systems
Wright Line Technical furniture solutions for
- - ----------- offices and laboratories
Financial information by segment and geographic area, as well as information
related to export sales, is included in Note O - "Segment Information" in Notes
to Consolidated Financial Statements, which is included as part of Item 8 of
Part II of this report and is incorporated herein by reference.
DESCRIPTION OF BUSINESS SEGMENTS
DISTRIBUTED PRODUCTS GROUP
The Distributed Products Group, which includes Enerpac and GB Electrical, is
engaged in the manufacture and distribution of tools and consumables to the
construction, retail and general industrial markets. Products are generally
distributed through wholesale and retail distributors. Both DPG businesses
supply in excess of 4,000 SKU's each to a broad customer base. Geographic
expansion offers a source of growth potential for the DPG businesses.
<PAGE> 3
Enerpac
Enerpac is involved in the design, manufacture and sale, on a worldwide basis,
of labor and cost saving products and systems for industrial and construction
operations. The products can be grouped into three product lines: high force
tools, production automation, and specially engineered or complementary
systems.
Enerpac's high force tool line consists of over 4,000 products that are used
extensively in general industrial and construction applications. These
hydraulic products allow users to apply controlled force and motion that
increase productivity and make work safer and easier to perform. Hydraulic
pumps, valves, cylinders and presses, as well as more specialized tools such as
pipe benders, torque wrenches and electronically-controlled lifting systems
are examples of Enerpac's high force tools.
Enerpac's production automation products consist of workholding components and
systems which enable a quick change of dies, molds and other equipment used in
production and assembly operations. Hydraulic workholding components and
systems utilized in metal-cutting machine tools hold parts in position during
the machining process, and provide superior accuracy and flexibility to
traditional mechanical clamping methods. Enerpac also designs and manufactures
quick mold change systems that are used extensively in the injection molding
industry.
In addition to its line of high force tools and production automation products,
Enerpac custom engineers and assembles equipment and special modified products
that are sold directly to original equipment manufacturers ("OEM's").
Enerpac has major engineering, manufacturing and warehousing operations in the
United States, Netherlands, Mexico, France and Japan, with sales and service
operations in a number of other countries. The manufacturing operations in the
Netherlands are in the process of being consolidated into the United States,
and will be completed in 1995. Products are primarily distributed through a
worldwide network of over 2,500 independent distributors as well as directly to
certain OEM customers. Enerpac believes its strengths include the breadth of
its product line, large distribution network, long operating history,
reputation and technical expertise.
GB Electrical
As a result of niche acquisitions, new product introductions, strong customer
service and its expansion into new markets, GB Electrical has doubled its sales
since being acquired by the Company in 1988. GB Electrical's major product
groups include the following: tools and accessories used in industrial,
commercial and residential construction, remodeling and maintenance; wire
connectors and other wire termination devices; conduit fishing and pulling
systems; conduit benders; fastening devices (including cable ties and plastic
staples); digital and analog multitesters; and spring steel clips (under the
"HIT" trademark).
GB's products are sold through electrical wholesale distributors and mass
merchandisers. This network includes approximately 4,000 electrical wholesale
accounts as well as merchandisers including Sears, Ace Hardware, Builders
Square, Payless Cashways, WalMart, The Home Depot, Cotter & Co. and other major
chains, which in total represent over 20,000 consumer outlets.
GB operates manufacturing facilities in Wisconsin, Minnesota and North
Carolina. GB's products are distributed through its National Distribution
Center located in Milwaukee, Wisconsin as well as a number of independent
warehouses located throughout the United States. Although the majority of its
business is generated in the United States, GB is aggressively pursuing
opportunities in Canada, Mexico, Latin America and Hong Kong.
<PAGE> 4
ENGINEERED SOLUTIONS GROUP
The Engineered Solutions Group, consisting of Power-Packer, APITECH and Barry
Controls, focuses on developing and marketing value-added solutions for
original equipment manufacturers in the transportation, construction,
aerospace, defense and industrial markets. Technical sales force members from
each of the ESG units often work together to develop and market ESG products in
one technology solution package. These value-added technology solutions offer
cost-effective systems to meet the needs of ESG s global customer base.
Power-Packer
Power-Packer custom designs hydraulic systems and components for OEM customers
in the transportation, medical equipment and agricultural equipment markets.
Although its principal engineering and assembly operations are based in the
United States and the Netherlands, Power-Packer also markets its products
throughout Europe, Japan, South Korea and North America. The majority of its
products are sold direct by its technically-trained sales force.
Power-Packer has three primary product applications in the transportation
industry: the cab-tilt system, the air suspension system and the convertible
top actuation system. The cab-tilt system is installed on heavy-duty,
cab-over-engine trucks and tilts and retracts the cab for engine inspection and
maintenance. The systems are customized to meet the needs of individual truck
manufacturers which include virtually all of the major manufacturers of
cab-over-engine trucks in the United States and Western Europe. Power-Packer
also markets its cab-tilt systems in Japan through a joint venture. Air
suspension systems improve the ride characteristics of trucks, enhance driver
comfort and reduce cab maintenance costs. Power-Packer has also developed a
leading position in supplying electrically-powered hydraulic actuator systems
for convertible automobile tops. These systems, which are shipped to
automotive OEMs fully assembled and tested, are presently used on many car
models in Europe and the United States.
Power-Packer supplies self-contained hydraulic actuators to medical equipment
manufacturers that provide portable patient lifting and positioning capability
for institutional or home use. Other manually-operated products are supplied
for hospital bed height adjustment. It also produces power-driven systems, in
some cases combined with fully-integrated microprocessor control, to expand the
multi-function capability of beds and examination tables.
APITECH
The Company formed APITECH to develop and market products that combine
electronic control with hydraulic technologies to increase the controllability,
safety and performance of end-user products. APITECH employs advanced
electronic and software technology in its modular line of products, including
electro-hydraulic control valves, microprocessor-based control circuitry,
sensors and software. These products can be adapted to customers' control
situations and span broad application areas without extensive redesign. The
Company has a patented digital electro-hydraulic valve, marketed under the
Pulsar Valve TM name, which can be directly controlled by a microprocessor to
deliver performance comparable to servo valve technology at a significantly
lower cost.
The Company markets APITECH products to a diversified mix of customers,
primarily OEMs. The highest demand for electro-hydraulic APITECH products
occurs in the off-highway mobile market, the on-highway transportation and
maintenance vehicle market and the automotive market. In the off-highway
market, APITECH's customers include John Deere, Hameck, F.W. McConnell, TRAK,
Snorkel and Altec. In the on-highway maintenance market, major state and
municipal road fleets in the United States and Canada use APITECH's salt and
sand spreader control products. In the automotive market, APITECH supplies
small fast valves to GM Delco that are part of the system that provides a
semi-active suspension capability in certain Cadillac models. Sales to GM
Delco are a significant portion of APITECH's business.
<PAGE> 5
Products are sold as components or turn-key systems, depending on customer
specifications and design capability, typically with long-term supply
arrangements. The Company primarily sells its APITECH products through its own
sales engineering team as well as through a group of full service mobile
equipment distributors in North America and Europe. Sales to the road
maintenance equipment market take place through a national network of truck
equipment dealers in the United States and Canada. APITECH's operations are
based in Butler, Wisconsin.
Barry Controls
Barry Controls was acquired by Applied Power in 1989, along with Wright Line,
in conjunction with the acquisition of Barry Wright Corporation. Barry
Controls is engaged in the business of custom designing, manufacturing and
marketing engineered products and systems that reduce vibration, shock and
structure-borne noise. Products for the commercial aerospace and defense
markets include engine vibration isolators for aircraft and vibration and shock
isolators for defense and aerospace applications. Industrial products
represent an important part of Barry Controls' business, and include vibration
isolators and noise dampening components for a variety of applications
including computers, appliances, tools, industrial equipment, heavy trucks,
farm and construction equipment and many other diverse applications.
Principal markets and customers served include OEMs of many types of machinery
and equipment (including computers), aircraft manufacturers, commercial
airlines, defense and aerospace contractors, and users of equipment requiring
noise or vibration reduction. Products are distributed through its sales
engineers, independent sales engineering representatives and specialized
distributors. Barry Controls' products are manufactured in two locations in
the United States as well as in England.
WRIGHT LINE
In the second quarter of 1994, the Company announced its decision to retain the
remaining Wright Line business, which had been included in discontinued
operations since the third quarter of 1992. The Company had originally
intended to sell all of Wright Line in a single transaction in 1993. However,
management subsequently determined that proceeds could be maximized by selling
the assets in a series of separate transactions. The Company completed the
sale of certain assets of Wright Line s German operation in 1993, and the
Canadian, Australian, U.K. and U.S. portions of Wright Line s Datafile
operations in early 1994. For further information, refer to Note B -
"Discontinued Operations" in Notes to Consolidated Financial Statements.
During the past two years, Wright Line has shifted its strategy to respond to
the application and storage demands posed by new and fast changing markets,
including Local Area Networks (LAN s), multi-media and bio-engineering markets.
Its customers require efficient and flexible work centers and equipment for
professionals. In addition to these fast growing markets, Wright Line continues
to provide traditional filing systems, cabinets, workstations and work surfaces
used in the modern office.
Wright Line products are primarily sold through its direct sales force in the
United States, in addition to a network of independent distributors and
Value-Added Resellers. Its products are marketed in foreign markets through
sales representatives and dealers in other countries. Products are primarily
sold to commercial and governmental end users. Sales to the government, which
have averaged approximately 31% of total Wright Line net sales over the past
three years, are made pursuant to a contract between Wright Line and the U.S.
Government s General Services Administration.
Competition
The Company competes on the basis of product design and quality, availability,
performance and support and price. The Company believes that its technical
skills, global presence, shared technology base, close working relationships
with customers and patents bolster its competitive position.
<PAGE> 6
Applied Power's businesses face competition to varying degrees in each of their
markets. In general, each product line competes with a small group of
different competitors. No one company competes directly with the Company
across all of its businesses. Some competitors of the Enerpac, GB Electrical,
APITECH, and Wright Line businesses are substantially larger than the Company
and have greater financial resources. The competitors of Power-Packer are
limited to a few specialized firms, which are generally privately held and
operate in specific geographic markets. Barry Controls and its principal
competitor, a segment of Lord Corporation, are the dominant suppliers in the
shock, vibration and noise isolation markets.
Research and Development
The Company maintains engineering staffs at several locations, which design new
products and make improvements to existing product lines. Expenditures for
research and development, which constitute a portion of the Company's
engineering expense, were $7.4 million, $5.9 million and $5.6 million in fiscal
years 1994, 1993 and 1992, respectively. Substantially all research,
development and product improvement expenditures are Company funded.
Patents and Trademarks
The Company has been issued a number of patents that provide protection of
valuable designs and processes in its APITECH, Power-Packer and Barry Controls
businesses. Numerous other United States and foreign patents and trademarks
are owned by the Company, although no such individual patent or trademark (or
group thereof) is believed to be of sufficient importance that its termination
would have a materially adverse effect on the Company's business.
Manufacturing, Materials and Suppliers
The majority of the Company's manufacturing operations include the assembly of
parts and components which have been purchased by the Company from a number of
suppliers. In the absence of unusual circumstances, substantially all such
products are normally available from a number of local and national suppliers.
Order Backlogs and Seasonality
At August 31, 1994, the Company had $93.3 million in backlog orders, compared
to approximately $79.7 million at August 31, 1993. Substantially all orders
are expected to be completed prior to August 31, 1995. The Company's sales are
subject to minor seasonal fluctuations, with second quarter sales traditionally
being the lowest of the year.
Employee Relations
As of August 31, 1994, Applied Power employed approximately 2,700 people, none
of which are subject to a collective bargaining agreement. In general, the
Company enjoys good relationships with its employees.
Environmental Compliance
The Company has facilities at numerous geographic locations, which are subject
to a range of environmental laws and regulations. Compliance with these laws
has, and will require expenditures on a continuing basis. Environmental
expenditures are expensed or capitalized depending on their future economic
benefit. The Company has been identified by the United States Environmental
Protection Agency as a "Potentially Responsible Party" regarding six
multi-party Superfund sites. Based on its investigations, the Company believes
it is a de minimis participant in each case, and that any liability which may
be incurred as a result of its involvement with such Superfund sites, taken
together with its expenditures for environmental compliance, will not have a
material adverse effect on the Company s financial position. Liabilities are
recorded when environmental remediation is probable, and the costs can be
reasonable estimated. Environmental remediation accruals of $567,000 and
$661,000 were included in the Consolidated Balance Sheet at August 31, 1994 and
1993, respectively. For further information, refer to Note P - "Contingencies
and Litigation" in Notes to Consolidated Financial Statements.
<PAGE> 7
ITEM 2. PROPERTIES
The following table summarizes the principal manufacturing, warehouse and
office facilities owned or leased by the Company:
<TABLE>
<CAPTION>
Location and Business Size (sq. feet) Owned/Leased
- - ----------------------------------------------------------------
DISTRIBUTED PRODUCTS GROUP
- - --------------------------
<S> <C> <C>
Enerpac
Columbus, Wisconsin 130,000 Leased
Veenendaal, Netherlands 98,000 Owned
Troyes, France 42,000 Leased
Tokyo, Japan 33,000 Leased
Pachuca, Mexico 24,000 Leased
GB Electrical
Glendale, Wisconsin 165,000 Leased
Matthews, North Carolina 33,000 Owned
Alexandria, Minnesota 26,000 Owned
ENGINEERED SOLUTIONS GROUP
- - --------------------------
Power-Packer
Westfield, Wisconsin 49,000 Leased
Oldenzaal, Netherlands 65,000 Owned
APITECH
Butler, Wisconsin 45,000 Leased
Barry Controls
Brighton, Massachusetts 227,000 Leased
Burbank, California 307,000 Leased
Hersham, England 37,000 Leased
WRIGHT LINE
- - -----------
Worcester, Massachusetts 210,000 Owned
</TABLE>
In addition to these properties, the Company utilizes a number of smaller
facilities in South Korea, Spain, Italy, Canada, France, Germany, Australia,
Russia, Switzerland, Singapore, India, the United Kingdom and the United
States. The Company's headquarters are based in a leased facility in Butler,
Wisconsin, which is also utilized by Enerpac and Power-Packer.
The Company's strategy is to lease properties when available and economically
advantageous. Leases for the majority of the Company's facilities include
renewal options. For additional information, see Note H - "Leases" in Notes to
Consolidated Financial Statements. The Company believes its current properties
are well maintained and in general, are adequately sized to house existing
operations. The Company intends to construct a manufacturing and warehousing
facility in South Korea within the next two years to support its expansion in
that emerging market. Further, a minor addition will be made to the Wright
Line facility in Worcester, Massachusetts to house a new paint line. Funding
for these projects is expected to come from operating cash flow.
<PAGE> 8
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings which have arisen in the
normal course of its business. These legal proceedings typically include
product liability, environmental and patent claims. (For further information
related to environmental claims, refer to "Environmental Compliance" on page
6). The Company has recorded reserves for loss contingencies based on the
specific circumstances of each case. Such reserves are recorded when the loss
is probable and can be reasonably estimated. In the opinion of management, the
resolution of these contingencies will not have a materially adverse effect on
the Company's financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of all of the executive officers of the Company
as of November 16, 1994 are listed below.
<TABLE>
<CAPTION>
Name Age Position
- - ---- --- --------
<S> <C> <C>
Richard G. Sim 50 Chairman, President and Chief Executive Officer; Director
William J. Albrecht 43 Senior Vice President, Engineered Solutions Group
Robert G. Deuster 44 Senior Vice President, Distributed Products Group
Alexander D. van Eyck 53 Senior Vice President, Asian Operations
Robert C. Arzbaecher 34 Vice President, Chief Financial Officer
Douglas R. Dorszynski 42 Vice President, Tax and Treasurer
Louis E. Font 41 Vice President, Human Resources
Robert T. Foote, Jr. 53 Vice President, Business Development
Dale A. Knutson 62 Vice President, Technology
Theodore M. Lecher 43 Vice President, President GB Electrical, Inc.
Andrew G. Lampereur 31 Controller
Anthony W. Asmuth III 52 Secretary
</TABLE>
Richard G. Sim was elected President and Chief Operating Officer on August 1,
1985, Chief Executive Officer effective September 1, 1986, and Chairman of the
Board effective November 1, 1988. From January, 1982 through August 1, 1985,
Mr. Sim was a General Manager in the General Electric Medical Systems Business
Group. He is also a director of The Gehl Company and IPSCO Inc.
<PAGE> 9
William J. Albrecht was named Senior Vice President of the Engineered Solutions
Group in May, 1994. Prior to that he served as Vice President and President of
Power-Packer and APITECH since January, 1991. He joined the Company in March,
1989 as General Manager of the APITECH Division in the United States. Prior to
joining the Company, Mr. Albrecht was Director of National Accounts and
Industrial Power Systems at Generac Corp. from 1987 to 1989 and Vice
President-Sales at NP Marketing from 1985 to 1987.
Robert G. Deuster was appointed Senior Vice President of the Distributed
Products Group in May, 1994. He had served as a Vice President since August,
1988, and was named President of Barry Controls in August, 1989. From March,
1987 to August, 1989, Mr. Deuster had responsibility for the APITECH business
worldwide. From November, 1985, to March, 1987, he was Vice President
Marketing and Sales for Enerpac in the United States. Prior to joining the
Company in 1985, Mr. Deuster spent 10 years at General Electric in engineering
and as Manager of Marketing in its Medical Systems Business Group.
Alexander D. van Eyck joined the Company as Senior Vice President, Asian
Operations in February, 1992. In this position he has oversight and business
development responsibilities for all of the Company's businesses in Japan and
Korea. From 1990 until joining the Company, Mr. van Eyck had served as
President and Chief Executive Officer of Concurrent Nippon Corp. in Japan.
Prior to that, he was Partner, Nakamura International from 1988 to 1990, and
President of Apple Computers Japan, Inc. from 1985 to 1988.
Robert C. Arzbaecher was named Vice President, Chief Financial Officer in
October, 1994. He had served as Vice President, Finance of the Distributed
Products Group from August, 1993 to October, 1994. He joined the Company in
January, 1992 as Controller. From May, 1988 to December, 1991, Mr. Arzbaecher
was employed by Grabill Aerospace Industries LTD, where he last held the
position of Chief Financial Officer. Prior to 1988, Mr. Arzbaecher held
various financial positions at Farley Industries Inc. and at Grant Thornton and
Company, a public accounting firm.
Douglas R. Dorszynski was appointed Vice President, Tax and Treasurer in July,
1994. Mr. Dorszynski joined the Company in 1983 as Corporate Tax Manager and
was subsequently appointed Director, Tax and Special Project Planning in 1985.
Prior to joining the Company, Mr. Dorszynski was employed by Arthur Young &
Co., a public accounting firm, from 1978 to 1983.
Louis E. Font was elected Vice President, Human Resources in October, 1994.
From March, 1994 to October, 1994 Mr. Font served as Vice President, Human
Resources for the Distributed Products Group. He served from May, 1992 to
March, 1994 as Vice President, Human Resources for Enerpac Americas. Prior to
joining the Company in 1992, Mr. Font was employed by General Electric for 12
years, holding various human resource positions.
Robert T. Foote, Jr. was appointed Vice President, Business Development on
September 1, 1992. Mr. Foote was Vice President and Chief Financial Officer
from August 1988 to August 1992. He was appointed a Vice President in July
1987 and has been a member of the corporate staff since 1984. Prior to that,
he held various divisional managerial positions. Mr. Foote has been employed
by the Company since 1971.
Dale A. Knutson has served as Vice President, Technology since May, 1987. From
1982 until May, 1987, he held the position of Vice President - Product
Engineering. Mr. Knutson has been associated with the Company since 1969.
Theodore M. Lecher has served as President of GB Electrical, Inc. (Gardner
Bender, Inc. prior to its acquisition by the Company in February, 1988) since
September, 1986, and as a Company Vice President since August, 1988. He was
Vice President-General Manager of Gardner Bender, Inc. from 1983 to 1986, and
prior to that Director of Sales and Marketing since 1980. Mr. Lecher has been
associated with GB Electrical, Inc. since 1977.
<PAGE> 10
Andrew G. Lampereur was appointed Corporate Controller in May, 1994. He
joined the Company in May, 1993 as Assistant Corporate Controller. Mr.
Lampereur was employed by Terex Corporation from 1988 to May, 1993, where he
held a number of financial positions, most recently Corporate Controller of its
Fruehauf Trailer Corporation subsidiary. Prior to that, he was employed at
Price Waterhouse, a public accounting firm, from 1985 to 1988.
Anthony W. Asmuth III is a partner in the law firm of Quarles & Brady,
Milwaukee, Wisconsin, having joined that firm in 1989. Prior to joining
Quarles & Brady, he was a partner with the law firm of Whyte & Hirschboeck
Dudek S.C. Mr. Asmuth had previously served as Secretary of the Company from
January, 1986 to January, 1993. He was re-elected Secretary in July, 1994.
Each officer is appointed by the Board of Directors and holds office until he
or she resigns, dies, is removed or a different person is appointed to the
office. The Board of Directors generally appoints officers at its meeting
following the Annual Meeting of Shareholders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on the New York Stock Exchange under the
symbol APW. At October 31, 1994, the approximate number of record shareholders
of common stock was 517. The high and low sales prices of the common stock by
quarter for each of the past two years are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR PERIOD HIGH LOW
- - ----------- -------------------------- ----------- ----------
<S> <C> <C> <C>
1994 June 1 to August 31 $22 1/2 $19
March 1 to May 31 22 5/8 16 3/8
December 1 to February 28 19 3/8 14 5/8
September 1 to November 30 18 1/4 14 1/2
1993 June 1 to August 31 17 1/8 15 3/8
March 1 to May 31 18 1/2 16 1/8
December 1 to February 28 18 1/2 15
September 1 to November 30 16 1/4 13 5/8
</TABLE>
Quarterly dividends of $0.03 per share were declared and paid for each of the
quarters above.
<PAGE> 11
ITEM 6. SELECTED FINANCIAL DATA
(In Millions, except per share amounts)
<TABLE>
<CAPTION>
For the years ended August 31,
-------------------------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Sales $433.6 $398.7 $404.3 $400.6 $406.9
Gross Profit 163.5 151.0 154.9 157.1 166.0
Earnings
Continuing Operations before
Cumulative Effect of Accounting
Change 16.9 7.1 (1) 8.5 (1) 10.8 (1) 18.7
Cumulative Effect of Accounting Change - (4.4) - - -
Discontinued Operations (0.4) (3.8) (32.9) (2.9) 0.8
------- ------- ------- ------- -------
Net Earnings 16.5 (1.1) (24.4) 7.8 19.5
Earnings per Share
Continuing Operations before
Cumulative Effect of Accounting
Change $ 1.27 $ 0.54 (1) $ 0.65 (1) $ 0.83 (1) $ 1.41
Cumulative Effect of Accounting Change - (0.33) - - -
Discontinued Operations (0.03) (0.29) (2.51) (0.23) .06
------- ------- ------- ------- -------
Net Earnings per Share $ 1.25 $ (0.08) $ (1.87) $ 0.60 $ 1.48
Dividends per Common Share $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12
<CAPTION>
At August 31,
-------------------------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total Assets 317.4 306.3 301.5 326.2 393.6
Long-term Obligations 88.7 97.5 108.0 118.6 142.5
Shareholders' Equity 107.3 88.0 96.6 116.8 115.5
Actual Shares Outstanding 13.2 13.0 13.0 12.9 12.8
</TABLE>
(1) Earnings from Continuing Operations before Cumulative Effect of Accounting
Change for 1993, 1992 and 1991 reflect after-tax restructuring charges of
$4,968 ($.38 per share), $3,114 ($.24 per share) and $3,034 ($.23 per share),
respectively. In addition, 1992 includes a liquidation of LIFO inventory which
had the effect of increasing earnings by $1,339 ($.10 per share).
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
APPLIED POWER INC. FINANCIAL REVIEW
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
RESULTS OF CONTINUING OPERATIONS
- - ------------------------------------------------------------------------------------------------------------
Years Ended August 31, Percentage of Net Sales
- - ------------------------------------------------------------------------------------------------------------
1994 1993 1992 1994 1993 1992
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $433.6 $398.7 $404.3 100.0% 100.0% 100.0%
Gross Profit 163.5 151.0 154.9 37.7 37.9 38.3
Operating Expenses 121.3 117.3 112.7 28.0 29.4 27.9
Restructuring Expenses - 7.7 4.7 - 1.9 1.2
Operating Earnings 42.2 26.0 37.5 9.7 6.5 9.3
Other Expenses 16.9 16.4 22.1 3.9 4.1 5.5
Earnings Before Income Taxes 25.3 9.6 15.4 5.8 2.4 3.8
Income Taxes 8.4 2.5 6.9 1.9 0.6 1.7
Earnings Before Accounting Change 16.9 7.1 8.5 3.9 1.8 2.1
Cumulative Effect of Accounting Change - 4.4 - - 1.1 -
Net Earnings $ 16.9 $ 2.7 $ 8.5 3.9% 0.7% 2.1%
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
The preceding table sets forth the results of continuing operations of the
Company for the years ended August 31, 1994, 1993 and 1992.
The Company recorded restructuring charges and adopted new accounting
pronouncements during the last three years which impact the comparability of
financial information. The following table reconciles reported net earnings
from continuing operations to net earnings from continuing operations excluding
restructuring costs and the cumulative effect of accounting changes:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
EARNINGS COMPARISON 1994 1993 1992
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings from Continuing Operations $16.9 $2.7 $8.5
Restructuring - after tax 5.0 3.1
Cumulative of effect of accounting change 4.4
- - ------------------------------------------------------------------------------------------------------------
TOTALS $16.9 $12.1 $11.6
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
[Graph A - see attached appendix to this report]
NET SALES
Net sales increased 9% in 1994 as all operating groups reported improvement
over the prior two years. Overall sales from the Distributed Products Group
(the "DPG"), which consists of Enerpac and GB Electrical, increased 4% from
1993, reflecting $1.8 million of sales from Palmer Industries (acquired in
1994), as well as growth in North America and the developing Asia Pacific and
Latin American markets. DPG sales in Europe and Japan were lower than the prior
year due to weak conditions in those economies in the first half of 1994.
The Engineered Solutions Group (the "ESG"), consisting of Barry Controls,
APITECH and Power-Packer, posted a 10% sales gain over 1993. The majority of
the improvement took place in the automotive and transportation markets in
North America and Europe. Improvement also resulted from the sale of products
introduced in recent years such as Power-Packer's multi-cylinder convertible
top actuation systems, Barry Control's DuoPlexx and industrial products and
APITECH's automotive suspension and motion control systems.
Sales of the LAN Management System ("LMS") product line, which was introduced
in the second half of 1993, increased significantly in 1994 and was the main
reason for Wright Line's 29% sales growth from 1993. Wright Line also
introduced in 1994 it's Addendum product line, consisting of reconfigurable
laboratory systems.
<PAGE> 13
Total sales in 1993 were 1% lower than 1992 reflecting lower shipments from
Wright Line, as well as the impact of economic downturns in Europe and Japan.
European sales declined 14% from 1992 to 1993, partially offset by gains in
emerging markets and North America. ESG sales from new products were partially
offset by declines in cyclical markets that Barry Controls competes in,
including commercial aerospace and defense.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
GEOGRAPHIC SALES 1994 1993 1992
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
North America $279.6 $259.7 $250.7
Latin America 11.3 10.2 9.6
Europe 99.2 87.3 101.8
Japan and Asia Pacific 43.5 41.5 42.2
- - ------------------------------------------------------------------------------------------------------------
TOTALS $433.6 $398.7 $404.3
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
[Graph B - see attached appendix to this report]
Acquisitions, price changes and foreign exchange rate changes have not had a
significant impact on the comparability of net sales during the last three
years.
GROSS PROFIT
Gross profit increased to $163.5 million in 1994, compared to $151.0 million
and $154.9 million in 1993 and 1992, respectively. The improvement results from
the 9% increase in sales in 1994. Accounting under SFAS 109 (see "Adoption of
New Accounting Pronouncements" below) had the effect of reducing gross profit
approximately $2.2 million in both 1994 and 1993, relative to 1992. The
liquidation of LIFO inventories increased gross profit approximately $2.2
million in 1992. Comparative gross profit percentages, assuming the Company had
adopted SFAS 109 in 1992 and had not received benefit from the LIFO
liquidation, are as follows:
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
GROSS PROFIT BY SEGMENT 1994 1993 1992
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Distributed Products Group 43.4% 45.4% 45.0%
Engineered Solutions Group 28.2 27.4 24.6
Wright Line 43.0 36.4 41.2
- - ------------------------------------------------------------------------------------------------------------
TOTALS 37.7% 37.9% 37.2%
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
Items influencing overall gross profit percentages include relative sales mix
between the DPG, ESG and Wright Line and production levels. The DPG experienced
erosion in its gross profit percentage in 1994 at Enerpac due to inefficiencies
during the consolidation of manufacturing, higher discounts to distributors and
increased shipments to OEM customers (which generate lower margins than non-OEM
customers). Gross profit percentages from the ESG and Wright Line improved due
to benefits from prior year restructuring (see "Restructuring Expense" below),
as well as higher production levels. The ESG generates lower gross profit
percentages than either Wright Line or the DPG because a much higher proportion
of its sales are made to OEM customers.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES 1994 1993 1992
- - ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Engineering $13.5 $12.3 $10.9
Selling and Marketing 72.0 68.1 67.2
Administration 35.8 36.9 34.6
- - ------------------------------------------------------------------------------------------------------------
TOTALS $121.3 $117.3 $112.7
- - ------------------------------------------------------------------------------------------------------------
</TABLE>
OPERATING EXPENSES
Engineering expense increased 24% over the last two years to $13.5 million due
to new product development programs. The Company believes that its investment
in technology in all businesses will continue to provide it with a competitive
advantage.
<PAGE> 14
Selling and marketing expenses increased from $67.2 million in 1992 to $68.1
million in 1993 and $72.0 million in 1994. The majority of the increase since
1992 relates to variable selling expenses (primarily commissions and volume
rebates) as well as expenditures for geographic expansion into emerging
markets. During the last few years, the Company opened sales offices in Moscow
and India, and increased its presence in Mexico, Canada and Korea.
Administrative expenses totalled $35.8 million, $36.9 million and $34.6 million
in 1994, 1993 and 1992, respectively. The reduction during 1994 reflects the
benefits of restructuring certain European operations. Both 1994 and 1993
include incremental expense over 1992 attributable to SFAS 106 (see "Adoption
of New Accounting Pronouncements" below.)
RESTRUCTURING EXPENSE
The Company recorded $7.7 million of pre-tax restructuring charges ($.38 per
share) in 1993, primarily related to consolidating certain manufacturing,
distribution and administrative functions at Enerpac and Barry Controls
operations in Europe, downsizing field sales and headquarters administrative
staff at retained Wright Line operations, and idle facility costs at Barry
Controls. All but $1.6 million of the restructuring costs had been incurred as
of August 31, 1994, consisting of severance and consolidation expenditures. The
balance of such expenditures will be incurred in the first half of 1995 when
the restructuring is finalized.
During 1992, pre-tax restructuring expenses of $4.7 million ($.24 per share)
were incurred for the transfer and consolidation of selected Barry Controls and
European Power-Packer operations.
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------
OTHER EXPENSE (INCOME) 1994 1993 1992
- - ------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense $11.4 $12.5 $15.3
Amortization expense 5.1 4.9 4.6
Other - net 0.4 (1.0) 2.2
- - ------------------------------------------------------------------------------
</TABLE>
OTHER EXPENSE(INCOME)
The reduction in interest expense during the last three years reflects lower
market interest rates and reduced debt levels. Amortization expense increased
due to incremental amortization of intangible assets added during the last
three years from acquisitions (see "Liquidity and Capital Resources") as well
as the adoption of SFAS 109 in 1993. "Other-net" includes foreign exchange
(gains)losses and miscellaneous other (income)expense. Net foreign exchange
gains were realized in 1993, accounting for the majority of the change in this
caption.
INCOME TAXES
The Company's effective income tax rate is largely impacted by the proportion
of earnings generated inside and outside the US, as well as the utilization of
foreign tax credits in the US. Tax expense in 1994 and 1993 was reduced by
approximately $2.4 million as a result of accounting for income taxes pursuant
to SFAS 109. The effective tax rate in 1992 was higher than the two subsequent
years since SFAS 109 had not been adopted prior to 1993. Higher US earnings,
the utilization of foreign tax credits, deferred tax adjustments and lower
pre-tax income also had a favorable impact on the effective tax rate in 1993.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits" ("SFAS 112") as of
September 1, 1993. SFAS 112 requires the accrual of postemployment benefits
during the years an employee provides service. There was no cumulative effect
or current year impact of adopting this new pronouncement.
<PAGE> 15
Two new accounting pronouncements were adopted as of September 1, 1992 which
impact the comparability of the financial statements. Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other than Pensions" ("SFAS 106"), requires the accrual of
postretirement benefits (such as health care and life insurance) during the
years an employee provides service. Previously, these costs were recognized as
they were paid. The cumulative effect of adopting SFAS 106 was $4.4 million
($.33 per share) in 1993.
Although it impacted gross profit, operating profit, amortization expense and
income tax expense, the adoption of Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" ("SFAS 109"), had no material impact on
net earnings or cash flows in 1993 or 1994. Certain assets and liabilities at
acquired companies that previously had been carried on a net-of-tax basis under
prior accounting rules, were adjusted to a gross basis. This increased
depreciation and amortization expense by approximately $2.4 million in both
1994 and 1993 (relative to 1992) while reducing income tax expense by an equal
amount. As a result, there was no effect on net income.
DISCONTINUED OPERATIONS
In the second quarter of 1994, the Company announced its decision to retain the
remaining Wright Line business, which had been reported as a discontinued
operation since 1992. The Company completed the sale of Wright Line's German
operation in 1993 and Wright Line's Datafile businesses in Canada, Australia,
the U.K. and the US in 1994. The net assets and results of operations for the
retained Wright Line business have been reclassified from discontinued to
continuing operations for all periods presented. However, the results of
operations from June, 1992 to November, 1993 have remained offset against the
reserve previously established for the estimated loss on disposition.
The Company had previously recorded write-downs of $31.3 million ($2.51 per
share) and $5.4 million ($.41 per share) in 1992 and 1993, respectively, to
reflect the estimated loss on disposition of all discontinued operations,
including operating results until the date of disposition. For further
information, see Note B -"Discontinued Operations" in Notes to Consolidated
Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt at August 31, 1994 totalled $103.5 million, a reduction of
$14.4 million since the beginning of the year. End-of-year debt to total
capital was approximately 45%, its lowest point since 1989. Approximately $22.5
million of cash was generated from operating activities in 1994, $12.7 million
of which was used to fund capital expenditures. Dividends of $1.6 million were
paid during the year. The Company utilized approximately $1.5 million of cash
during 1994 to acquire certain assets of Palmer Industries. It used an
additional $0.9 million to increase its ownership in Applied Power Korea from
approximately 50% to 90%. Total cash generated from discontinued operations was
$6.9 million, including $6.2 million from the sale of the Datafile operations.
The resulting cash flow, net of the increase in cash balances, was used to
reduce debt.
Primary working capital (net receivables plus net inventory less trade accounts
payable) increased approximately $15 million during 1994 as a result of higher
sales volume (receivables), geographic expansion (inventory) and safety stock
during manufacturing consolidation. The Company believes that primary working
capital will remain stable or decline in 1995 as a result of improved asset
management and physical distribution consolidation programs.
The Company replaced two expiring revolving credit facilities in the fourth
quarter of 1994 with a single $40 million multicurrency revolving credit
agreement that expires in August, 1999. The expiring $25 million Accounts
Receivable Financing Program was also replaced in the fourth quarter of 1994
with a similar new facility.
Outstanding indebtedness declined $6.9 million in 1993. The Company generated
$12.7 million of cash in operating activities during the year and used $12.2
million on capital expenditures. Dividends of $1.6 million were also paid.
<PAGE> 16
Total borrowings decreased $10.6 million in 1992. Cash of $29.0 million was
generated from operations. Major expenditures included $9.7 million for fixed
asset additions and $8.9 million for the acquisition of the remaining interests
in Barry Controls' German business and Enerpac's Mexican operation. Dividends
totalling $1.6 million were also paid.
In order to minimize interest expense, the Company intentionally maintains low
cash balances and uses available cash to reduce short-term bank borrowings.
Funds available under unused credit lines totalled $45.8 million as of August
31, 1994. The Company believes that such availability, plus funds generated
from operations will be adequate to fund operating activities, including
modestly higher capital expenditures, for the foreseeable future. The Company
will be in a position to meet future scheduled debt maturities.
[Graph C - see attached appendix to this report]
INFLATION
No meaningful measures of inflation are available because the Company has a
significant number of small operations which operate in countries with diverse
rates of inflation and currency rate movements.
<PAGE> 17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Quarterly financial data for 1994 and 1993 is as follows:
(In millions, except per share amounts)
<TABLE>
<CAPTION>
1994
------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Continuing Operations
Net Sales $ 103.6 $ 101.9 $ 111.3 $ 116.8
Gross Profit 38.6 37.7 42.5 44.7
Earnings 2.9 3.3 5.4 5.3
Discontinued Operations (0.3) - - -
---------- ---------- ---------- ----------
Net Income 2.6 3.3 5.4 5.3
========== ========== ========== ==========
Earnings (Loss) per Share
Continuing Operations $ 0.22 $ 0.25 $ 0.40 $ 0.40
Discontinued Operations (0.03) - - -
---------- ---------- ---------- ----------
Total $ 0.20 $ 0.25 $ 0.40 $ 0.40
========== ========== ========== ==========
<CAPTION>
1993
------------------------------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Continuing Operations
Net Sales $ 102.3 $ 94.9 $ 102.4 $ 99.1
Gross Profit 39.0 35.1 39.5 37.4
Earnings (Loss) Before Cumulative
Effect of Accounting Change 3.3 1.8 3.8 (1.8)
Cumulative Effect of Accounting Change (4.4) - - -
Discontinued Operations - 0.8 - (4.6)
---------- ---------- ---------- ----------
Net Income (Loss) (1.1) 2.6 3.8 (6.4)
========== ========== ========== ==========
Earnings (Loss) per Share
Continuing Operations $ 0.25 $ 0.13 $ 0.30 $ (0.14)
Cumulative Effect of Accounting Change (0.33) - - -
Discontinued Operations - 0.06 - (0.35)
---------- ---------- ---------- ----------
Total $ (0.08) $ 0.19 $ 0.30 $ (0.49)
========== ========== ========== ==========
</TABLE>
The Consolidated Financial Statements are included on pages 22 to 37 and are
incorporated by reference herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is incorporated by reference from the
"Election of Directors" and "Other Information -- Compliance with Section 16(a)
of the Exchange Act" sections of the Company's Proxy Statement for its Annual
Meeting of Shareholders to be held on January 9, 1995 (the "1995 Annual Meeting
Proxy Statement"). See also "Executive Officers of the Registrant" in Part I
hereof.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from the
"Board Meetings, Committees and Director Compensation" and "Executive
Compensation" sections of the 1995 Annual Meeting Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from the
"Certain Beneficial Owners" and "Election of Directors" sections of the 1995
Annual Meeting Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
<PAGE> 19
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. Financial Statements
See "Index to Financial Statements and Financial Statement
Schedules" on page 20 which is incorporated herein by
reference.
2. Financial Statement Schedules
See "Index to Financial Statements and Financial Statement
Schedules" on page 20 and the Financial Statement Schedules on
pages 38 to 42, all of which is incorporated herein by
reference.
3. Exhibits
See "Index to Exhibits" on page 45 which is incorporated herein
by reference.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed in the fourth quarter or through
the date of this report.
<PAGE> 20
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Page
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ----
Independent Auditors' Report 21
Consolidated Statement of Earnings
For the years ended August 31, 1994, 1993 and 1992 22
Consolidated Balance Sheet
As of August 31, 1994 and 1993 23
Consolidated Statement of Shareholders' Equity
For the years ended August 31, 1994, 1993 and 1992 24
Consolidated Statement of Cash Flows
For the years ended August 31, 1994, 1993 and 1992 25
Notes to Consolidated Financial Statements 26-37
INDEX TO FINANCIAL STATEMENT SCHEDULES
Independent Auditors' Report 21
Schedule II - Amounts Receivable from Related Parties 38
Schedule VII - Guarantees of Securities of Other Issuers 39
Schedule VIII - Valuation and Qualifying Accounts 40
Schedule IX - Short-term Borrowings 41
Schedule X - Supplementary Income Statement Data 42
All other schedules are omitted because they are not applicable, not required,
or because the required information is included in the consolidated financial
statements or notes thereto.
<PAGE> 21
Independent Auditors' Report
To the Shareholders and Directors of Applied Power Inc.:
We have audited the accompanying consolidated balance sheets of Applied Power
Inc. and subsidiaries as of August 31, 1994 and 1993, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended August 31, 1994. Our audits also
included the consolidated financial statement schedules listed in the Index at
Item 14. These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express
an opinion on the financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evalutaing the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Applied Power Inc. and
subsidiaries at August 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the three years in the period ended August 31,
1994 in conformity with generally accepted accounting principles. Also, in our
opinion, such consolidated financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
As discussed in Note M to the consolidated financial statements, effective
September 1, 1992 the Company changed its method of accounting for
postretirement benefits other than pensions to conform with Statement of
Financial Accounting Standards No. 106.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
September 30, 1994
<PAGE> 22
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Years ended August 31,
---------------------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
Net Sales $ 433,644 $ 398,727 $ 404,286
Cost of products sold 270,120 247,741 249,428
------------- ------------- -------------
Gross Profit 163,524 150,986 154,858
Engineering, selling and administrative expenses 121,315 117,295 112,681
Restructuring expenses 7,721 4,706
------------- ------------- -------------
Operating Earnings from Continuing Operations 42,209 25,970 37,471
Other Expense (Income)
Interest expense 11,362 12,469 15,332
Amortization of intangible assets 5,092 4,914 4,606
Other - net 457 (1,003) 2,144
------------- ------------- -------------
Earnings from Continuing Operations Before
Income Tax Expense 25,298 9,590 15,389
Income Tax Expense 8,402 2,504 6,936
------------- ------------- -------------
Earnings from Continuing Operations Before Cumulative
Effect of Accounting Change 16,896 7,086 8,453
Cumulative Effect of Accounting Change -
Postretirement Benefits
(4,335)
------------- ------------- -------------
Earnings from Continuing Operations 16,896 2,731 8,453
Discontinued Operations, net of income taxes
Loss (Income) from operations previously
offset against reserve for estimated
on disposition (348) 1,618 241
Loss from discontinued operations (1,792)
Provision for loss on disposition (5,400) (31,307)
------------- ------------- -------------
Loss from Discontinued Operations (348) (3,782) (32,858)
------------- ------------- -------------
Net Earnings (Loss) $ 16,548 $ (1,051) $ (24,405)
============= ============= =============
Earnings (Loss) Per Share
Continuing Operations $ 1.27 $ 0.54 $ 0.65
Cumulative Effect of Accounting Change (0.33)
Discontinued Operations (0.03) (0.29) (2.51)
------------- ------------- -------------
Net Earnings (Loss) Per Share $ 1.25 $ (0.08) $ (1.87)
============= ============= =============
Weighted Average Shares Outstanding (In Thousands) 13,289 13,099 13,081
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 23
APPLIED POWER INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
August 31,
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,907 $ 1,320
Accounts receivable, less allowances of $3,131 and $3,053, respectively 64,259 49,463
Inventories 94,949 85,730
Prepaid expenses 13,694 15,143
Net assets held for sale 12,035
----------- -----------
Total Current Assets 174,809 163,691
Other Assets 6,390 8,181
Goodwill, net of accumulated amortization of $9,404 and $7,625, respectively 56,708 57,645
Other Intangibles, net of accumulated amortization of $17,141 and $13,828, respectively 11,750 14,812
Property, Plant and Equipment
Property 1,643 1,182
Plant 27,724 21,122
Machinery and equipment 109,425 100,732
----------- -----------
138,792 123,036
Less: Accumulated depreciation (71,047) (61,048)
----------- -----------
Net Property, Plant and Equipment 67,745 61,988
----------- -----------
Total Assets $ 317,402 $ 306,317
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 14,707 $ 20,401
Trade accounts payable 35,219 26,176
Accrued compensation and benefits 16,335 13,177
Income taxes payable 8,190 6,500
Current maturities of long-term debt 10,792 10,745
Other current liabilities 16,722 24,994
----------- -----------
Total Current Liabilities 101,965 101,993
Long-term Debt, less current portion 77,956 86,785
Deferred Income Tax 16,768 17,649
Other Deferred Liabilities 13,402 11,880
Shareholders' Equity
Class A Common stock, $.20 par value, authorized 40,000,000 shares, issued and
outstanding 13,152,454 and 13,005,116 shares, respectively 2,630 2,601
Additional paid-in capital 23,648 21,654
Retained earnings 75,802 60,823
Cumulative translation adjustments 5,231 2,932
----------- -----------
Total Shareholders' Equity 107,311 88,010
----------- -----------
Total Liabilities and Shareholders' Equity $ 317,402 $ 306,317
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 24
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Years Ended August 31, 1994, 1993 and 1992
---------------------------------------------------------------------------
Capital Stock
---------------------- Additional Cumulative
Class A Class B Paid-in Retained Translation
Common Common Capital Earnings Adjustments
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balances at September 1, 1991 $ 2,115 $ 467 $ 20,766 $ 89,390 $ 4,457
Net loss for the year (24,405)
Cash dividends declared - $0.12 per share (1,553)
Class A common stock contributed to ESOP 4 295
Conversion of Class B to Class A stock 467 (467)
Exercise of stock options 6 113
Other 126
Remove cumulative translation adjustments
relating to discontinued operations (1,115)
Currency translation adjustments 6,312
-------- ------- --------- --------- ---------
Balances at August 31, 1992 2,592 0 21,300 63,432 9,654
Net loss for the year (1,051)
Cash dividends declared - $0.12 per share (1,558)
Exercise of stock options 9 354
Currency translation adjustments (6,722)
-------- ------- --------- --------- ---------
Balances at August 31, 1993 2,601 0 21,654 60,823 2,932
Net earnings for the year 16,548
Cash dividends declared - $0.12 per share (1,569)
Exercise of stock options 29 1,850
Other 144
Currency translation adjustments 2,299
-------- ------- --------- --------- ---------
Balances at August 31, 1994 $ 2,630 $ 0 $ 23,648 $ 75,802 $ 5,231
======== ======= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 25
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Years ended August 31,
--------------------------------------------------
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Earnings from Continuing Operations $ 16,896 $ 2,731 $ 8,453
Adjustments to reconcile earnings from continuing
operations to net cash provided by operating activities:
Depreciation and amortization 19,406 19,767 17,755
Other non-cash charges, principally restructuring and
adoption of SFAS 106 8,710 4,730
Provision for deferred taxes (789) (6,425) 455
Changes in operating assets and liabilities, excluding
the effects of business acquisitions and disposals:
Accounts receivable (12,855) (2,073) 1,231
Inventories (7,182) (9,515) 8,014
Prepaid expenses and other assets 3,156 2,167 (1,328)
Trade accounts payable 8,509 694 (3,144)
Other liabilities (6,125) (4,312) (3,538)
Income taxes payable 1,462 973 (3,652)
----------- ----------- -----------
Net Cash Provided by Operating Activities 22,478 12,717 28,976
Investing Activities
Proceeds on the sale of property, plant and equipment 1,342 2,073 920
Additions to property, plant and equipment (12,707) (12,217) (9,686)
Cash used to purchase subsidiaries (2,446) (8,922)
Other 142 627 1,008
----------- ----------- -----------
Net Cash Used in Investing Activities (13,669) (9,517) (16,680)
Financing Activities
Proceeds from issuance of long-term debt 13,959 3,484 27,463
Principal payments on long-term debt (33,755) (12,528) (12,517)
Net borrowings (repayments) on short-term credit facilities (5,700) 4,926 (879)
Net commercial paper borrowings (repayments) 9,947 (28,528)
Dividends paid on common stock (1,569) (1,558) (1,533)
Capital stock transactions and other 1,879 754 119
----------- ----------- -----------
Net Cash Used in Financing Activities (15,239) (4,922) (15,895)
Effect of Exchange Rate Changes on Cash 132 (436) 590
----------- ----------- -----------
Net Cash Used in Continuing Operations (6,298) (2,158) (3,009)
Discontinued Operations Activities
Proceeds from sale of Datafile 6,222
Other 663 31 2,852
----------- ----------- -----------
Net Cash Provided by Discontinued Operations 6,885 31 2,852
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents 587 (2,127) (157)
Cash and Cash Equivalents - Beginning of Year 1,320 3,447 3,604
----------- ----------- -----------
Cash and Cash Equivalents - End of Year $ 1,907 $ 1,320 $ 3,447
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 26
APPLIED POWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands, except per share amounts)
NOTE A - SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include the
accounts of Applied Power Inc. and its majority-owned subsidiaries ("Applied
Power" or the "Company"). All significant intercompany balances, transactions
and profits have been eliminated.
Cash and Cash Equivalents: The Company considers all highly liquid investments
with original maturities of 90 days or less to be cash equivalents.
Inventories: Inventories are comprised of material, direct labor and
manufacturing overhead, and are stated at the lower of cost or market.
Property, Plant and Equipment: Property, plant and equipment are stated at
cost. Plant and equipment are depreciated over the estimated useful lives of
the assets under the straight-line method for financial reporting purposes and
both straight-line and accelerated methods for tax purposes. Expenditures for
maintenance and repairs not expected to extend the useful life of an asset
beyond its normal useful life are expensed.
Intangible Assets: Goodwill is amortized on a straight-line basis over forty
years. The Company periodically evaluates the carrying value of goodwill by
calculating the present value of anticipated future cash flows. Other
intangible assets, consisting primarily of purchased patents, trademarks and
noncompete agreements, are amortized over periods from five to seventeen years.
Revenue Recognition: Revenues and costs of products sold are recognized as the
related products are shipped.
Research and Development Costs: Research and development costs are generally
expensed as incurred. Such costs incurred in the development of new products or
significant improvements to existing products totalled approximately $7,446,
$5,878 and $5,594 in 1994, 1993 and 1992, respectively.
Income Taxes: Prior to 1993, the Company accounted for income taxes in
accordance with Accounting Principles Board Opinion No. 11. Effective
September 1, 1992, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes". For further
information, see Note N - "Income Taxes".
Earnings per Share: Earnings per share is based on the weighted average number
of common and common equivalent shares outstanding during the year. The
dilutive effect of common stock equivalents is calculated using the treasury
stock method.
Foreign Currency Translation: Foreign currency translation adjustments are
generally excluded from the Consolidated Statement of Earnings and are included
in Cumulative Translation Adjustments in the Consolidated Balance Sheet. Gains
and losses resulting from foreign currency transactions are included in Other
Expense (Income) in the Consolidated Statement of Earnings.
Financial Instruments: The Company utilizes interest rate swap agreements to
manage interest rate exposure. The differential to be paid or received is
recorded as interest rates change. For further information, see Note
G-"Long-term Debt". The Company also utilizes, in limited circumstances,
foreign currency forward contracts. Gains and losses resulting from these
instruments are recognized in the same period as the underlying transaction.
The Company was not a party to any foreign currency contracts at August 31,
1994. Other than foreign currency forward contracts and interest rate swap
agreements, the Company does not utilize or trade derivative financial
instruments.
<PAGE> 27
Reclassifications: Certain amounts shown for 1993 and 1992 have been
reclassified to conform to the current year presentation.
Recent Accounting Pronouncement: The Company adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits", which requires the accrual of
postemployment benefits during the years an employee provides service. The
adoption of this pronouncement in 1994 did not have a material impact on the
Company's financial position and results of operations, because the Company has
historically accounted for postemployment benefits consistent with SFAS No. 112
guidelines.
NOTE B - DISCONTINUED OPERATIONS
In the second quarter of 1994, the Company announced its decision to retain the
remaining Wright Line business, which had been included in discontinued
operations since the third quarter of 1992. The retained business has
refocussed its business strategy on technical furniture solutions for offices
and laboratories.
The Company had originally intended to sell all of Wright Line in a single
transaction in 1993. However, management subsequently determined that proceeds
could be maximized by selling the assets in a series of separate transactions.
The Company completed the sale of certain assets of Wright Line's German
operation to an existing distributor in exchange for the assumption of certain
liabilities. In early 1994, Wright Line's Datafile businesses in Canada,
Australia, the UK and the US were sold, generating proceeds of $6.2 million. A
short time later, Wright Line sold its Tapeseal product line to a third party
for future compensation.
Wright Line's owned manufacturing and office facility in Worcester,
Massachusetts (the "Worcester Facility") was placed for sale in 1993. The
Company had intended to sell the Worcester Facility and relocate the downsized
US Wright Line business to a smaller leased facility, thereby making it more
attractive to potential buyers. An agreement was reached in the first quarter
of 1994 to sell the Worcester Facility for approximately $7.5 million. The
agreement was subsequently cancelled, and the Company decided to retain the
Worcester Facility due to Wright Line's improved performance and growth
prospects. As a result, the Worcester Facility was reclassified from Net Assets
Held for Sale to Property, Plant and Equipment in the Consolidated Balance
Sheet.
The operating results from the retained Wright Line operations have been
reclassified from discontinued operations to continuing operations for all
periods presented. However, the results of the retained operations for the
period June, 1992 through November, 1993 have remained offset against the
reserve previously established for operating losses until disposition. The
Company had previously recorded provisions of $31.3 million ($2.51 per share)
and $5.4 million ($.41 per share) in 1992 and 1993, respectively, to accrue for
the estimated loss on the sale of Wright Line and a small French subsidiary,
the sale of a previously vacated Wright Line building (completed in 1992),
estimated operating losses prior to disposition, and estimated disposition
costs. Substantially all of the provisions for loss on disposition of
discontinued operations recorded in 1992 and 1993 were utilized for the
operations, product lines and assets sold since 1992. The net assets of the
retained operations were returned to the appropriate balance sheet captions
based on their historical cost. After reviewing the value of such assets, the
Company determined that no impairment had taken place.
The following is a summary of selected financial data for the retained
operations during the periods they were included in discontinued operations:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------
1993 1992
- - ----------------------------------------------------------------------------
<S> <C> <C>
Total Assets (at August 31) $23,314 $22,296
Total Liabilities (at August 31) 16,439 17,146
Net Sales 38,239 46,291
Operating Earnings(Loss) (2,372) 2,348
- - ----------------------------------------------------------------------------
</TABLE>
<PAGE> 28
NOTE C - ACQUISITIONS
The Company completed the acquisition of certain assets of Palmer Industries,
Inc. ("Palmer") on October 1, 1993 for approximately $1,534 in cash and a $350
note. Approximately $490 of the purchase price was assigned to Goodwill.
Palmer, based in Alexandria, Minnesota, is a leading manufacturer of plastic
and metal staples, fasteners and straps. The operating results of Palmer
subsequent to October 1, 1993 are included in the Consolidated Statement of
Earnings.
On March 21, 1994, the Company increased its ownership interest in Applied
Power Korea from approximately 50% to 90%. Cash of $912 was used in the
acquisition which resulted in Goodwill of $572. The operating results of this
subsidiary have historically been included in the Consolidated Statement of
Earnings.
During the second quarter of fiscal 1992, the Company completed the
acquisitions of the remaining interests of two jointly-owned companies. In
December, 1991, the remaining 51% interest in Barry Controls GmbH was acquired
for $4,247 in cash. Approximately $4,022 of the purchase price was assigned to
Goodwill. The operating results of this subsidiary, which historically had been
accounted for under the equity method, are included in the Consolidated
Statement of Earnings subsequent to December 1, 1991. The Company purchased the
remaining 49% interest in Applied Power Mexico S.A. for $4,675 in cash in
February, 1992. Approximately $3,140 of the purchase price was assigned to
Goodwill. The operating results of this subsidiary have historically been
included in the Consolidated Statement of Earnings.
All acquisitions were accounted for using the purchase method.
NOTE D - ACCOUNTS RECEIVABLE FINANCING
As a part of its overall financing strategy, the Company sells to a financial
institution undivided participation interests in designated pools of accounts
receivable, with limited recourse, in an amount not to exceed $30,000 at any
one time. Participation interests in new receivables may be sold as collections
reduce previously sold participation interests. The sold accounts receivable
are reflected as a reduction of receivables in the Consolidated Balance Sheet.
The Company retains collection and administrative responsibilities on the
participation interests sold as agent for the purchaser.
At both August 31, 1994 and 1993, accounts receivable were reduced by $25,000,
representing receivable interests sold under this program. The current accounts
receivable financing agreement expires in August, 1997.
NOTE E - NET INVENTORIES
Inventory cost is determined using the last-in, first-out ("LIFO") method for
substantially all inventory in the United States (approximately 59% and 62% of
total inventories in 1994 and 1993, respectively). The first-in, first-out or
average cost methods are used for all other inventories. If the LIFO method was
not used, inventory balances would be higher than the amounts in the
Consolidated Balance Sheet by approximately $9,748 and $10,458 at August 31,
1994 and 1993, respectively.
During the year ended August 31, 1992, certain LIFO inventory quantities were
reduced, which resulted in a liquidation of LIFO inventory carried at lower
costs prevailing in prior years as opposed to the cost of current year
purchases. The effect was to increase earnings from continuing operations by
$1,339 or $0.10 per share in 1992.
It is not practical to segregate the amounts of raw materials, work-in-process
or finished goods at the respective balance sheet dates, since the segregation
is possible only as the result of physical inventories which are taken at dates
different from the balance sheet dates. The accounting systems at many of the
Company's operating units have not been designed to capture this segregation
due to the very short production cycle of their products and the minimal amount
of work-in-process.
<PAGE> 29
NOTE F - SHORT-TERM BORROWINGS
The Company had borrowings under unsecured lines of credit with banks
aggregating approximately $14,707 and $20,401 at August 31, 1994 and 1993,
respectively. Interest rates vary depending on the currency being borrowed. The
weighted average interest rate on the short-term borrowings was 7.79% at August
31, 1994. The amount of unused available borrowings under such lines of credit
was approximately $29,716 at August 31, 1994.
NOTE G - LONG-TERM DEBT
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------
August 31,
- - ----------------------------------------------------------------------------------------
1994 1993
- - ----------------------------------------------------------------------------------------
<S> <C> <C>
Borrowings under:
9.92% Senior Unsecured Notes due in installments to 2000 $64,492 $75,000
Multi-currency revolving credit agreement 13,959 22,435
Commercial paper 9,947
Other notes 350 95
- - ----------------------------------------------------------------------------------------
Total long-term debt 88,748 97,530
Less current maturities (10,792) (10,745)
- - ----------------------------------------------------------------------------------------
Long-term Debt, less current portion $77,956 $86,785
- - ----------------------------------------------------------------------------------------
</TABLE>
Senior Unsecured Notes: The Senior Unsecured Notes bear interest at 9.92%
and are repayable in annual installments of $10,650 through August 15, 1999.
Amounts outstanding thereafter are due on August 15, 2000. Interest is payable
semi-annually. In the event the Company refinances the Senior Unsecured Notes
prior to their scheduled maturity, it would be obligated to pay a "make-whole"
amount in addition to the accrued interest and then-outstanding principal.
Assuming the Company retired the Senior Unsecured Notes as of August 31, 1994,
the make-whole amount would have been approximately $5,419.
As part of its interest rate management program, the Company periodically
enters into interest rate swaps with respect to portions of the Senior Unsecured
Notes. As of August 31, 1994, the Company was a participant in three swap
agreements on $50,000 of the Senior Unsecured Notes which convert the interest
from a fixed rate to a floating rate of LIBOR plus approximately 5.5%.
Short-term LIBOR was 5.25% at August 31, 1994. These agreements mature in
August, 1996. Counterparties to these swap agreements are major financial
institutions. The Company believes the risk of incurring losses related to
credit risk is remote.
Revolving Credit Agreements: The Company replaced two expiring revolving
credit agreements in the fourth quarter of 1994 with a $40,000 multi-currency
revolving credit facility (the "Multicurrency Agreement"), expiring August,
1999. Pursuant to the agreement, the loans may be denominated in various
currencies at the Company's option. Borrowings under this agreement bear
interest at a rate equal to IBOR plus .5%. A commitment fee, computed at a rate
of .25 of 1% annually, is payable quarterly on the average unused credit line.
The unused credit line at August 31, 1994 was $16,094. Commercial paper
outstanding at August 31, 1994 totalled $9,947 net of discount, and carried an
interest rate of 4.73%. The Company has the ability and intent to maintain these
obligations, classified as long term, for more than one year. Amounts
outstanding as commercial paper reduce the amount available for borrowing under
the Multicurrency Agreement.
Debt Covenants: The Company's debt agreements contain customary restrictions
concerning investments, liens on assets, sales of assets, dividend payments,
maximum levels of debt and minimum levels of shareholders' equity. In addition,
the agreements require the Company to maintain certain financial ratios. As of
August 31, 1994, the Company was in compliance with all debt covenants. Under
the most restrictive covenant, approximately $12,182 of retained earnings was
available for the payment of future dividends on common stock as of August 31,
1994.
<PAGE> 30
Fair Values: With the exception of the Senior Unsecured Notes, the fair value
of the Company's short-term borrowings and long-term debt approximated book
value as of August 31, 1994. Due to the reduction in market interest rates since
the issuance of the Senior Unsecured Notes in 1990, the fair value of such notes
at August 31, 1994 was approximately $66,512. The fair value of debt instruments
is calculated by discounting the cash flow of such obligations using the market
interest rates for similar instruments at August 31, 1994. The fair value of the
Company's interest rate swap agreements at August 31, 1994 was $(1,780).
Aggregate Maturities: Aggregate maturities of long-term debt outstanding at
August 31, 1994, were as follows: $10,792 in 1995; $10,837 in 1996; $10,725 in
1997; $10,731 in 1998; $34,563 in 1999; and $11,100 thereafter.
The Company paid $10,695, $11,894 and $14,176 of interest in 1994, 1993 and
1992, respectively.
NOTE H - LEASES
The Company leases certain facilities, equipment and vehicles under various
lease agreements over periods of one to twenty years. Under most arrangements,
the Company pays the property taxes, insurance, maintenance and expenses related
to the leased property. Many of the leases include provisions which enable the
Company to renew leases based upon the fair values on the date of expiration of
the initial lease.
Future obligations on non-cancelable operating leases in effect at August 31,
1994 were: 1995 - $10,274; 1996 -$7,540; 1997 - $5,293; 1998 - $4,065; 1999
- - -$3,197; thereafter - $17,739.
Total rental expense under operating leases was $11,379, $12,250, and
$10,447 in 1994, 1993 and 1992, respectively.
NOTE I - SHAREHOLDERS' EQUITY
In May, 1988, the Board of Directors authorized the permanent right of
conversion of the Company's Class B common shares to the Company's Class A
common shares on a one-for-one basis. During 1992, all outstanding Class B
common shares were converted to Class A shares.
At August 31, 1994, 2,381,971 shares of Class A common stock were reserved
for issuance under the Company's stock option plans.
NOTE J - INCENTIVE STOCK OPTION PLANS
Employee Plans: The Company has three stock option plans for employees - the
1985, 1987 and 1990 Plans. No further options may be granted under the 1985 or
1987 Plans, although options previously issued and outstanding under these plans
remain exercisable pursuant to the provisions of the plans.
Options may be granted under the 1990 Plan to officers and key employees.
Options granted to date have a maximum term of ten years and an exercise price
equal to 100% of the fair market value of a share of the Company's common stock
at the date of grant. Options vest 50% after 2 years and 100% after 5 years.
A total of 3,050,000 shares may be issued under all three stock option plans
(equal to 950,000 shares authorized under the 1985 Plan, 1,200,000 shares under
the 1987 Plan and 900,000 shares under the 1990 Plan). Any available unissued
shares under the 1985 and 1987 Plans at the date of adoption of the 1990 Plan
became available for issuance under the 1990 Plan.
<PAGE> 31
A combined summary of changes in options under the three plans (all of which
are nonqualified stock options at August 31, 1994) is as follows:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------
Number of Price
Shares Range
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at September 1, 1991 1,250,307 $2.21 - $26.75
Granted 303,850 12.75 - 18.00
Granted under reload provision 13,001 12.75 - 18.00
Exercised (49,607) 2.21 - 14.38
Cancelled (43,650) 8.50 - 24.88
- - ----------------------------------------------------------------------------------------
Outstanding at August 31, 1992 1,473,901 $2.21 - $26.75
Granted 314,125 15.13 - 16.88
Granted under reload provision 6,259 15.13
Exercised (48,645) 2.21 - 13.00
Cancelled (29,030) 15.63 - 26.75
- - ----------------------------------------------------------------------------------------
Outstanding at August 31, 1993 1,716,610 $2.21 - $26.75
Granted 189,400 15.81 - 21.38
Exercised (146,288) 2.21 - 20.56
Cancelled (174,187) 12.75 - 26.75
- - ----------------------------------------------------------------------------------------
Outstanding at August 31, 1994 1,585,535 $2.21 - $24.13
- - ----------------------------------------------------------------------------------------
Exercisable at August 31, 1994 904,662 $2.21 - $22.25
- - ----------------------------------------------------------------------------------------
</TABLE>
Outside Director Plan: Annually each outside director is automatically
granted stock options to purchase 1,000 shares of common stock at a price equal
to the market price of the underlying stock on the date of grant. A maximum of
60,000 shares may be issued under this plan. Options vest 100% after 11 months.
A summary of options under this plan is as follows:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------
Number of Price
Shares Range
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at September 1, 1991 8,000 $12.75 - $24.13
Granted 4,000 17.38
Cancelled (2,000) 17.38 - 24.13
- - ----------------------------------------------------------------------------------------
Outstanding at August 31, 1992 10,000 $12.75 - $24.13
Granted 5,000 17.00
Exercised (1,000) 12.75
- - ----------------------------------------------------------------------------------------
Outstanding at August 31, 1993 14,000 $12.75 - $24.13
Granted 6,000 16.69
Cancelled (1,000) 16.69
- - ----------------------------------------------------------------------------------------
Outstanding at August 31, 1994 19,000 $12.75 - $24.13
- - ----------------------------------------------------------------------------------------
Exercisable at August 31, 1994 14,000 $12.75 - $24.13
- - ----------------------------------------------------------------------------------------
</TABLE>
NOTE K - STOCK OWNERSHIP, SAVINGS AND PENSION PLANS
US Employees: All of the Company's full-time US employees are participants in
the Applied Power Inc. Employee Stock Ownership Plan (the "ESOP Plan"). Under
the provisions of the ESOP Plan, the Company acquires shares of its stock on the
open market and contributes such shares or cash to accounts set aside for its
employees' retirements. Contributions equal 3% of each employee's annual cash
compensation except "initial participants", who are to receive no allocation of
shares until 1995. During the years ended August 31, 1994, 1993 and 1992,
pre-tax expense related to the ESOP Plan was $534, $450 and $602, respectively.
Expense attributable to the ESOP Plan is expected to increase by approximately
$1,300 in 1995, when initial participants become eligible.
<PAGE> 32
Full-time US employees are also eligible to participate in the Applied Power
Inc. Employee Savings Plan (the "Savings Plan"), pursuant to which they are
allowed to contribute up to 15% of their base compensation. The Company
contributes an amount equal to 100% of each employee's contribution, to a
maximum of $300 per employee. Expense attributable to the Savings Plan was $293,
$307 and $0 for 1994, 1993 and 1992, respectively. Expense for 1992 was offset
entirely by participant forfeitures.
Non-US Employees: For employees outside the US, the Company contributes to a
number of retirement programs. Pension expense amounted to $631, $1,213, and
$1,171 in 1994, 1993 and 1992, respectively. One defined benefit plan was
terminated in 1994 and replaced with a defined contribution plan, resulting in a
non-recurring reduction in pension expense of approximately $450 in 1994. These
plans are not required to report to US governmental agencies under ERISA and do
not otherwise determine the actuarial value of accumulated plan benefits or net
assets available for benefits.
NOTE L - SIGNIFICANT FOURTH QUARTER ADJUSTMENTS
In addition to the discontinued operations charge in 1993, the Company
recorded, during the fourth quarters of 1993 and 1992, pre-tax restructuring
charges of $7,721 and $4,706, respectively. The 1993 restructuring charge
primarily related to the cost of consolidating certain manufacturing,
distribution and administrative functions at Enerpac and Barry Controls
operations in Europe, downsizing sales and administrative staffs at retained
Wright Line operations, and idle facility costs at Barry Controls. The majority
of costs incurred related to severance, facility consolidation and future lease
payments. All but $1.6 million of such costs had been incurred as of August 31,
1994, with the balance anticipated in the first half of 1995 when the
restructuring is finalized. The 1992 restructuring charge related to the
transfer and consolidation of selected Barry Controls and Power-Packer
operations. All expenditures related to such restructuring were incurred in
1993.
NOTE M - POSTRETIREMENT BENEFITS
The Company adopted SFAS No. 106 - "Employers' Accounting for Postretirement
Benefits Other Than Pensions" effective September 1, 1992. This new
pronouncement requires the accrual of postretirement benefits (such as health
care and life insurance) during the years an employee provides service. Prior to
adopting this new accounting method, the Company expensed the cost of such
benefits as they were incurred (paid).
In connection with the adoption of SFAS No. 106, the Company elected to
recognize as expense in 1993 the accumulated postretirement benefit obligation
rather than amortizing such amount to expense over a 20-year period. The Company
recorded a $4,355 charge (net of a $2,579 tax benefit) in 1993 for the
cumulative effect of this accounting change. Operating results of prior years
were not restated to reflect the change.
The Company's current policy is not to offer postretirement health care and
life insurance benefits to employees. However, certain employees of businesses
previously acquired by the Company were entitled to such benefits upon
retirement. The individuals receiving health care benefits under these programs
are required to make monthly contributions to defray a portion of the cost.
Retiree contributions are adjusted annually. Retirees currently do not
contribute toward the cost of life insurance. The accounting for retiree health
care benefits assumes retirees will continue to contribute toward the cost of
such benefits.
Net periodic postretirement benefit expense for 1994 and 1993 included the
following components:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------
1994 1993
- - ----------------------------------------------------------------------------------------
<S> <C> <C>
Service cost of benefits earned $ 9 $ 12
Interest cost on accumulated postretirement benefit obligation 553 694
Amortization of unrecognized gain (91)
- - ----------------------------------------------------------------------------------------
TOTALS $ 471 $ 706
- - ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 33
Benefits paid in 1994 and 1993 were $202 and $420 lower than that expensed
during those years, respectively. Expenses related to these benefits in 1992
totalled approximately $450.
The Company's accumulated postretirement benefit obligation for such benefits
is as follows:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------
August 31,
- - ----------------------------------------------------------------------------------------
1994 1993
- - ----------------------------------------------------------------------------------------
<S> <C> <C>
Retirees $5,686 $6,192
Vested former employees 1,595 1,730
Active employees 229 1,432
- - ----------------------------------------------------------------------------------------
Subtotal 7,510 9,354
Unrecognized gain 1,966
- - ----------------------------------------------------------------------------------------
Accumulated postretirement benefit obligation $9,476 $9,354
- - ----------------------------------------------------------------------------------------
</TABLE>
The Company's postretirement benefit obligations are not funded.
The health care cost trend rate used in the actuarial calculations was 11.0%,
trending downward to 6.5% by the year 2010, and remaining level thereafter. The
discount rate used in determining the accumulated postretirement benefit
obligation was 7.75% in 1994 and 8.0% in 1993. The effect of a one
percentage-point change in health care cost trend rates would change the
accumulated postretirement benefit obligation by approximately 10%.
NOTE N - INCOME TAXES
Income tax expense for continuing operations consists of the following:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------
1994 1993 1992
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Currently Payable:
Federal $4,475 $5,926 $504
Foreign 3,621 2,590 5,743
State 1,095 413 234
- - ----------------------------------------------------------------------------------------
Subtotals 9,191 8,929 6,481
- - ----------------------------------------------------------------------------------------
Deferred (Credits):
Federal (2,166) (4,390) (3)
Foreign 1,672 (1,845) 459
State (295) (190) (1)
- - ----------------------------------------------------------------------------------------
Subtotals (789) (6,425) 455
- - ----------------------------------------------------------------------------------------
TOTALS $8,402 $2,504 $6,936
- - ----------------------------------------------------------------------------------------
</TABLE>
Income tax expense differs from the amounts computed by applying the
Federal income tax rate to earnings before income taxes. A reconciliation of
income taxes at the US statutory rate to the effective tax rate follows:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------
Percent of Pre-tax
- - ----------------------------------------------------------------------------------------
1994 1993 1992
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed "expected" tax expense 35.0% 34.0% 34.0%
State income taxes, net of Federal effect 2.1 1.8 1.0
Non-deductible depreciation and amortization 1.8 5.3 7.9
Adjustment of deferred tax balances (6.4)
Basis differences in acquired assets 2.4
Alternative minimum tax (credit) (3.0)
Net effects of foreign tax rates and credits (4.2) 8.0 4.6
Other items (1.5) (.6) (1.8)
- - ----------------------------------------------------------------------------------------
Effective Tax Rate 33.2% 26.1% 45.1%
- - ----------------------------------------------------------------------------------------
</TABLE>
<PAGE> 34
Major components of deferred income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------
1994 1993 1992
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Compensation and other employee benefits $ (962) $ (149) $ 228
Inventory items (519) (201) 53
Depreciation and amortization (1,798) (3,366) (856)
Restructuring expenses 2,504 (2,366) 96
Unrealized exchange adjustments 290
Other items (14) (343) 644
- - -------------------------------------------------------------------------------------------
TOTALS $ (789) $ 6,425 $ 455
- - -------------------------------------------------------------------------------------------
</TABLE>
The Company's policy is to remit earnings from foreign subsidiaries only to the
extent any resultant foreign income taxes are creditable in the US. Accordingly,
the Company does not currently provide for the additional US and foreign income
taxes which would become payable upon remission of undistributed earnings of
foreign subsidiaries. Undistributed earnings on which income taxes have not been
provided amounted to approximately $29,100 at August 31, 1994. If all such
undistributed earnings were remitted, an additional provision for income taxes
of approximately $2,000 would have been necessary as of August 31, 1994.
The Company has available tax credit carryforwards of approximately $4,200
expiring in various years through 1996.
Effective September 1, 1992, the Company adopted SFAS No. 109. This statement
requires that deferred income taxes reflect the tax consequences on future years
of differences between the tax bases of assets and liabilities and their
financial reporting amounts. The adoption of this new rule had no material
impact on net earnings in 1993. Certain assets and liabilities that historically
had been carried on a net-of-tax basis under prior accounting rules, were
adjusted to a gross basis.
On August 31, 1994, the Company had deferred tax assets of $14,343 net of a
total valuation allowance of $5,551 relating to tax loss and credit
carryforwards, with the principal deductible temporary differences being
inventory items and reserves $4,563, postretirement benefits $3,632,
restructuring accruals $656, employee benefit accruals $1,623 and bad debt
accruals $472. Deferred tax liabilities were $16,768, with the principal taxable
temporary differences being accelerated depreciation and purchase accounting
basis differences of $14,714.
The Company paid taxes of $9,191, $5,080, and $10,580 in 1994, 1993 and 1992,
respectively.
Earnings from continuing operations before income taxes related to non-US
operations were $12,041 $2,293 and $17,226 for 1994, 1993 and 1992,
respectively.
NOTE O - SEGMENT INFORMATION
The Company's operations have been classified into three business
segments: The Distributed Products Group (the "DPG"), the Engineered Solutions
Group (the"ESG") and Wright Line. The DPG, consisting of Enerpac and GB
Electrical, is involved in the manufacture and distribution of tools and
consumables to the construction, retail and general industrial markets. The ESG,
which consists of Barry Controls, Power-Packer and APITECH, focuses on
high-volume technology products for OEM customers in the transportation,
industrial, defense and aerospace markets. Wright Line develops, manufactures
and sells technical furniture solutions for offices and laboratories.
<PAGE> 35
Summarized financial information by business segment is as follows:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
1994 1993 1992
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES:
Distributed Products Group $222,076 $212,924 $211,921
Engineered Solutions Group 162,296 147,564 145,444
Wright Line 49,272 38,239 46,921
- - -----------------------------------------------------------------------------------------------------------------
Totals $433,644 $398,727 $404,286
- - -----------------------------------------------------------------------------------------------------------------
OPERATIONS BEFORE INCOME TAXES:
Distributed Products Group $32,023 $29,739 $38,733
Engineered Solutions Group 12,314 4,526 1,272
Wright Line 4,242 (2,372) 2,348
General corporate and other (23,281) (22,303) (26,964)
- - -----------------------------------------------------------------------------------------------------------------
Totals $25,298 $ 9,590 $15,389
- - -----------------------------------------------------------------------------------------------------------------
DEPRECIATION:
Distributed Products Group $ 4,165 $ 3,855 $ 3,733
Engineered Solutions Group 7,346 7,631 6,788
Wright Line 2,761 3,329 2,590
General corporate and other 42 38 38
- - -----------------------------------------------------------------------------------------------------------------
Totals $14,314 $14,853 $13,149
- - -----------------------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES:
Distributed Products Group $ 5,917 $ 4,884 $ 4,632
Engineered Solutions Group 5,957 6,159 4,537
Wright Line 769 753 395
General corporate and other 64 421 122
- - -----------------------------------------------------------------------------------------------------------------
Totals $12,707 $12,217 $9,686
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------
At August 31,
- - -----------------------------------------------------------------------------------------------------------------
1994 1993 1992
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Distributed Products Group $148,737 $131,868 $130,324
Engineered Solutions Group 128,190 127,481 124,786
Wright Line 23,838 18,618 17,146
Net assets held for sale 12,035 15,848
General corporate 16,637 16,315 13,386
- - -----------------------------------------------------------------------------------------------------------------
Totals $317,402 $306,317 $301,490
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 36
Summarized financial information by geographic region is as follows:
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------
1994 1993 1992
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES:
North America $279,613 $259,692 $250,703
Latin America 11,300 10,154 9,536
Europe 99,215 87,346 101,824
Japan and Asia Pacific 43,516 41,535 42,223
- - -----------------------------------------------------------------------------------------------------------------
Totals $433,644 $398,727 $404,286
- - -----------------------------------------------------------------------------------------------------------------
OPERATIONS BEFORE INCOME TAXES:
North America $32,672 $23,855 $24,001
Latin America 512 1,662 1,697
Europe 8,352 (820) 7,806
Japan and Asia Pacific 7,043 7,196 8,849
General corporate and other (23,281) (22,303) (26,964)
- - -----------------------------------------------------------------------------------------------------------------
Totals $25,298 $ 9,590 $15,389
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------
At August 31,
- - -----------------------------------------------------------------------------------------------------------------
1994 1993 1992
- - -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
North America $192,103 $183,412 $175,099
Latin America 11,053 9,358 8,195
Europe 64,919 57,927 66,540
Japan and Asia Pacific 32,690 27,270 22,422
Net assets held for sale 12,035 15,848
General corporate 16,637 16,315 13,386
- - -----------------------------------------------------------------------------------------------------------------
Totals $317,402 $306,317 $301,490
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
Operations before income taxes for each business and geopraphic segment do not
include general corporate expenses, amortization expense, interest expense or
exchange adjustments. Sales between business segments and geographical areas are
insignificant and are accounted for at prices intended to yield a reasonable
return to the selling affiliate. No single customer accounted for more than 10%
of total sales in 1994, 1993 or 1992. Export sales from domestic operations were
less than 10% in each of the periods presented.
Corporate assets, which are not allocated, represent principally cash, prepaid
taxes and investments.
NOTE P - CONTINGENCIES AND LITIGATION
The Company had outstanding letters of credit totalling $1,640 and $4,279 at
August 31, 1994 and 1993, respectively. The letters of credit generally serve
as collateral for liabilities included in the Consolidated Balance Sheet.
The Company is involved in various legal proceedings which have arisen in the
normal course of its business. These legal proceedings typically include product
liability and patent claims. The Company has recorded reserves for loss
contingencies based on the specific circumstances of each case. Such reserves
are recorded when the occurrence of loss is probable and can be reasonably
estimated. In the opinion of management, the resolution of these contingencies
will not have a materially adverse effect on the Company's financial condition
or results of operations.
<PAGE> 37
The Company has facilities at numerous geographic locations, which are
subject to a range of environmental laws and regulations. Environmental costs
are expensed or capitalized depending on their future economic benefit.
Expenditures that have no future economic value are expensed. Liabilities are
recorded when environmental remediation is probable, and the costs can be
reasonably estimated. Although the level of future expenditures for
environmental remediation is impossible to determine with any degree of
certainty, it is management's opinion that such costs will not have a material
effect on the Company's financial position. Environmental remediation accruals
of $567, and $661 were included in the Consolidated Balance Sheet at August 31,
1994 and 1993, respectively.
<PAGE> 38
APPLIED POWER INC. AND SUBSIDIARIES
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
<TABLE>
<CAPTION>
Deductions Balance at
----------------------- End of Period
Balance at Amounts ------------------------
Beginning Amounts Written Non-
Name of Debtor of Period Additions Collected Off Current Current
- - ------------------ ---------- --------- --------- --------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
August 31, 1993:
Richard G. Sim (1) $391 $391
---------- --------- --------- --------- -------- --------
$391 $391
========== ========= ========= ========= ======== ========
August 31, 1992:
Richard G. Sim (1) $391 $391
---------- --------- --------- --------- -------- --------
$391 $391
========== ========= ========= ========= ======== ========
</TABLE>
(1) Pursuant to a provision of an employment agreement, the Company held an
interest-free note receivable from its Chief Executive Officer received in
connection with the purchase of 204,000 shares of common stock. The note was
repaid in full during 1993.
<PAGE> 39
APPLIED POWER INC. AND SUBSIDIARIES
SCHEDULE VII - GUARANTEES OF SECURITIES OF OTHER ISSUERS
<TABLE>
<CAPTION>
Title of Total Amount
Issue of Guaranteed and Amount in Treasury Nature of Nature of
Name of Issuer Securities Outstanding Owned of Issuer Guarantee Default
- - ---------------- ----------- ----------------- -------- ----------- ------------ -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
August 31, 1994:
DETEC (1) Bank Debt $ 316(2) - - Principal N/A
and Interest
August 31, 1993:
DETEC (1) Bank Debt $ 298(2) - - Principal N/A
and Interest
</TABLE>
(1) Applied Power owns 50% of the outstanding stock of DETEC, a joint
venture in Germany engaged in the business of designing, manufacturing and
marketing advanced convertible top hydraulic actuation systems for custom and
specialty cars.
(2) Amount guaranteed of 500,000 Deutschmarks translates to $316 and $298 US
dollars at August 31, 1994 and 1993, respectively.
<PAGE> 40
APPLIED POWER INC. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Additions Deductions
---------------------------- --------------------------
Account
Balance at Charged to Written Off Balance
Beginning Costs and Net Less at End
Description of Period Expenses Acquired Recoveries Other of Period
- - ---------------- ----------- ---------- --------- ------------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Deducted from assets to
which they apply:
Allowance for losses -
trade accounts receivable
August 31, 1994 $3,053 $1,379 $1,301 $3,131
====== ====== ====== ====== ====== ======
August 31, 1993 $3,412 $739 $1,098 $3,053
====== ====== ====== ====== ====== ======
August 31, 1992 $3,101 $872 $19 $481 $99(1) $3,412
====== ====== ====== ====== ====== ======
</TABLE>
(1) Amount attributable to discontinued operations.
<PAGE> 41
APPLIED POWER INC. AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
Weighted
Year-End Maximum Average Average
Weighted Amount Amount Interest
Balance Average Outstanding Outstanding Rate
Category of Aggregate at End Interest During the During the During the
Short-term Borrowings of Period Rate Period Period(D) Period (E)
- - ---------------------- ------------ ---------- ------------- ----------- -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
August 31, 1994:
Payable to Banks (A) $14,707 7.79% $23,648 $18,894 8.41%
Payable to Holders of Commercial
Paper (B) $9,947 4.73% $11,554 $4,050 4.12%
Revolving Credit Agreement (C) $13,959 3.20% $22,747 $15,298 4.71%
August 31, 1993:
Payable to Banks (A) $20,401 6.66% $23,809 $18,953 9.88%
Non-U.S. Revolving Credit Agreements (C) $22,435 6.24% $29,702 $26,871 8.08%
August 31, 1992:
Payable to Banks (A) $16,809 10.29% $29,915 $16,362 16.22%
Payable to Holders of Commercial
Paper (B) $0 - $28,217 $21,042 5.24%
Non-U.S. Revolving Credit Agreements (C) $27,463 9.02% $27,463 $25,530 11.16%
</TABLE>
(A) Short-term borrowings payable to banks consist primarily of notes payable to
banks by subsidiaries outside the United States. Substantially all of the
notes outside the United States are guaranteed by Applied Power Inc. and
are payable in currencies other than the US dollar.
(B) Commercial paper is payable to US holders. Based on the ability to
refinance commercial paper with borrowing capacity available under another
agreement, $9,947 was classified as long-term debt for balance sheet
purposes at August 31, 1994.
(C) The Company replaced two expiring revolving credit agreements in August,
1994 with a multi-currency credit facility which provides for borrowings of
up to $40,000.
(D) Average amount outstanding during the period is computed by dividing the
total of month-end outstanding principal balances by 12, or the number of
periods outstanding, if less.
(E) Average interest rate for the year is computed by dividing the actual
short-term interest expense by the average debt outstanding.
<PAGE> 42
APPLIED POWER INC. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT DATA
<TABLE>
<CAPTION>
Years Ended August 31,
------------------------------------------------
Item (1) 1994 1993 1992
- - ------------------- ---- ---- ----
(Dollars in Thousands)
<S> <C> <C> <C>
Maintenance and Repairs $4,329 $4,460 $4,103
====== ====== ======
Amortization ofIntangible Assets $5,092 $4,914 $4,606
====== ====== ======
Advertising Costs $7,783 $8,023 $7,464
====== ====== ======
</TABLE>
(1) Amounts paid for taxes other than payroll and income taxes and royalties
are not, presented as such amounts are less than 1% of net sales.
<PAGE> 43
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.
APPLIED POWER INC.
(Registrant)
Dated: November 16, 1994 By:/s/ ROBERT C. ARZBAECHER
-------------------------
Robert C. Arzbaecher
Vice President,
Chief Financial Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard G. Sim and Robert C. Arzbaecher,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this report,
and to file the same, with all and any other regulatory authority, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
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 and in the capacities and on the dates indicated.*
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Richard G. Sim Chairman of the Board, President and Chief Executive
- - ------------------ Officer; Director
Richard G. Sim
/s/ Robert C. Arzbaecher Vice President, Chief Financial Officer
- - ------------------------ (Principal Financial Officer)
Robert C. Arzbaecher
/s/ Andrew G. Lampereur Controller
- - ----------------------- (Principal Accounting Officer)
Andrew G. Lampereur
/s/ Jack L. Heckel Director
- - ------------------
Jack L. Heckel
/s/ Richard M. Jones Director
- - --------------------
Richard M. Jones
/s/ Richard A. Kashnow Director
- - ----------------------
Richard A. Kashnow
/s/ L. Dennis Kozlowski Director
- - -----------------------
L. Dennis Kozlowski
/s/ Richard T. Savage Director
- - ---------------------
Richard T. Savage
/s/ Raymond S. Troubh Director
- - ---------------------
Raymond S. Troubh
</TABLE>
* Each of the above signatures is affixed as of November 16, 1994
<PAGE> 44
APPENDIX TO 1994 10-K
DESCRIPTION OF GRAPHIC MATERIAL IN MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GRAPH A
Bar chart which shows a break out of 1994, 1993 and 1992 sales between the
Distributed Products Group, Engineered Solutions Group and Wright Line. Each
bar represents one year and is proportionally divided by the percentage of sales
for each of these segments. Data is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Distributed Products Group 51% 53% 52%
Engineered Solutions Group 37% 37% 36%
Wright Line 12% 10% 12%
</TABLE>
GRAPH B
Pie chart identifying the percentage breakout of 1994 sales by geographic
region. Regions depicted include North America, Europe, Japan and Asia Pacific,
and Latin America. Data is as follows:
North America - 64%
Europe - 23%
Japan and Asia Pacific - 10%
Latin America - 3%
GRAPH C
Pie chart which identifies the percentage breakout of total capitalization
as of August 31, 1994 between Debt, Shareholders' Equity and Deferred Taxes.
Data is as follows:
Debt - 45%
Shareholders Equity - 47%
Deferred Taxes - 8%
<PAGE> 45
APPLIED POWER INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED AUGUST 31, 1994
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
<S> <C> <C> <C>
3.1 (a) Amended and Restated Exhibit 19.1(a) to Form 10-Q for
Articles ofIncorporation (as quarter ended February 28, 1990
adopted January 8, 1987) ("2/28/90 10-Q")
(b) Articles of Amendment to Exhibit 19.1(b) to 2/28/90 10-Q
Amended and Restated Articles
of Incorporation, amending
Sections 3.1 and 3.2 of Article
III and Article IV (adopted
January 13, 1990)
3.2 Amended and Restated By-Laws X
(as last amended by amendment to
Section 3.01 decreasing the
number of directors to six, adopted
October 24, 1994 by the Board
of Directors and to be effective
on January 9, 1995)
4+
4.1 (a) Secured Credit Agreement Exhibit 29 to Schedule 14D-1, as
dated as of June 27, 1989, among amended by Amendment No. 13
Applied Power Inc., API thereto
Acquisitions Inc. and Continental
Bank N.A. (and *Secured Credit
Agreement")
(b) Amendment and Waiver, dated Exhibit 4.1(b) to Form 10-K for
as of July 31, 1989, to the Secured fiscal year ended August 31, 1990
Credit Agreement ("1990 10-K")
</TABLE>
+ Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant agrees
to furnish to the Securities and Exchange Commission upon request a copy of
any unfiled instruments, or any unfiled exhibits or schedules to filed
instruments, defining the rights of security holders.
<PAGE> 46
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
<S> <C> <C> <C>
4.1 (c) Amendment No. 2, dated as of Exhibit 4.1(C) to 1990 10-K
August 10, 1990, to the Secured
Credit Agreement
(d) Amendment No. 3, dated as of Exhibit 19 to Form 10-Q for
January 30, 1991, to the Secured quarter ended February 28, 1991
Credit Agreement
(e) Amendment No. 4, dated as of Exhibit 19.1 to Form 10-Q for
May 31, 1991, to the Secured quarter ended May 31, 1991
Credit Agreement ("5/31/91 10-Q")
(f) Amendment No. 5, dated as of Exhibit 19 to Form 10-Q for
January 17, 1992, to the Secured quarter ended February 29, 1992
Credit Agreement
(g) Amendment No. 6, dated as of Exhibit 4.1(g) to Form 10-K for
October 30, 1993, to the Secured fiscal year ended August 31, 1993
Credit Agreement ("1993 10-K")
4.2 (a) Loan Agreement, dated as of Exhibit 4.2 to 1990 10-K
August 1, 1990, relating to
$75,000,000 9.92% Senior Notes
due August 15, 2000
(b) Amendment to Loan Agreement, Exhibit 4.2(b) to 1993 10-K
made as of August 31, 1993
4.3 Articles III, IV, and V of Amended See Exhibit 3.1 above
and Restated Articles of
Incorporation
4.4 Amendment for Purchase and Sale, Exhibit 19.2 to 5/31/91/10-Q
dated August 29, 1990, between
Minnesota Mining and
Manufacturing Company and
Applied Power Inc. and seven
related Leases, each dated April 29,
1991, between Bernard Garland and
Sheldon Garland, d/b/a Garland
Enterprises, as Landlord and
Applied Power Inc. as Tenant,
designated as exhibits 19.2(a)
through 19.2(g)
</TABLE>
<PAGE> 47
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
<S> <C> <C> <C>
4.5 Revolving Credit Agreement, X
dated as of August 22, 1994
between Applied Power Finance
S.A., as Borrower, Continental
Bank N.A., PNC Bank and ABN
Amro Bank, collectively as lenders,
and Applied Power Inc. as
Guarantor
4.6 Receivables Purchase Agreement, X
dated as of August 31, 1994
between Applied Power Inc.,
Barry Wright Corporation, Wright
Line Inc., and GB Electrical, Inc.,
collectively as sellers, and PNC
Bank, as lender
10.1* Employment Agreement dated X
May 9, 1994 between Applied
Power Inc. and Richard G. Sim
(superseding Employment Agreement
dated July 5, 1985, as amended)
10.2* (a) Applied Power Inc. 1985 Stock Exhibit 10.2(a) to Form 10-K for
Option Plan (approved by fiscal year ended August 31, 1989
shareholders on January 6, 1986), ("1989 10-K")
as amended
(b) Amendment adopted by Board Exhibit 10.2(b) to 1989 10-K
of Directors on November 8, 1989
and approved by shareholders on
January 13, 1990
(c) Amendment adopted by Board Exhibit 10.2(c) to 1990 10-K
of Directors on August 9, 1990
</TABLE>
* Management contracts and executive compensation plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
<PAGE> 48
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
<S> <C> <C> <C>
10.3* (a) Applied Power Inc. 1987 Exhibit 10-8 to Form 10-K for
Nonqualified Stock Option Plan fiscal year ended August 31, 1987
(approved by shareholders January
7, 1988)
(b) Amendment adopted by Board See Exhibit 10.2(b)
of Directors on November 8, 1989
and approved by shareholders on
January 13, 1990
10.4* (a) Applied Power Inc. 1990 Stock Exhibit A to Proxy Statement dated
Option Plan, adopted by Board of December 5, 1990 for 1991 Annual
Directors on August 9, 1990, and Meeting of Shareholders
approved by shareholders on
January 7, 1991.
(b) Amendment adopted by Board Exhibit 10.5(b) to Form 10-K for
of Directors on August 10, 1992, fiscal year ended August 31, 1992
and approved by shareholders on
January 7, 1991.
10.5* (a) Description of Fiscal 1994 Exhibit 10.6 to 1993 10-K
Management Bonus Arrangement
(b) Amendment to Fiscal 1994 X
Management Bonus Arrangement
10.6* Description of Fiscal 1995 X
Management Bonus Arrangement
10.7* (a) Applied Power Inc. 1989 Exhibit 10.7 to 1989 10-K
Outside Directors' Stock Option
Plan adopted by Board of Directors
on November 8, 1989 and
approved by shareholders on
January 13, 1990
(b) Amendment adopted by Board Exhibit 10.7(b) to 1990 10-K
of Directors on November 9, 1990,
and approved by shareholders on
January 7, 1991
</TABLE>
* Management contracts and executive compensation plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
<PAGE> 49
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
<S> <C> <C> <C>
11 Statement re Computation of
Earnings per Share X
21 Subsidiaries of the Registrant X
23 Consent of Deloitte & Touche LLP X
24 Power of Attorney See Signature Page of this report
27 Financial Data Schedule X
</TABLE>
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
of
APPLIED POWER INC.
ADOPTED
NOVEMBER 7, 1991
and
AS LAST AMENDED ON OCTOBER 24, 1994
<PAGE> 2
ARTICLE I. OFFICES; RECORDS; FISCAL YEAR
1.01. Principal and Business Offices. The corporation may
have such principal and other business offices, either within or without the
State of Wisconsin, as the Board of Directors may designate or as the business
of the corporation may require from time to time.
1.02. Registered Office and Registered Agent. The registered
office of the corporation required by the Wisconsin Business Corporation Law to
be maintained in the State of Wisconsin may be, but need not be, identical with
the principal office in the State of Wisconsin. The street address of the
registered office may be changed from time to time by any officer or by the
registered agent. The business office of the registered agent of the
corporation shall be identical to the street office of such registered office.
1.03. Corporate Records. The following documents and records
shall be kept at the corporation's principal office or at such other reasonable
location as may be specified by the corporation:
(a) Minutes of shareholders' and Board of
Directors' meetings, any written notices thereof and any written waivers of
such notices.
(b) Records of actions taken by the shareholders
or Board of Directors without a meeting.
(c) Records of actions taken by committees of the
Board of Directors in place of the Board of Directors and on behalf of the
Corporation.
(d) Accounting records.
(e) A record of its shareholders.
(f) Current Bylaws.
1.04. Fiscal Year. The fiscal year of the corporation shall
commence on the first day of September and end on the last day of August.
<PAGE> 3
ARTICLE II. SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of the shareholders
shall be held on the second Tuesday in January, or at such other time and date
as may be fixed by or under the authority of the Board of Directors, for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting is a
legal holiday in the State of Wisconsin, such meeting shall be held on the next
succeeding business day. If the election of directors is not held on the day
designated herein, or fixed as herein provided, for any annual meeting of the
shareholders, or at any adjournment thereof, the Board of Directors shall cause
the election to be held at a meeting of the shareholders as soon thereafter as
may be convenient.
2.02. Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by
statute, may be called by the Chairperson of the Board, if there is one, the
President or the Board of Directors. If and as required by the Wisconsin
Business Corporation Law, a special meeting shall be called upon written demand
describing one or more purposes for which it is to be held by holders of shares
with at least 10% of the votes entitled to be cast on any issue proposed to be
considered at the meeting. The purpose or purposes of any special meeting
shall be described in the notice required by Section 2.04 of these Bylaws.
2.03. Place of Meeting. The Board of Directors may designate
any place, either within or without the State of Wisconsin, as the place of
meeting for any annual meeting or any special meeting. If no designation is
made, the place of meeting shall be the principal office of the corporation but
any meeting may be adjourned to reconvene at any place designated by vote of a
majority of the shares represented thereat.
2.04. Notices to Shareholders.
(a) Required Notice. Written notice stating the
place, day and hour of the meeting and, in case of a special meeting, the
purpose or purposes for which the meeting is called, shall be delivered not
less than ten (10) days nor more than sixty (60) days before the date of the
meeting (unless a different time is provided by law or the Articles of
Incorporation), by or at the direction of the Chairperson of the Board, if
there is one, the President or the Secretary, to each shareholder entitled to
vote at such meeting or, for the fundamental transactions described in Sections
2.04(e)(1) to (4)
-2-
<PAGE> 4
below (for which the Wisconsin Business Corporation Law requires that notice be
given to shareholders not entitled to vote), to all shareholders. If mailed,
such notice is effective when deposited in the United States mail, and shall be
addressed to the shareholder's address shown in the current record of
shareholders of the corporation, with postage thereon prepaid. At least twenty
(20) days' notice shall be provided if the purpose, or one of the purposes, of
the meeting is to consider a plan of merger or share exchange for which
shareholder approval is required by law, or the sale, lease, exchange or other
disposition of all or substantially all of the corporation's property, with or
without good will, otherwise than in the usual and regular course of business.
(b) Adjourned Meeting. If any shareholder
meeting is adjourned to a different date, time or place, notice need not be
given of the new date, time or place, if the new date, time or place is
announced at the meeting before adjournment; provided, however, that if a new
record date for the adjourned meeting is or must be fixed, then notice must be
given pursuant to the requirements of Section 2.04(a), to those persons who are
shareholders as of the new record date.
(c) Waiver of Notice. A shareholder may waive
notice in accordance with Article VI of these Bylaws.
(d) Contents of Notice. The notice of each
special shareholder meeting shall include a description of the purpose or
purposes for which the meeting is called. Except as otherwise provided in
Section 2.04(e), in the Articles of Incorporation, or in the Wisconsin Business
Corporation Law, the notice of an annual shareholder meeting need not include a
description of the purpose or purposes for which the meeting is called.
(e) Fundamental Transactions. If a purpose of
any shareholder meeting is to consider: (1) a proposed amendment to the
Articles of Incorporation (including any restated articles); (2) a plan of
merger or share exchange for which shareholder approval is required by law; (3)
the sale, lease, exchange or other disposition of all or substantially all of
the corporation's property, with or without good will, otherwise than in the
usual and regular course of business; (4) the dissolution of the corporation;
or (5) the removal of a director, the notice must so state and in cases (1),
(2) and (3) above must be accompanied by, respectively, a copy or summary of
the: (1) proposed articles of amendment or a copy of the restated articles
that identifies any amendment or other change; (2) proposed plan of merger or
share exchange; or (3) proposed transaction for disposition of all or
substantially all of the corporation's prop-
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erty. If the proposed corporate action creates dissenters' rights, the notice
must state that shareholders and beneficial shareholders are or may be entitled
to assert dissenters' rights, and must be accompanied by a copy of Sections
180.1301 to 180.1331 of the Wisconsin Business Corporation Law.
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2.05. Fixing of Record Date. The Board of Directors may fix
in advance a date as the record date for one or more voting classes for any
determination of shareholders entitled to notice of a shareholders' meeting, to
demand a special meeting, to vote, or to take any other action, such date in
any case to be not more than seventy (70) days prior to the meeting or action
requiring such determination of shareholders, and may fix the record date for
determining shareholders entitled to a share dividend or distribution. If no
record date is fixed for the determination of shareholders entitled to demand a
shareholder meeting, to notice of or to vote at a meeting of shareholders, or
to consent to action without a meeting, (a) the close of business on the day
before the corporation receives the first written demand for a shareholder
meeting, (b) the close of business on the day before the first notice of the
meeting is mailed or otherwise delivered to shareholders, or (c) the close of
business on the day before the first written consent to shareholder action
without a meeting is received by the corporation, as the case may be, shall be
the record date for the determination of shareholders. If no record date is
fixed for the determination of shareholders entitled to receive a share
dividend or distribution (other than a distribution involving a purchase,
redemption or other acquisition of the corporation's shares), the close of
business on the day on which the resolution of the Board of Directors is
adopted declaring the dividend or distribution shall be the record date. When
a determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination shall be applied
to any adjournment thereof unless the Board of Directors fixes a new record
date and except as otherwise required by law. A new record date must be set if
a meeting is adjourned to a date more than 120 days after the date fixed for
the original meeting.
2.06. Shareholder List. The officer or agent having charge
of the stock transfer books for shares of the corporation shall, before each
meeting of shareholders, make a complete record of the shareholders entitled to
notice of such meeting, arranged by class or series of shares and showing the
address of and the number of shares held by each shareholder. The shareholder
list shall be available at the meeting and may be inspected by any shareholder
or his or her agent or attorney at any time during the meeting or any
adjournment. Any shareholder or his or her agent or attorney may inspect the
shareholder list beginning two (2) business days after the notice of the
meeting is given and continuing to the date of the meeting, at the
corporation's principal office or at a place identified in the meeting notice
in the city where the meeting will be held and, subject to Section
180.1602(2)(b) 3 to 5 of the Wisconsin Business Corporation Law, may copy the
list, during regular business hours and at his or her expense, during the
period that it is available for
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inspection hereunder. The original stock transfer books and nominee
certificates on file with the corporation (if any) shall be prima facie
evidence as to who are the shareholders entitled to inspect the shareholder
list or to vote at any meeting of shareholders. Refusal or failure to comply
with the requirements of this section shall not affect the validity of any
action taken at such meeting.
2.07. Quorum and Voting Requirements. Except as otherwise
provided in the Articles of Incorporation or in the Wisconsin Business
Corporation Law, a majority of the votes entitled to be cast by shares entitled
to vote as a separate voting class on a matter, represented in person or by
proxy, shall constitute a quorum of that voting class for action on that matter
at a meeting of shareholders. If a quorum exists, action on a matter, other
than the election of directors, by a voting class is approved if the votes cast
within the voting class favoring the action exceed the votes cast opposing the
action unless a greater number of affirmative votes is required by the
Wisconsin Business Corporation Law or the Articles of Incorporation. If the
Articles of Incorporation or the Wisconsin Business Corporation Law provide for
voting by two (2) or more voting classes on a matter, action on that matter is
taken only when voted upon by each of those voting classes counted separately.
Action may be taken by one (1) voting class on a matter even though no action
is taken by another voting class entitled to vote on the matter. Although less
than a quorum exists at a meeting, a majority of the shares represented at the
meeting may adjourn the meeting from time to time and, unless a new record date
is or must be set for the meeting, the corporation is not required to give
notice of the new date, time or place of the meeting if the new date, time or
place is announced at the meeting before adjournment. Once a share is
represented for any purpose at a meeting, other than for the purpose of
objecting to holding the meeting or transacting business at the meeting, it is
considered present for purposes of determining whether a quorum exists for the
remainder of the meeting and for any adjournment of that meeting unless a new
record date is or must be set for that meeting. The term "voting class" as
used in these Bylaws shall have the same meaning as the term "voting group"
under the Wisconsin Business Corporation Law.
2.08. Conduct of Meetings. The Chairperson of the Board, or
if there is none, or in his or her absence, the President, and in the
President's absence, a Vice President in the order provided under Section 4.06
of these Bylaws, and in their absence, any person chosen by the shareholders
present shall call the meeting of the shareholders to order and shall act as
chairperson of the meeting, and the Secretary shall act as secretary of all
meetings of the shareholders, but, in the absence of the
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Secretary, the presiding officer may appoint any other person to act as
secretary of the meeting.
2.09. Proxies. At all meetings of shareholders, a
shareholder entitled to vote may vote in person or by proxy appointed in
writing by the shareholder or by his or her duly authorized attorney-in-fact.
All proxy appointment forms shall be filed with the Secretary or other officer
or agent of the corporation authorized to tabulate votes before or at the time
of the meeting. Unless the appointment form conspicuously states that it is
irrevocable and the appointment is coupled with an interest, a proxy
appointment may be revoked at any time. The presence of a shareholder who has
filed a proxy appointment shall not of itself constitute a revocation. No
proxy appointment shall be valid after eleven months from the date of its
execution, unless otherwise expressly provided in the appointment form. The
Board of Directors shall have the power and authority to make rules that are
not inconsistent with the Wisconsin Business Corporation Law as to the validity
and sufficiency of proxy appointments.
2.10. Voting of Shares. Each outstanding share shall be
entitled to one (1) vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the shares are
enlarged, limited or denied by the Articles of Incorporation or the Wisconsin
Business Corporation Law. Shares owned directly or indirectly by another
corporation are not entitled to vote if this corporation owns, directly or
indirectly, sufficient shares to elect a majority of the directors of such
other corporation. However, the prior sentence shall not limit the power of
the corporation to vote any shares, including its own shares, held by it in a
fiduciary capacity. Redeemable shares are not entitled to vote after notice of
redemption is mailed to the holders and a sum sufficient to redeem the shares
has been deposited with a bank, trust company, or other financial institution
under an irrevocable obligation to pay the holders the redemption price on
surrender of the shares.
ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers and Number. All corporate powers shall
be exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, its Board of Directors.
The number of directors of the corporation shall be six (6). The number of
directors may be increased or decreased from time to time by amendment to this
Section adopted by the shareholders or the Board of Directors,
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but no decrease shall have the effect of shortening the term of an incumbent
director.
3.02. Election, Removal, Tenure and Qualifications. Unless
action is taken without a meeting under Section 7.01 of these Bylaws, directors
shall be elected by a plurality of the votes cast by the shares of the voting
class entitled to vote for such directors in the election at a shareholders
meeting at which a quorum is present; i.e., the individuals eligible for
election by a voting class with the largest number of votes in favor of their
election are elected as directors up to the maximum number of directors to be
chosen in the election by such voting class. Votes against a candidate are not
given legal effect and are not counted as votes cast in an election of
directors. In the event two (2) or more persons tie for the last vacancy to be
filled, a run-off vote shall be taken from among the candidates receiving the
tie vote. Each director shall hold office until the next annual meeting of
shareholders and until the director's successor shall have been elected or
there is a decrease in the number of directors, or until his or her prior
death, resignation or removal. Any director may be removed from office by the
affirmative vote of a two-thirds majority of the shares outstanding of the
class or classes of stock which elected such director at a special meeting of
shareholders called for that purpose. Although the foregoing bylaw establishes
a greater shareholder voting requirement than is generally provided by the
Wisconsin Business Corporation Law, it has not been amended or repealed, and it
is therefore effective pursuant to Section 180.1706(4) or successor statutes.
The removal may be made with or without cause unless the Articles of
Incorporation or these Bylaws provide that directors may be removed only for
cause. If a director is elected by a voting class of shareholders, only the
shareholders of that voting class may participate in the vote to remove that
director. A director may resign at any time by delivering a written
resignation to the Board of Directors, to the Chairperson of the Board (if
there is one), or to the corporation through the Secretary or otherwise.
Directors need not be residents of the State of Wisconsin or shareholders of
the corporation. Any person who is seventy (70) years of age or older on the
date of a meeting of shareholders shall not be eligible for election or
re-election as a director at such meeting.
3.03. Regular Meetings. A regular meeting of the Board of
Directors shall be held, without other notice than this Bylaw, immediately
after the annual meeting of shareholders, and each adjourned session thereof.
The place of such regular meeting shall be the same as the place of the meeting
of shareholders which precedes it, or such other suitable place as may be
announced at such meeting of shareholders or designated in a notice
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sent to the directors. The Board of Directors and any committee may provide,
by resolution, the time and place, either within or without the State of
Wisconsin, for the holding of additional regular meetings without other notice
than such resolution.
3.04. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of either the Chairperson of the
Board, if there is one, or the President. Special meetings of any committee
may be called by or at the request of the foregoing persons or the chairperson
of the committee. The persons calling any special meeting of the Board of
Directors or committee may fix any place, either within or without the State of
Wisconsin, as the place for holding any special meeting called by them, and if
no other place is fixed the place of meeting shall be the principal office of
the corporation in the State of Wisconsin.
3.05 Meetings By Telephone or Other Communication Technology.
(a) Any or all directors may participate in a regular or special meeting or in
a committee meeting of the Board of Directors by, or conduct the meeting
through the use of, telephone or any other means of communication by which
either: (i) all participating directors may simultaneously hear each other
during the meeting or (ii) all communication during the meeting is immediately
transmitted to each participating director, and each participating director is
able to immediately send messages to all other participating directors.
(b) If a meeting will be conducted through the use of any
means described in Section 3.05(a), all participating directors shall be
informed that a meeting is taking place at which official business may be
transacted. A director participating in a meeting by any means described in
Section 3.05(a) is deemed to be present in person at the meeting.
3.06. Notice of Meetings. Except as otherwise provided in
the Articles of Incorporation or the Wisconsin Business Corporation Law, notice
of the date, time and place of any special meeting of the Board of Directors
and of any special meeting of a committee of the Board shall be given orally or
in writing to each director or committee member at least 48 hours prior to the
meeting, except that notice by mail or private carrier shall be given at least
five (5) days prior to the meeting. The notice need not describe the purpose
of the meeting. Notice may be communicated in person, by telephone, telegraph
or facsimile, or by mail or private carrier. Oral notice is effective when
communicated. Written notice is effective as follows: If delivered in person,
when received; if given by mail, when deposited, postage prepaid, in the United
States mail addressed to the director at his or her business or home address
(or such
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other address as the director may have designated in writing filed with the
Secretary); if given by private carrier, when delivered to the private carrier,
with fees prepaid, addressed to the director at his or her business or home
address (or such other address as the director may have designated in writing
filed with the Secretary); if given by facsimile, at the time transmitted to a
facsimile number at any address designated above; and if given by telegraph,
when delivered to the telegraph company.
3.07. Quorum. Except as otherwise provided by the Wisconsin
Business Corporation Law, a majority of the number of directors as provided in
Section 3.01 shall constitute a quorum of the Board of Directors. Except as
otherwise provided by the Wisconsin Business Corporation Law, a majority of the
number of directors appointed to serve on a committee shall constitute a quorum
of the committee. Although less than a quorum of the Board of Directors or a
committee is present at a meeting, a majority of the directors present may
adjourn the meeting from time to time without further notice.
3.08. Manner of Acting. Except as otherwise provided by the
Wisconsin Business Corporation Law or the Articles of Incorporation, the
affirmative vote of a majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors or any committee
thereof.
3.09. Conduct of Meetings. The Chairperson of the Board, or
if there is none, or in his or her absence, the President, and in the
President's absence, a Vice President in the order provided under Section 4.06
of these Bylaws, and in their absence, any director chosen by the directors
present, shall call meetings of the Board of Directors to order and shall chair
the meeting. The Secretary of the corporation shall act as secretary of all
meetings of the Board of Directors, but in the absence of the Secretary, the
presiding officer may appoint any assistant secretary or any director or other
person present to act as secretary of the meeting.
3.10. Vacancies. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the number of
directors, may be filled by the shareholders or the Board of Directors. If the
directors remaining in office constitute fewer than a quorum of the Board, the
directors may fill a vacancy by the affirmative vote of a majority of all
directors remaining in office. If the vacant office was held by a director
elected by a voting class of shareholders, only the holders of shares of that
voting class may vote to fill the vacancy if it
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is filled by the shareholders, and only the remaining directors elected by that
voting class may vote to fill the vacancy if it is filled by the directors. A
vacancy that will occur at a specific later date (because of a resignation
effective at a later date or otherwise) may be filled before the vacancy
occurs, but the new director may not take office until the vacancy occurs.
3.11. Compensation. The Board of Directors, irrespective of
any personal interest of any of its members, may fix the compensation of
directors, or may delegate the authority to an appropriate committee.
3.12. Presumption of Assent. A director who is present and
is announced as present at a meeting of the Board of Directors or a committee
thereof at which action on any corporate matter is taken shall be presumed to
have assented to the action taken unless (i) the director objects at the
beginning of the meeting or promptly upon his or her arrival to holding the
meeting or transacting business at the meeting, or (ii) the director's dissent
or abstention from the action taken is entered in the minutes of the meeting,
or (iii) the director delivers his or her written dissent or abstention to the
presiding officer of the meeting before the adjournment thereof or to the
corporation immediately after the adjournment of the meeting. Such right to
dissent or abstain shall not apply to a director who voted in favor of such
action.
3.13. Committees. Unless the Articles of Incorporation
otherwise provide, the Board of Directors, by resolution adopted by the
affirmative vote of a majority of all the directors then in office, may create
one (1) or more committees. Each committee shall consist of three (3) or more
directors as members. An Executive Committee so appointed shall have and may
exercise, when the Board of Directors is not in session, the powers of the
Board of Directors in the management of the business and affairs of the
corporation, subject to the limitations set forth in this Section 3.13 and any
additional limitations provided by resolution adopted by the affirmative vote
of the directors then in office. Committees other than an Executive Committee,
to the extent provided in the resolution adopted by the Board of Directors
creating such other committees, and as thereafter supplemented or amended by
further resolution adopted by a like vote, may exercise the authority of the
Board of Directors, except that neither the Executive Committee nor any other
committee may: (a) authorize distributions; (b) approve or propose to
shareholders action that the Wisconsin Business Corporation Law requires be
approved by shareholders; (c) fill vacancies on the Board of Directors or any
of its committees, except that the Board of Directors may provide by resolution
that any vacancies on a committee shall be filled by the affirmative vote of a
majority of the remaining committee members; (d) amend
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the Articles of Incorporation; (e) adopt, amend or repeal Bylaws; (f) approve a
plan of merger not requiring shareholder approval; (g) authorize or approve
reacquisition of shares, except according to a formula or method prescribed by
the Board of Directors or (h) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except within
limits prescribed by the Board of Directors. The Board of Directors may elect
one or more of its members as alternate members of any such committee who may
take the place of any absent member or members at any meeting of such
committee, upon request by the Chairperson of the Board, if there is one, the
President or upon request by the chairperson of such meeting. Each such
committee shall fix its own rules (consistent with the Wisconsin Business
Corporation Law, the Articles of Incorporation and these Bylaws) governing the
conduct of its activities and shall make such reports to the Board of Directors
of its activities as the Board of Directors may request. Unless otherwise
provided by the Board of Directors in creating a committee, a committee may
employ counsel, accountants and other consultants to assist it in the exercise
of authority. The creation of a committee, delegation of authority to a
committee or action by a committee does not relieve the Board of Directors or
any of its members of any responsibility imposed on the Board of Directors or
its members by law.
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ARTICLE IV. OFFICERS
4.01. Appointment. The principal officers shall include a
President, one or more Vice Presidents (the number and designations to be
determined by the Board of Directors), a Secretary, a Treasurer and such other
officers if any, as may be deemed necessary by the Board of Directors, each of
whom shall be appointed by the Board of Directors. Any two or more offices may
be held by the same person.
4.02. Resignation and Removal. An officer shall hold office
until he or she resigns, dies, is removed hereunder, or a different person is
appointed to the office. An officer may resign at any time by delivering an
appropriate written notice to the corporation. The resignation is effective
when the notice is delivered, unless the notice specifies a later effective
date and the corporation accepts the later effective date. Any officer may be
removed by the Board of Directors with or without cause and notwithstanding the
contract rights, if any, of the person removed. Except as provided in the
preceding sentence, the resignation or removal is subject to any remedies
provided by any contract between the officer and the corporation or otherwise
provided by law. Appointment shall not of itself create contract rights.
4.03. Vacancies. A vacancy in any office because of death,
resignation, removal or otherwise, shall be filled by the Board of Directors.
If a resignation is effective at a later date, the Board of Directors may fill
the vacancy before the effective date if the Board of Directors provides that
the successor may not take office until the effective date.
4.04. Chairperson of the Board. The Board of Directors may
at its discretion appoint a Chairperson of the Board. The Chairperson of the
Board, if there is one, shall preside at all meetings of the shareholders and
Board of Directors, and shall carry out such other duties as directed by the
Board of Directors.
4.05. President. The President shall be the principal
executive officer and, subject to the control and direction of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He or she shall, in the absence of the Chairperson
of the Board (if one is appointed), preside at all meetings of the shareholders
and of the Board of Directors. The President shall have authority, subject to
such rules as may be prescribed by the Board of Directors, to appoint such
agents and employees of the corporation as he or she shall deem necessary, to
prescribe their powers, duties
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and compensation, and to delegate authority to them. Such agents and employees
shall hold office at the discretion of the President. The President shall have
authority to sign, execute and acknowledge, on behalf of the corporation, all
deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all
other documents or instruments necessary or proper to be executed in the course
of the corporation's regular business, or which shall be authorized by
resolution of the Board of Directors; and, except as otherwise provided by law
or directed by the Board of Directors, the President may authorize any Vice
President or other officer or agent of the corporation to sign, execute and
acknowledge such documents or instruments in his or her place and stead. In
general he or she shall perform all duties incident to the office of President
and such other duties as may be prescribed by the Board of Directors from time
to time.
4.06. Vice Presidents. In the absence of the President, or
in the event of the President's death, inability or refusal to act, or in the
event for any reason it shall be impracticable for the President to act
personally, a Vice President (or in the event there be more than one Vice
President, the Vice Presidents in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of their
appointment) shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President. Any Vice President may sign, with the Secretary or Assistant
Secretary, certificates for shares of the corporation; and shall perform such
other duties and have such authority as from time to time may be delegated or
assigned to him or her by the President or the Board of Directors. The
execution of any instrument of the corporation by any Vice President shall be
conclusive evidence, as to third parties, of the Vice President's authority to
act in the stead of the President.
4.07. Secretary. The Secretary shall: (a) keep (or cause to
be kept) regular minutes of all meetings of the shareholders, the Board of
Directors and any committees of the Board of Directors in one or more books
provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation, if any,
and see that the seal of the corporation, if any, is affixed to all documents
which are authorized to be executed on behalf of the corporation under its
seal; (d) keep or arrange for the keeping of a register of the post office
address of each shareholder which shall be furnished to the Secretary by such
shareholder; (e) sign with the President, or a Vice President, certificates for
shares of the corporation, the issuance of which shall have been authorized by
resolution of the Board of Directors; (f) keep
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or arrange for the keeping of the stock transfer books of the corporation; and
(g) in general perform all duties incident to the office of Secretary and have
such other duties and exercise such authority as from time to time may be
delegated or assigned to him or her by the President or by the Board of
Directors.
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4.08. Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
(b) receive and give receipts for moneys due and payable to the corporation
from any source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries as shall be
selected by the corporation; and (c) in general perform all of the duties
incident to the office of Treasurer and have such other duties and exercise
such other authority as from time to time may be delegated or assigned to him
or her by the President or by the Board of Directors.
4.09. Assistants and Acting Officers. The Board of Directors
or the President shall have the power to appoint any person to act as assistant
to any officer, or as agent for the corporation in the officer's stead, or to
perform the duties of such officer whenever for any reason it is impracticable
for such officer to act personally, and such assistant or acting officer or
other agent so appointed by the Board of Directors or President shall have the
power to perform all the duties of the office to which that person is so
appointed to be assistant, or as to which he or she is so appointed to act,
except as such power may be otherwise defined or restricted by the Board of
Directors or the President.
4.10. Salaries. The salaries of the principal officers shall
be fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such salary
by reason of the fact that such officer is also a director of the corporation.
ARTICLE V. CERTIFICATES FOR SHARES AND THEIR TRANSFER
5.01. Certificates for Shares. All shares of this
corporation shall be represented by certificates. Certificates representing
shares of the corporation shall be in such form, consistent with law, as shall
be determined by the Board of Directors. At a minimum, a share certificate
shall state on its face the name of the corporation and that it is organized
under the laws of the State of Wisconsin, the name of the person to whom
issued, and the number and class of shares and the designation of the series,
if any, that the certificate represents. If the corporation is authorized to
issue different classes of shares or different series within a class, the front
or back of the certificate must contain either (a) a summary of the
designations, relative rights, preferences and limitations applicable to each
class, and the variations in the rights, preferences and limitations determined
for each series and the authority of the
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Board of Directors to determine variations for future series, or (b) a
conspicuous statement that the corporation will furnish the shareholder the
information described in clause (a) on request, in writing and without charge.
Such certificates shall be signed, either manually or in facsimile, by the
President or a Vice President and by the Secretary or an Assistant Secretary.
All certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All certificates
surrendered to the corporation for transfer shall be canceled and no new
certificate shall be issued until the former certificate for a like number of
shares shall have been surrendered and canceled, except as provided in Section
5.05.
5.02. Signature by Former Officers. If an officer or
assistant officer, who has signed or whose facsimile signature has been placed
upon any certificate for shares, has ceased to be such officer or assistant
officer before such certificate is issued, the certificate may be issued by the
corporation with the same effect as if that person were still an officer or
assistant officer at the date of its issue.
5.03. Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer, and unless the corporation
has established a procedure by which a beneficial owner of shares held by a
nominee is to be recognized by the corporation as the shareholder, the
corporation may treat the registered owner of such shares as the person
exclusively entitled to vote, to receive notifications and otherwise to have
and exercise all the rights and power of an owner. The corporation may require
reasonable assurance that all transfer endorsements are genuine and effective
and in compliance with all regulations prescribed by or under the authority of
the Board of Directors.
5.04. Restrictions on Transfer. The face or reverse side of
each certificate representing shares shall bear a conspicuous notation of any
restriction upon the transfer of such shares imposed by the corporation or
imposed by any agreement of which the corporation has written notice.
5.05. Lost, Destroyed or Stolen Certificates. Where the
owner claims that his or her certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if the
owner (a) so requests before the corporation has notice that such shares have
been acquired by a bona fide purchaser, and (b) if required by the corporation,
files with the corporation a sufficient indemnity bond, and (c)
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satisfies such other reasonable requirements as may be prescribed by or under
the authority of the Board of Directors.
5.06. Consideration for Shares. The shares of the
corporation may be issued for such consideration as shall be fixed from time to
time and determined to be adequate by the Board of Directors, provided that any
shares having a par value shall not be issued for a consideration less than the
par value thereof. The consideration may consist of any tangible or intangible
property or benefit to the corporation, including cash, promissory notes,
services performed, contracts for services to be performed, or other securities
of the corporation. When the corporation receives the consideration for which
the Board of Directors authorized the issuance of shares, such shares shall be
deemed to be fully paid and nonassessable by the corporation.
5.07. Stock Regulations. The Board of Directors shall have
the power and authority to make all such rules and regulations not inconsistent
with the statutes of the State of Wisconsin as it may deem expedient concerning
the issue, transfer and registration of certificates representing shares of the
corporation, including the appointment or designation of one or more stock
transfer agents and one or more registrars.
ARTICLE VI. WAIVER OF NOTICE
6.01. Shareholder Written Waiver. A shareholder may waive
any notice required by the Wisconsin Business Corporation Law, the Articles of
Incorporation or these Bylaws before or after the date and time stated in the
notice. The waiver shall be in writing and signed by the shareholder entitled
to the notice, shall contain the same information that would have been required
in the notice under the Wisconsin Business Corporation Law except that the time
and place of meeting need not be stated, and shall be delivered to the
corporation for inclusion in the corporate records.
6.02. Shareholder Waiver by Attendance. A shareholder's
attendance at a meeting, in person or by proxy, waives objection to both of the
following:
(a) Lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the meeting or promptly
upon arrival objects to holding the meeting or transacting business at the
meeting.
(b) Consideration of a particular matter at the
meeting that is not within the purpose described in the meeting
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notice, unless the shareholder objects to considering the matter when it is
presented.
6.03. Director Written Waiver. A director may waive any
notice required by the Wisconsin Business Corporation Law, the Articles of
Incorporation or the Bylaws before or after the date and time stated in the
notice. The waiver shall be in writing, signed by the director entitled to the
notice and retained by the corporation.
6.04. Director Waiver by Attendance. A director's attendance
at or participation in a meeting of the Board of Directors or any committee
thereof waives any required notice to him or her of the meeting unless the
director at the beginning of the meeting or promptly upon his or her arrival
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting.
ARTICLE VII. ACTION WITHOUT MEETINGS
7.01. Shareholder Action Without Meeting. Action required or
permitted by the Wisconsin Business Corporation Law to be taken at a
shareholders' meeting may be taken without a meeting by all shareholders
entitled to vote on the action. The action must be evidenced by one or more
written consents describing the action taken, signed by the shareholders
consenting thereto and delivered to the corporation for inclusion in its
corporate records. Action taken hereunder is effective when the consent is
delivered to the corporation, unless the consent specifies a different
effective date. A consent hereunder has the effect of a meeting vote and may
be described as such in any document.
7.02. Director Action Without Meeting. Unless the Articles
of Incorporation provide otherwise, action required or permitted by the
Wisconsin Business Corporation Law to be taken at a Board of Directors meeting
or committee meeting may be taken without a meeting if the action is taken by
all members of the Board or committee. The action shall be evidenced by one or
more written consents describing the action taken, signed by each director and
retained by the corporation. Action taken hereunder is effective when the last
director signs the consent, unless the consent specifies a different effective
date. A consent signed hereunder has the effect of a unanimous vote taken at a
meeting at which all directors or committee members were present, and may be
described as such in any document.
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ARTICLE VIII. INDEMNIFICATION
8.01. Indemnification for Successful Defense. Within twenty
(20) days after receipt of a written request pursuant to Section 8.03, the
corporation shall indemnify a director or officer, to the extent he or she has
been successful on the merits or otherwise in the defense of a proceeding, for
all reasonable expenses incurred in the proceeding if the director or officer
was a party because he or she is a director or officer of the corporation.
8.02. Other Indemnification.
(a) In cases not included under Section 8.01, the
corporation shall indemnify a director or officer against all liabilities and
expenses incurred by the director or officer in a proceeding to which the
director or officer was a party because he or she is a director or officer of
the corporation, unless liability was incurred because the director or officer
breached or failed to perform a duty he or she owes to the corporation and the
breach or failure to perform constitutes any of the following:
(1) A willful failure to deal fairly with the corporation or
its shareholders in connection with a matter in which the director or officer
has a material conflict of interest.
(2) A violation of criminal law, unless the director or
officer had reasonable cause to believe that his or her conduct was lawful or
no reasonable cause to believe that his or her conduct was unlawful.
(3) A transaction from which the director or officer derived
an improper personal profit.
(4) Willful misconduct.
(b) Determination of whether indemnification is
required under this Section shall be made pursuant to Section 8.05.
(c) The termination of a proceeding by judgment,
order, settlement or conviction, or upon a plea of no contest or an equivalent
plea, does not, by itself, create a presumption that indemnification of the
director or officer is not required under this Section.
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8.03. Written Request. A director or officer who seeks
indemnification under Sections 8.01 or 8.02 shall make a written request to the
corporation.
8.04. Nonduplication. The corporation shall not indemnify a
director or officer under Sections 8.01 or 8.02 if the director or officer has
previously received indemnification or allowance of expenses from any person,
including the corporation, in connection with the same proceeding. However,
the director or officer has no duty to look to any other person for
indemnification.
8.05. Determination of Right to Indemnification.
(a) Unless otherwise provided by the Articles of
Incorporation or by written agreement between the director or officer and the
corporation, the director or officer seeking indemnification under Section 8.02
shall select one of the following means for determining his or her right to
indemnification:
(1) By a majority vote of a quorum of the Board of Directors
consisting of directors not at the time parties to the same or related
proceedings. If a quorum of disinterested directors cannot be obtained, by
majority vote of a committee duly appointed by the Board of Directors and
consisting solely of two (2) or more directors who are not at the time parties
to the same or related proceedings. Directors who are parties to the same or
related proceedings may participate in the designation of members of the
committee.
(2) By independent legal counsel selected by a quorum of the
Board of Directors or its committee in the manner prescribed in sub. (1) or, if
unable to obtain such a quorum or committee, by a majority vote of the full
Board of Directors, including directors who are parties to the same or related
proceedings.
(3) By a panel of three (3) arbitrators consisting of one
arbitrator selected by those directors entitled under sub. (2) to select
independent legal counsel, one arbitrator selected by the director or officer
seeking indemnification and one arbitrator selected by the two (2) arbitrators
previously selected.
(4) By an affirmative vote of shares represented at a meeting
of shareholders at which a quorum of the voting group entitled to vote thereon
is present. Shares owned by, or voted under the control of, persons who are at
the time parties to the
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same or related proceedings, whether as plaintiffs or defendants or in any
other capacity, may not be voted in making the determination.
(5) By a court under Section 8.08.
(6) By any other method provided for in any additional right
to indemnification permitted under Section 8.07.
(b) In any determination under (a), the burden of
proof is on the corporation to prove by clear and convincing evidence that
indemnification under Section 8.02 should not be allowed.
(c) A written determination as to a director's or
officer's indemnification under Section 8.02 shall be submitted to both the
corporation and the director or officer within 60 days of the selection made
under (a).
(d) If it is determined that indemnification is
required under Section 8.02, the corporation shall pay all liabilities and
expenses not prohibited by Section 8.04 within ten (10) days after receipt of
the written determination under (c). The corporation shall also pay all
expenses incurred by the director or officer in the determination process under
(a).
8.06. Advance of Expenses. Within ten (10) days after
receipt of a written request by a director or officer who is a party to a
proceeding, the corporation shall pay or reimburse his or her reasonable
expenses as incurred if the director or officer provides the corporation with
all of the following:
(a) A written affirmation of his or her good faith
belief that he or she has not breached or failed to perform his or her duties
to the corporation.
(b) A written undertaking, executed personally or on
his or her behalf, to repay the allowance to the extent that it is ultimately
determined under Section 8.05 that indemnification under Section 8.02 is not
required and that indemnification is not ordered by a court under Section
8.08(b)(2). The undertaking under this Section 8.06(b) shall be an unlimited
general obligation of the director or officer and may be accepted without
reference to his or her ability to repay the allowance. The undertaking may be
secured or unsecured.
8.07. Nonexclusivity.
(a) Except as provided in Section 8.07(b), Sections
8.01, 8.02 and 8.06 do not preclude any additional right
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to indemnification or allowance of expenses that a director or officer may have
under any of the following:
(1) The Articles of Incorporation.
(2) A written agreement between the director or officer and
the corporation.
(3) A resolution of the Board of Directors.
(4) A resolution, after notice, adopted by a majority vote of
all of the corporation's voting shares then issued and outstanding.
(b) Regardless of the existence of an additional
right under Section 8.07(a), the corporation shall not indemnify a director or
officer, or permit a director or officer to retain any allowance of expenses
unless it is determined by or on behalf of the corporation that the director or
officer did not breach or fail to perform a duty he or she owes to the
corporation which constitutes conduct under Section 8.02(a)(1), (2), (3) or
(4). A director or officer who is a party to the same or related proceeding
for which indemnification or an allowance of expenses is sought may not
participate in a determination under this Section 8.07(b).
(c) Sections 8.01 to 8.14 do not affect the
corporation's power to pay or reimburse expenses incurred by a director or
officer in either of the following circumstances:
(1) As a witness in a proceeding to which he or she is not a
party.
(2) As a plaintiff or petitioner in a proceeding because he or
she is or was an employee, agent, director or officer of the corporation.
8.08. Court-Ordered Indemnification.
(a) Except as provided otherwise by written agreement
between the director or officer and the corporation, a director or officer who
is a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction.
Application shall be made for an initial determination by the court under
Section 8.05(a)(5) or for review by the court of an adverse determination under
Section 8.05(a)(1), (2), (3), (4) or (6). After receipt of an application, the
court shall give any notice it considers necessary.
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(b) The court shall order indemnification if it
determines any of the following:
(1) That the director or officer is entitled to
indemnification under Sections 8.01 or 8.02.
(2) That the director or officer is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances,
regardless of whether indemnification is required under Section 8.02.
(c) If the court determines under Section 8.08(b)
that the director or officer is entitled to indemnification, the corporation
shall pay the director's or officer's expenses incurred to obtain the
court-ordered indemnification.
8.09. Indemnification and Allowance of Expenses of Employees
and Agents. The corporation shall indemnify an employee of the corporation who
is not a director or officer of the corporation, to the extent that he or she
has been successful on the merits or otherwise in defense of a proceeding, for
all reasonable expenses incurred in the proceeding if the employee was a party
because he or she was an employee of the corporation. In addition, the
corporation may indemnify and allow reasonable expenses of an employee or agent
who is not a director or officer of the corporation to the extent provided by
the Articles of Incorporation or these Bylaws, by general or specific action of
the Board of Directors or by contract.
8.10. Insurance. The corporation may purchase and maintain
insurance on behalf of an individual who is an employee, agent, director or
officer of the corporation against liability asserted against or incurred by
the individual in his or her capacity as an employee, agent, director or
officer, regardless of whether the corporation is required or authorized to
indemnify or allow expenses to the individual against the same liability under
Sections 8.01, 8.02, 8.06, 8.07 and 8.09.
8.11. Securities Law Claims.
(a) Pursuant to the public policy of the State of
Wisconsin, the corporation shall provide indemnification and allowance of
expenses and may insure for any liability incurred in connection with a
proceeding involving securities regulation described under Section 8.11(b) to
the extent required or permitted under Sections 8.01 to 8.10.
(b) Sections 8.01 to 8.10 apply, to the extent
applicable to any other proceeding, to any proceeding involving a federal or
state statute, rule or regulation regulating the
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offer, sale or purchase of securities, securities brokers or dealers, or
investment companies or investment advisers.
8.12. Liberal Construction. In order for the corporation to
obtain and retain qualified directors, officers and employees, the foregoing
provisions shall be liberally administered in order to afford maximum
indemnification of directors, officers and, where Section 8.09 of these Bylaws
applies, employees. The indemnification above provided for shall be granted in
all applicable cases unless to do so would clearly contravene law, controlling
precedent or public policy.
8.13. Definitions Applicable to this Article. For purposes
of this Article:
(a) "Affiliate" shall include, without limitation,
any corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the corporation.
(b) "Corporation" means this corporation and any
domestic or foreign predecessor of this corporation where the predecessor
corporation's existence ceased upon the consummation of a merger or other
transaction.
(c) "Director or officer" means any of the following:
(1) An individual who is or was a director or officer of this
corporation.
(2) An individual who, while a director or officer of this
corporation, is or was serving at the corporation's request as a director,
officer, partner, trustee, member of any governing or decision-making
committee, employee or agent of another corporation or foreign corporation,
partnership, joint venture, trust or other enterprise.
(3) An individual who, while a director or officer of this
corporation, is or was serving an employee benefit plan because his or her
duties to the corporation also impose duties on, or otherwise involve services
by, the person to the plan or to participants in or beneficiaries of the plan.
(4) Unless the context requires otherwise, the estate or
personal representative of a director or officer.
For purposes of this Article, it shall be conclusively
presumed that any director or officer serving as a director,
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officer, partner, trustee, member of any governing or decision-making
committee, employee or agent of an affiliate shall be so serving at the request
of the corporation.
(d) "Expenses" include fees, costs, charges,
disbursements, attorney fees and other expenses incurred in connection with a
proceeding.
(e) "Liability" includes the obligation to pay a
judgment, settlement, penalty, assessment, forfeiture or fine, including an
excise tax assessed with respect to an employee benefit plan, and reasonable
expenses.
(f) "Party" includes an individual who was or is, or
who is threatened to be made, a named defendant or respondent in a proceeding.
(g) "Proceeding" means any threatened, pending or
completed civil, criminal, administrative or investigative action, suit,
arbitration or other proceeding, whether formal or informal, which involves
foreign, federal, state or local law and which is brought by or in the right of
the corporation or by any other person.
ARTICLE IX. SEAL
The Board of Directors may provide a corporate seal which may
be circular in form and have inscribed thereon the name of the corporation and
the state of incorporation and the words "Corporate Seal."
ARTICLE X. AMENDMENTS
10.01. By Shareholders. These Bylaws may be amended or
repealed and new Bylaws may be adopted by the shareholders by the vote provided
in Section 2.07 of these Bylaws or as specifically provided in this Section
10.01. If authorized by the Articles of Incorporation, the shareholders may
adopt or amend a Bylaw that fixes a greater or lower quorum requirement or a
greater voting requirement for shareholders or voting classes of shareholders
than otherwise is provided in the Wisconsin Business Corporation Law. The
adoption or amendment of a Bylaw that adds, changes or deletes a greater or
lower quorum requirement or a greater voting requirement for shareholders must
meet the same quorum requirement and be adopted by the same vote and voting
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classes required to take action under the quorum and voting requirement then in
effect.
10.02. By Directors. Except as the Articles of Incorporation
may otherwise provide, these Bylaws may also be amended or repealed and new
Bylaws may be adopted by the Board of Directors by the vote provided in Section
3.08, but (a) no Bylaw adopted by the shareholders shall be amended, repealed
or readopted by the Board of Directors if the Bylaw so adopted so provides and
(b) a Bylaw adopted or amended by the shareholders that fixes a greater or
lower quorum requirement or a greater voting requirement for the Board of
Directors than otherwise is provided in the Wisconsin Business Corporation Law
may not be amended or repealed by the Board of Directors unless the Bylaw
expressly provides that it may be amended or repealed by a specified vote of
the Board of Directors. Action by the Board of Directors to adopt or amend a
Bylaw that changes the quorum or voting requirement for the Board of Directors
must meet the same quorum requirement and be adopted by the same vote required
to take action under the quorum and voting requirement then in effect, unless a
different voting requirement is specified as provided by the preceding
sentence. A Bylaw that fixes a greater or lower quorum requirement or a
greater voting requirement for shareholders or voting classes of shareholders
than otherwise is provided in the Wisconsin Business Corporation Law may not be
adopted, amended or repealed by the Board of Directors.
10.03. Implied Amendments. Any action taken or authorized by
the shareholders or by the Board of Directors, which would be inconsistent with
the Bylaws then in effect but is taken or authorized by a vote that would be
sufficient to amend the Bylaws so that the Bylaws would be consistent with such
action, shall be given the same effect as though the Bylaws had been
temporarily amended or suspended so far, but only so far, as is necessary to
permit the specific action so taken or authorized.
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EXHIBIT 4.5
- - --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of August 22, 1994
among
APPLIED POWER INC.,
APPLIED POWER FINANCE S.A.,
VARIOUS FINANCIAL INSTITUTIONS,
and
CONTINENTAL BANK,
as Agent
- - --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C>
SECTION 1 CERTAIN DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2 COMMITTED LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.1 Committed Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1.2 Commitment Limits . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.2 Procedure for Committed Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3 Maturity of Committed Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.4 Committed Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.5 Termination Date Extension. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3 BID LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.1 Making of Bid Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.2 Procedure for Bid Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.3 Maturity of Bid Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.4 Bid Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4 INTEREST AND FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1 Interest Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Interest Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.3 Setting and Notice of Committed Loan Rates . . . . . . . . . . . . . . . . . . . . 25
4.4 Non-Use Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.5 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.6 Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.1 Reduction or Termination of the Commitments . . . . . . . . . . . . . . . . . . . . 27
5.2 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES . . . . . . . . . . . . . . . . . . . 28
6.1 Making of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Order and Proration of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.4 Payments Net of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.5 Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 7 INCREASED COSTS AND SPECIAL PROVISIONS FOR
FIXED RATE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . 33
7.3 Changes in Law Rendering Certain Loans Unlawful . . . . . . . . . . . . . . . . . . 34
7.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.5 Discretion of Lenders as to Manner of Funding . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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<TABLE>
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7.6 Mitigation of Circumstances; Replacement of Affected Lender . . . . . . . . . . . . 35
7.7 Conclusiveness of Statements; Survival of Provisions . . . . . . . . . . . . . . . 36
SECTION 8 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Organization, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.2 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.3 Validity and Binding Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.6 Litigation and Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . 38
8.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.9 Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.10 Regulated Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.11 Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.13 Environmental and Safety Matters . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.14 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.15 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.16 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.17 Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.18 Patents, Trademarks, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 9 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1 Reports, Certificates and Other Information . . . . . . . . . . . . . . . . . . . . 41
9.1.1 Audit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.1.2 Interim Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.1.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . 42
9.1.4 Reports to SEC . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.1.5 Notice of Default, Litigation and
ERISA Matters . . . . . . . . . . . . . . . . . . . . . . . 43
9.1.6 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2 Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.4 Compliance with Law; Payment of Taxes and Liabilities . . . . . . . . . . . . . . . 44
9.5 Maintenance of Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.6 Financial Ratios and Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 44
9.7 Mergers, Consolidations, Purchases and Sales . . . . . . . . . . . . . . . . . . . 45
9.8 Commercial Paper Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.9 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.10 Restricted Payments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.12 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.13 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.14 Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.15.1 Environmental Obligations . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
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<TABLE>
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9.15.2 Environmental Information . . . . . . . . . . . . . . . . . . . . 48
9.16 Unconditional Purchase Obligations . . . . . . . . . . . . . . . . . . . . . . . . 48
9.17 Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.18 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.19 The Company's and Subsidiaries' Stock . . . . . . . . . . . . . . . . . . . . . . 49
9.20 Negative Pledges; Subsidiary Payments . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.1 Conditions Precedent to Initial Loan . . . . . . . . . . . . . . . . . . . . . . . 49
10.1.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.1.2 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . 50
10.1.3 Consents, etc . . . . . . . . . . . . . . . . . . . . . . . 50
10.1.4 Incumbency and Signatures . . . . . . . . . . . . . . . . . 50
10.1.5 Opinion of Counsel for the Company . . . . . . . . . . . . 50
10.1.6 Opinion of Counsel for the Agent . . . . . . . . . . . . . 50
10.1.7 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.2 Conditions Precedent to All Loans . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.1.1 Non-Payment of Notes, etc . . . . . . . . . . . . . . . . . 51
11.1.2 Non-Payment of Other Indebtedness for Borrowed Money . . . 51
11.1.3 Warranties . . . . . . . . . . . . . . . . . . . . . . . . 51
11.1.4 Bankruptcy, Insolvency, etc . . . . . . . . . . . . . . . . 51
11.1.5 Non-Compliance with Certain Covenants . . . . . . . . . . . 52
11.1.6 Non-Compliance with Other Provisions
of this Agreement . . . . . . . . . . . . . . . . . . . . . 52
11.1.7 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . 52
11.1.8 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.1.9 Change of Control . . . . . . . . . . . . . . . . . . . . . 53
11.1.10 Material Adverse Effect . . . . . . . . . . . . . . . . . . 53
11.2 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 12 THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.1 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
12.3 Action on Instructions of the Required Lenders . . . . . . . . . . . . . . 54
12.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
12.5 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.6 Credit Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.7 Continental and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 56
12.8 Resignation or Removal . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 13 GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
13.1 Guarantee from Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
13.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
13.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
13.4 No Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.5 Waiver of Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
13.6 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
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<TABLE>
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13.7 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
13.8 Subrogation, Waivers, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
13.9 Delay, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 14 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.1 Waiver; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.3 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.4 Assignments; Participations . . . . . . . . . . . . . . . . . . . . . . . 61
14.4.1 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.4.2 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . 63
14.5 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . 64
14.6 Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
14.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
14.8 Governing Law; Severability . . . . . . . . . . . . . . . . . . . . . . . 64
14.9 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . 65
14.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.11 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.12 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
14.13 FORUM SELECTION AND SUBMISSION TO JURISDICTION . . . . . . . . . . . . . . . . . 65
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULES and EXHIBITS
<S> <C>
SCHEDULE I Schedule of Lenders
SCHEDULE II Disclosure Schedule
Item 8.6 Litigation
Item 8.8 Subsidiaries
Item 8.13 Environmental Matters
Item 8.18 Patents, Trademarks
Item 8.19 Insurance
Item 9.9 Liens
EXHIBIT A Form of Bid Loan Request (Section 1)
EXHIBIT B Form of Bid (Section 1)
EXHIBIT C Form of Committed Loan Request (Section 2.2)
EXHIBIT D Form of Bid Note (Section 1)
EXHIBIT E Form of Committed Note (Section 1)
EXHIBIT F Form of Opinion of Counsel for the Company (Section 10.1.6)
EXHIBIT G Form of Opinion of Counsel for the Agent (Section 10.1.7)
EXHIBIT H Form of Assignment Agreement (Section 14.4.1)
</TABLE>
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this Agreement") dated as of August 22, 1994 is
among APPLIED POWER INC., a Wisconsin corporation (the "Company"), APPLIED POWER
FINANCE S.A., a French corporation ("APSA"), the financial institutions listed
on the signature pages hereof (together with their respective successors and
assigns, collectively the "Lenders" and individually each a "Lender"), and
CONTINENTAL BANK (in its individual capacity, together with its successors and
assigns, "Continental"), as agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, the "Agent").
SECTION 1 CERTAIN DEFINITIONS AND INTERPRETATION.
SECTION 1.1 Defined Terms. When used herein the following terms have
the following meanings (such meanings to be applicable to both the singular and
plural forms of the terms defined):
Absolute Rate means a rate of interest per annum expressed as
a percentage to four decimal places and set forth in a Bid for a
particular Bid Loan amount and particular Loan Period.
Affiliate means, with respect to any Person, any other Person
which, directly or indirectly, controls, is controlled by or is under
common control with such Person. For purposes of this definition,
"control" (together with the correlative meanings of "controlled by"
and "under common control with") means possession, directly or
indirectly, of the power (a) to vote 5% or more of the securities (on
a fully diluted basis) having ordinary voting power for the directors
or managing general partners (or their equivalent) of such Person or
(b) to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by
contract or otherwise.
Agent - see the Preamble.
Aggregate Commitment at any time means the total amount of the
Commitments of all Lenders.
Agreement - see the Preamble.
Alternate Reference Rate means at any time the greater of (a)
the Federal Funds Rate as then in effect plus 1/2 of 1% and (b) the
rate per annum then most recently announced by the Agent as its
reference rate.
APSA - see the Preamble.
<PAGE> 8
Assignee - see Section 14.4.1.
Authorized Officer means, relative to each Borrower, those of
its officers whose signatures and incumbency shall have been certified
to the Lender pursuant to Section 10.1.4.
Available Currency means Dollars, Guilders, Sterling, Deutsche
Marks, Yen, French Francs, Italian Lira, Swiss Francs, Canadian
Dollars and any other currency requested by either Borrower as an
"Available Currency" hereunder; provided, however, that the definition
of "Available Currency" shall not include any such other currency if
such other currency is not then (i) freely available in the
international interbank market, (ii) freely transferable and freely
convertible into Dollars and (iii) readily utilized for the settlement
of private international debt transactions.
Bid means one or more offers by a Lender to make one or more
Bid Loans, submitted to the Company by telephone no later than the
Submission Deadline, and promptly confirmed on a duly completed and
executed form substantially similar to Exhibit B transmitted by
facsimile to the Company.
Bid Loan means a loan to either Borrower that bears interest
at an Absolute Rate and is made pursuant to Section 3.
Bid Loan Request means a request by either Borrower for Bids,
submitted by the Company to the Lenders by telephone no later than the
time provided in Section 3.2(a), and promptly confirmed on a duly
completed and executed form substantially similar to Exhibit A
transmitted by facsimile to the Lenders.
Bid Note means a promissory note of a Borrower, substantially
in the form of Exhibit D, duly completed, evidencing Bid Loans made to
such Borrower, as such note may be replaced, amended or otherwise
modified from time to time.
Borrower means the Company and/or APSA, as applicable.
Business Day means
(a) any day which is neither a Saturday or Sunday
nor a legal holiday on which banks are authorized or required
to be closed in Chicago, Illinois or New York, New York; and
(b) relative to the date of
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<PAGE> 9
(i) making or continuing any Eurocurrency Loans
or Bid Loans,
(ii) making any payment or prepayment of
principal of or payment of interest on any portion
of the principal amount of any Eurocurrency Loans or
Bid Loans, or
(iii) either Borrower giving any notice (or the
number of Business Days to elapse prior to the
effectiveness thereof) in connection with any matter
referred to in clause (b)(i) or (b)(ii),
any day on which dealings in the relevant Available Currency
are carried on in the relevant interbank eurocurrency market.
Canadian Dollars means lawful money of Canada.
Capital Lease means, with respect to any Person, any lease of
(or other agreement conveying the right to use) any real or personal
property which, in conformity with GAAP, is accounted for as a capital
lease on the balance sheet of such Person.
CERCLA means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
Code means the Internal Revenue Code of 1986, as amended.
Commitments means the Lenders' commitments to make Committed
Loans hereunder, and Commitment as to any Lender means such Lender's
commitment to make Committed Loans, in each case as reduced from time
to time pursuant to Section 5.1.
Committed Loan - see Section 2.1.1.
Committed Loan Request - see Section 2.2(a).
Committed Note means a promissory note of a Borrower,
substantially in the form of Exhibit E, duly completed, evidencing
Committed Loans to such Borrower, as such note may be replaced,
amended or otherwise modified from time to time.
Company - see the Preamble.
Computation Period means any period of four consecutive Fiscal
Quarters ending on the last day of a Fiscal Quarter.
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<PAGE> 10
Consolidated Interest Expense means, for any period, the
consolidated interest expense of the Company and its Subsidiaries for
such period, as determined in accordance with GAAP and in any event
including, without duplication, all commissions, discounts and other
fees and charges owed with respect to letters of credit and banker's
acceptances, net costs under interest rate protection agreements and
the portion of any Capital Leases allocable to consolidated interest
expense.
Consolidated Net Income means, for any period, all amounts
which, in conformity with GAAP, would be included under net income on
a consolidated income statement of the Company and its Subsidiaries
for such period.
Continental - see the Preamble.
"Contractual Obligation" means, relative to the Company or any
Subsidiary, any provision of any security issued by the Company or such
Subsidiary or of any Instrument or undertaking to which the Company or such
Subsidiary is a party or by which it or any of its property is bound.
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 Company or
APSA, are treated as a single employer under Section 414(b) or 414(c)
of the Code or Section 4001 of ERISA.
Debt of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, whether or not
evidenced by bonds, debentures, notes or similar instruments, (b) all
obligations of such Person as lessee under Capital Leases which have
been recorded as liabilities on a balance sheet of such Person, (c)
all obligations of such Person to pay the deferred purchase price of
property or services (other than current accounts payable in the
ordinary course of business), (d) all indebtedness secured by a Lien
on the property of such Person, whether or not such indebtedness shall
have been assumed by such Person (it being understood that if such
Person has not assumed or otherwise become personally liable for any
such indebtedness, the amount of the Debt of such Person in connection
therewith shall be limited to the lesser of the face amount of such
indebtedness or the fair market value of all property of such Person
securing such indebtedness), (e) all obligations, contingent or
otherwise, with respect to the face amount of all letters of credit
(whether or not drawn) and banker's acceptances issued for the account
of such Person, (f) all obligations of such Person in respect
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<PAGE> 11
of Hedging Arrangements, (g) all Suretyship Liabilities of such Person
and (h) all Debt (as defined above) of any partnership in which such
Person is a general partner. The amount of the Debt of any Person in
respect of Hedging Arrangements shall be deemed to be the unrealized
net loss position of such Person thereunder (determined for each
counterparty individually, but netted for all Hedging Arrangements
maintained with such counterparty).
Debt to Capital Ratio means the ratio of (a) Funded Debt to
(b) Total Capital.
Determination Date means with respect to any Loan in an
Available Currency other than Dollars:
(a) the date a Loan is made; or
(b) if such Loan is a Eurocurrency Rate Loan, the
last Business Day of each month, and the date such
Eurocurrency Rate Loan is continued from the current Interest
Period of such Loan into a subsequent Interest Period.
Deutsche Mark means lawful money of the Federal Republic of
Germany.
Disclosure Schedule means the Disclosure Schedule attached
hereto as Schedule II.
Dollar(s) and the sign "$" mean lawful money of the United
States of America.
Dollar Amount means:
(a) with respect to Dollars or an amount denominated
in Dollars, such amount; and
(b) with respect to an amount of any other Available
Currency or an amount denominated in such Available Currency,
the amount of Dollars into which the Agent could, in
accordance with its practice from time to time in the
interbank foreign exchange market, convert such amount of
Available Currency at its spot rate of exchange (inclusive of
all related costs of conversion) applicable to the relevant
transaction at or about 8:00 a.m., Chicago time, on the
applicable Determination Date for the delivery of Dollars on
the applicable date contemplated in this Agreement.
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<PAGE> 12
Domestic Subsidiary means a Subsidiary that is created or
organized in or under the law of the United States, any State thereof
or the Commonwealth of Puerto Rico.
Environmental Laws means all applicable federal, state or
local statutes, laws, ordinances, codes, rules, regulations and
guidelines (including consent decrees and administrative orders)
relating to public health and safety and protection of the
environment.
ERISA means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in effect
from time to time. References to sections of ERISA also refer to any
successor sections.
Eurocurrency Reserve Percentage means, with respect to any
Eurocurrency Loan for any Loan Period, a percentage (expressed as a
decimal) equal to the daily average during such Interest Period of the
percentage in effect on each day of such Interest Period, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor), for determining the aggregate maximum reserve
requirements applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or any other then applicable regulation of such Board of
Governors which prescribes reserve requirements applicable to
"Eurocurrency Liabilities" as presently defined in Regulation D.
Eurocurrency Loan means any Loan which bears interest at a
rate determined by reference to the Eurocurrency Rate (Reserve
Adjusted).
Eurocurrency Rate means, with respect to any Eurocurrency Loan
for any Loan Period, the rate per annum at which deposits in the
relevant Available Currency in immediately available funds are offered
to the Funding Office of Continental two Business Days prior to the
beginning of such Loan Period by major banks in the major interbank
eurocurrency market as at or about 10:00 a.m., Chicago time, for
delivery on the first day of such Loan Period, for the number of days
comprised therein and in an amount equal or comparable to the amount
of the Eurocurrency Loan of Continental for such Loan Period.
Eurocurrency Rate (Reserve Adjusted) means, with respect to
any Eurocurrency Loan for any Loan Period, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant
to the following formula:
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<PAGE> 13
Eurocurrency Rate = Eurocurrency Rate
(Reserve Adjusted) -----------------
1-Eurocurrency
Reserve Percentage
Event of Default means any of the events described in Section
11.1.
Existing Credit Agreements means (a) Revolving Credit
Agreement dated as of July 10, 1992, as amended, among the Borrowers
and Continental, and (b) Secured Credit Agreement dated as of June 27,
1989, as amended among the Company, API Acquisitions, Inc., various
financial institutions and Continental, as Agent.
Federal Funds Rate means, for any day, the rate set forth in
the daily statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Lender of New York
(including any such successor publication, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective
Rate". If such rate is not published in the Composite 3:30 p.m.
Quotations for any Business Day, the rate for such day will be the
arithmetic mean of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m., New York City time, on such
day by each of three leading brokers of Federal funds transactions in
New York City, selected by the Agent. The rate for any day which is
not a Business Day shall be the rate for the immediately preceding
Business Day.
Fiscal Quarter means any fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of the Company and its
Subsidiaries, which period shall be the 12-month period ending on
August 31 of each year.
Fixed Charge Coverage Ratio means, for any Computation Period,
the ratio of
(a) the sum of
(i) Consolidated Net Income for such period,
plus
(ii) the aggregate amount deducted in respect of
federal, state, local and foreign income
taxes in determining such Consolidated Net
Income,
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<PAGE> 14
plus
(iii) Consolidated Interest Expense for such period,
plus
(iv) the aggregate amount deducted in respect of
leases that were not Capital Leases in
determining such Consolidated Net Income,
plus
(v) the aggregate amount deducted in respect of
amortization of intangible assets (including
goodwill) in determining such Consolidated
Net Income,
to
(b) the sum of
(i) Consolidated Interest Expense for such period,
plus
(ii) the aggregate amount deducted in respect of
leases that were not Capital Leases in
determining such Consolidated Net Income.
Fixed Rate Loans means, collectively, Bid Loans and
Eurocurrency Loans and, individually, any Bid Loan or Eurocurrency
Loan.
Floating Rate Loan means any Loan which bears interest at or
by reference to the Alternate Reference Rate.
French Francs means lawful money of the Republic of France.
Funding Date means the date on which any Loan is scheduled to
be disbursed.
Funded Debt of any Person at any date of determination means
the sum of all Debt described in clauses (a) and (b) of the definition
of "Debt".
Funding Office means with respect to any Lender any office or
offices of such Lender or affiliate or affiliates of such Lender
through which such Lender shall fund or shall have funded any Loan (or
through which it makes any
8
<PAGE> 15
determination for purposes of the definition of "Eurocurrency Rate").
A Funding Office may be, at the option of any Lender, either a
domestic or foreign office of such Lender or a domestic or foreign
office of an affiliate of such Lender.
GAAP means those U.S. generally accepted accounting principles
applied in the preparation of the audited financial statements
referred to in Section 8.4.
Guilders means lawful money of the Netherlands.
Hazardous Material means
(a) any "hazardous substance", as defined by
CERCLA;
(b) any "hazardous waste", as defined by the
Resource Conservation and Recovery Act;
(c) any crude oil, petroleum product or fraction
thereof (excluding gasoline and oil in motor vehicles, small
amounts of cleaners and similar items used in the ordinary
course of business); or
(d) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material or substance within the
meaning of any Environmental Law.
Hedging Arrangement means any interest rate swap, cap or
collar agreement, currency swap agreement or other arrangement
designed to hedge interest rate and/or currency risk.
Impermissible Change in Control means at any time,
(a) the failure of the Company to own, free and
clear of all Liens or other encumbrances, 99% of the issued
and outstanding shares of capital stock of APSA; or
(b) Any Person or group of Persons acting in
concert (other than the "core shareholders") of the Company
identified in Item 1 on the Disclosure Schedule which are
unacceptable to the Required Lenders obtained control of more
than 50% of the issued and outstanding shares of capital stock
of the Company having the power to elect a majority of
directors of the Company.
Instrument means any contract, agreement, letter of credit,
indenture, mortgage, document or writing (whether by
9
<PAGE> 16
formal agreement, letter or otherwise) under which any obligation is
evidenced, assumed or undertaken, or any Lien (or right or interest
therein) is granted or perfected.
Investment means, with respect to any Person:
(a) any loan or advance made by such Person to any
other Person; and
(b) any capital contribution made by such Person to,
or ownership or similar interest held by such Person in, any
other Person.
The amount of any Investment shall be the original principal
or capital amount thereof less all returns of principal or equity
thereon (and without adjustment by reason of the financial condition
of such other Person) and shall, if made by the transfer or exchange
of property other than cash, be deemed to have been made in an
original principal or capital amount equal to the fair market value of
such property.
Italian Lira means the lawful currency of the Republic of
Italy.
Lender - see the Preamble.
Lien means, when used with respect to any Person, any interest
of any other Person in any real or personal property, asset or other
right owned or being purchased or acquired by such Person which
secures payment or performance of any obligation and shall include any
mortgage, lien, encumbrance, charge or other security interest of any
kind, whether arising by contract, as a matter of law, by judicial
process or otherwise.
Loan Period means (i) with respect to any Bid Loan, the period
commencing on such Bid Loan's Funding Date and ending not less than 7
nor more than 183 days thereafter as specified in the Bid Loan Request
related to such Bid Loan, (ii) with respect to any Eurocurrency Loan,
the period commencing on such Eurocurrency Loan's Funding Date and
ending 1, 2, 3 or, if available for the requested Available Currency,
6 months thereafter as selected by the applicable Borrower pursuant to
Section 2.2(a), and (iii) with respect to any Floating Rate Loan, the
period commencing on such Floating Rate Loan's Funding Date and ending
on the Termination Date; provided, however, that
(a) if a Loan Period would otherwise end on a day
which is not a Business Day, such Loan Period shall end
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on the next succeeding Business Day (unless, in the case
of a Eurocurrency Loan, such next succeeding Business
Day would fall in the next succeeding calendar month, in which
case such Loan Period shall end on the next preceding Business
Day);
(b) in the case of a Loan Period for any Eurocurrency
Loan, if there exists no day numerically corresponding to the
day such Loan was made in the month in which the last day of
such Loan Period would otherwise fall, such Loan Period shall
end on the last Business Day of such month; and
(c) on the date of the making of any Loan, the
Loan Period for such Loan shall not extend beyond the then-
scheduled Termination Date.
Loans means, collectively, the Bid Loans and the Committed
Loans and, individually, any Bid Loan or Committed Loan.
Margin means, at any time for any Committed Loan the
percentage set forth in the following table opposite the applicable
Debt to Capital Ratio:
MARGIN
<TABLE>
<CAPTION>
Debt to Capital Ratio
---------------------------------------------------------------------------------------------------------
Below 40% At or above 40% but below At or above 45% but At or above 50% At or above 55%
45% below 50% but below 55%
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alternate Base 0.0% 0.0% 0.0% 0.25% 0.25%
Rate Loans
Eurocurrency 0.375% 0.45% 0.50% 0.55% 0.70%
Loans
</TABLE>
The Margin shall be adjusted, to the extent applicable, 60
days (or, in the case of the last Fiscal Quarter of any Fiscal Year,
90 days, respectively) after the end of each Fiscal Quarter based on
the Debt to Capital Ratio as of the last day of such Fiscal Quarter;
it being understood that if the Company fails to deliver the financial
statements required by Section 9.1.1 or 9.1.2, as applicable, by the
60th day (or, if applicable, the 90th day) after any Fiscal Quarter,
the Margin shall be 0.70% for Eurocurrency Loans
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<PAGE> 18
and 0.25% for Alternate Base Rate Loans until such financial
statements are delivered.
Margin Stock means any "margin stock" as defined in Regulation
U of the Board of Governors of the Federal Reserve System.
Material Adverse Effect means a material adverse effect on (a)
the financial condition, operations, business, assets or prospects of
the Company and its Subsidiaries taken as a whole or (b) the ability
of the Company or APSA to timely and fully perform any of its payment
or other material obligations under this Agreement or any Note.
Maximum Offer - see Section 3.2(b).
Maximum Request - see Section 3.2(a).
Notes means, collectively, the Bid Notes and the Committed
Notes; and Note means any individual Bid Note or Committed Note.
Organic Document means, relative to each of the Borrowers, its
certificate of incorporation, its by-laws, any other constituent
documents and all shareholder agreements, voting trusts and similar
arrangements applicable to any of its capital stock.
Participant - see Section 14.4.2.
Payment Sharing Notice means a written notice from the Company
or any Lender informing the Agent that an Event of Default has
occurred and is continuing and directing the Agent to allocate
payments received from the Company in accordance with Section 6.2(b).
PBGC means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined
in section 3(2) of ERISA, which is subject to title IV of ERISA (other
than a multiemployer plan as defined in section 4001(a)(3) of ERISA),
and to which the Company or any corporation, trade or business that
is, along with the Company, a member of a Controlled Group may have
any liability, including any liability by reason of having been a
substantial employer within the meaning of section 4063 of ERISA at
any time during the preceding five years, or by reason of being deemed
to be a contributing sponsor under section 4069 of ERISA.
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<PAGE> 19
Percentage means as to any Lender the percentage set forth
opposite such Lender's name on Schedule I, as periodically revised in
accordance with Section 14.4.
Permitted Receivables Securitization means any receivables
purchase agreement entered into by the Company (as such agreement may
be amended, modified, or refinanced) provided all such agreements do
not result in the sale or securitization of receivables in excess of
$30,000,000.
Person means any natural person, corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
joint stock company, government (or an agency or political subdivision
thereof) or other entity, whether acting in an individual, fiduciary
or other capacity.
Portion - see Section 3.2(b).
Release means a "release", as such term is defined in CERCLA.
Required Lenders means Lenders having an aggregate Percentage
of 55% or more; provided that after the Commitments have been
irrevocably terminated (through lapse of time, pursuant to Section
11.2 or otherwise), "Required Lenders" shall mean one or more Lenders
having an aggregate of 55% or more of the sum of the principal amount
of all outstanding Loans.
Resource Conservation and Recovery Act means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 690, et seq., as in
effect from time to time.
Restricted Payment means (a) any dividend or other
distribution on the capital stock of the Company or any Subsidiary
(excluding dividends payable solely in capital stock) or (b) any
purchase or redemption of the capital stock of the Company or any
Subsidiary (or of any warrant, option or other right in respect of any
such capital stock).
SEC means the Securities and Exchange Commission.
Shareholders' Equity means, at any date of determination, all
amounts which would be included under shareholders' equity on a
consolidated balance sheet of the Company and its Subsidiaries or APSA
and its Subsidiaries, as the case may be.
Sterling means lawful money of the United Kingdom.
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<PAGE> 20
Submission Deadline - see Section 3.2(b).
Subsidiary means, with respect to any Person, any corporation
of which such Person and/or its other Subsidiaries own, directly or
indirectly, such number of outstanding shares as have more than 50% of
the ordinary voting power for the election of directors. Unless the
context otherwise requires, each reference to Subsidiaries herein
shall be a reference to Subsidiaries of the Company.
Suretyship Liability means any agreement, undertaking or other
contractual arrangement by which any Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or
indirect agreement, contingent or otherwise, to provide funds for
payment, to supply funds to or otherwise to invest in a debtor, or
otherwise to assure a creditor against loss) any indebtedness,
obligation or other liability (including accounts payable) of any
other Person (other than by endorsements of instruments in the course
of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any
Person's obligation under any Suretyship Liability shall (subject to
any limitation set forth therein) be deemed to be the principal amount
of the indebtedness, obligation or other liability guaranteed thereby.
Swiss Francs means lawful money of Switzerland.
Termination Date means the earlier to occur of
(i) August 22, 1999, as such date may be extended pursuant to Section
2.5 or (ii) the date on which the Commitments terminate pursuant to
Section 11.2 or are reduced to zero pursuant to Section 5.
Total Capital at any date of determination means the sum of
(a) Funded Debt,
plus
(b) all federal, state, local and foreign income
taxes carried as deferred income taxes in accordance with GAAP
on the consolidated balance sheet of the Company and its
Subsidiaries,
plus
(c) Shareholders' Equity of the Company and its
Subsidiaries.
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<PAGE> 21
United States or U.S. means the United States of America, its
50 States, the District of Columbia and the Commonwealth of Puerto
Rico.
Unmatured Event of Default means any event which if it
continues uncured will, with lapse of time or notice or lapse of time
and notice, constitute an Event of Default.
Unused Aggregate Commitment means, for any day, the Aggregate
Commitment then in effect minus the aggregate Dollar Amount of the
outstanding principal amount of all Committed Loans.
Welfare Plan means a "welfare plan", as such term is defined
in section 3(1) of ERISA.
Yen means lawful money of Japan.
SECTION 1.2 Interpretation. In this Agreement and each other Loan
Document, unless a clear contrary intention appears:
(a) the singular number includes the plural number and vice
versa;
(b) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns
are permitted by the Loan Documents, and reference to a Person in a
particular capacity excludes such Person in any other capacity or
individually;
(c) reference to any gender includes each other gender;
(d) reference to any agreement (including this Agreement and
the Schedules and Exhibits and the Loan Documents), document or
instrument means such agreement, document or instrument as it may have
been or may be amended, supplemented, restated or otherwise modified
and in effect from time to time in accordance with the terms thereof
and, if applicable, the terms hereof and the other Loan Documents, and
reference to any promissory note includes any promissory note which is
an extension or renewal thereof or a substitute or replacement
therefor;
(e) reference to any law, rule, regulation or ordinance means
such law, rule, regulation or ordinance as amended, modified,
codified, replaced or reenacted, in whole or in part, and in effect
from time to time, including rules and regulations promulgated
thereunder, and references to any particular section or provision in
any such law, rule, regulation or ordinance or any such rule or
regulation
15
<PAGE> 22
promulgated thereunder means the successor section or provision;
(f) reference to any Article, Section, Schedule or Exhibit
means such Article or Section hereof or Schedule or Exhibit hereto;
(g) "hereunder", "hereof", "hereto" and words of similar
import shall be deemed references to this Agreement as a whole and not
to any particular Article, Section or other provision hereof;
(h) "including" (and with correlative meaning "include")
means including without limiting the generality of any description
preceding such term;
(i) relative to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";
and
(j) references to financial statements include notes thereto
in accordance with GAAP; and accounting terms used but not defined
herein shall be construed in accordance with GAAP, and whenever the
character or amount of any asset or liability or item of income or
expense is required to be determined, or any consolidation or other
accounting computation is required to be made, for purposes hereof,
such determination or computation shall be made in accordance with
GAAP; provided that such determinations and computations with respect
to financial covenants and ratios hereunder shall be made in
accordance with GAAP as in effect on the date hereof.
SECTION 2 COMMITTED LOANS.
SECTION 2.1 Commitments. On the terms and subject to the conditions
of this Agreement, each Lender, severally and for itself alone, agrees to make
loans as follows:
2.1.1 Committed Loans. Each Lender agrees to make loans on a
revolving basis (collectively "Committed Loans" and individually each
a "Committed Loan") from time to time before the Termination Date in
such Lender's Percentage of such aggregate amounts as either Borrower
may from time to time request pursuant to this Section 2 (and without
regard to the amount of Bid Loans such Lender may have outstanding).
Committed Loans may be Eurocurrency Loans or Floating Rate Loans, as
selected by the Borrower as provided in Section 2.2.
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<PAGE> 23
2.1.2 Commitment Limits. Notwithstanding any other provision
of this Agreement, the aggregate principal amount of all outstanding
Loans shall not at any time exceed a Dollar Amount equal to the then
Aggregate Commitment and the aggregate principal amount of all
outstanding Committed Loans of any Lender shall not at any time exceed
a Dollar Amount equal to such Lender's Commitment as shown on Schedule
I, as such Commitment may be reduced from time to time pursuant to
Section 5.1 or revised from time to time pursuant to Section 14.4.1.
For purposes of this Section 2.1.2, the Dollar Amount of any Loan
shall be determined as of the most recent Determination Date for such
Loan.
SECTION 2.2 Procedure for Committed Loans.
(a) Committed Loan Requests. A Borrower shall give the
Agent irrevocable telephonic notice (promptly confirmed in writing on
the same day) of each proposed Committed Loan, (a) not later than
10:30 a.m., Chicago time, at least three Business Days prior to the
Funding Date in the case of Dollar Eurocurrency Loans, (b) not later
than 10:30 a.m., Chicago time, at least four Business Days prior to
the Funding Date in the case of Eurocurrency Loans in Available
Currencies other than Dollars, or (c) not later than 10:30 a.m.,
Chicago time, on the Funding Date in the case of Floating Rate Loans.
The Agent shall promptly advise each Lender thereof. Each such notice
by a Borrower to the Agent (a "Committed Loan Request") shall be
substantially in the form of Exhibit C and shall specify (i) the
Funding Date, (ii) the aggregate amount of the Committed Loans
requested (in an amount permitted under clause (b) below), (iii) the
Available Currency (iv) whether the Committed Loans shall be
Eurocurrency Loans or Floating Rate Loans, and (v) the Loan Period
therefor (subject to the limitations set forth in the definition of
Loan Period).
(b) Amount and Increments of Committed Loans. Each
Committed Loan Request shall contemplate Committed Loans in a minimum
aggregate Dollar Amount of $5,000,000 and an integral multiple of
$500,000 or the equivalent in another Available Currency.
(c) Funding of Agent.
(i) Not later than 12:00 noon, Chicago time, (or
noon, local time, as directed by the Agent in the case of
Committed Loans in Available Currencies other than Dollars) on
the Funding Date of a Committed Loan, each Lender shall,
subject to this Section 2.2(c) and to Section 2.2(d), provide
the Agent at its principal office in Chicago (or, in the case
of Available
17
<PAGE> 24
Currencies other than Dollars, at such locations
in such jurisdictions as the Agent may direct from
time to time) with immediately available funds covering such
Lender's Committed Loan. The Agent shall pay over such funds
to the applicable Borrower not later than 1:00 p.m., Chicago
time, (or 1:00 p.m., local time, as directed by the applicable
Borrower in the case of Committed Loans in Available
Currencies other than Dollars) on such day if the Agent shall
have received the documents required under Section 10 with
respect to such Loan and the other conditions precedent to the
making of such Loan shall have been satisfied not later than
11:00 a.m., Chicago time, on such day. If the Agent does not
receive such documents or such other conditions precedent have
not been satisfied prior to such time, then (A) the Agent
shall not pay over such funds to the applicable Borrower on
such day, (B) the applicable Borrower's Committed Loan Request
related to such Loan shall be deemed canceled in its entirety,
(C) in the case of Committed Loan Requests relative to
Eurocurrency Loans, the applicable Borrower shall be liable to
each Lender in accordance with Section 7.4(b) and (D) the
Agent shall return the amount previously provided to the Agent
by each Lender no later than the next following Business Day
together with interest at the Federal Funds Rate to the extent
customary.
(ii) Each Borrower agrees, notwithstanding its
previous delivery of any documents required under Section 10
with respect to a particular Loan, immediately to notify the
Agent of any failure by it to satisfy the conditions precedent
to the making of such Loan. The Agent shall be entitled to
assume, after it has received each of the documents required
under Section 10 with respect to a particular Loan, that each
of the conditions precedent to the making of such Loan has
been satisfied absent actual knowledge to the contrary
received by the Agent prior to the time of the receipt of such
documents. Unless the Agent shall have notified the Lenders
prior to 11:30 a.m., Chicago time, on the Funding Date of any
Loan that the Agent has actual knowledge that the conditions
precedent to the making of such Loan have not been satisfied,
the Lenders shall be entitled to assume that such conditions
precedent have been satisfied.
(d) Repayment of Loans. If any Lender makes a Committed
Loan hereunder on a day on which either Borrower is to repay in the
same Available Currency as the Committed Loan being made all or any
part of any outstanding Committed Loan held by such Lender, such
Lender shall apply the
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<PAGE> 25
proceeds of such new Committed Loan to make such repayment and only an
amount equal to the positive difference, if any, between the amount
being borrowed and the amount being repaid shall be made available by
such Lender to the Agent as provided inSection 2.2(c).
SECTION 2.3 Maturity of Committed Loans. Each Committed Loan shall
mature on the last day of the Loan Period applicable to such Committed Loan,
but in no event later than the Termination Date.
SECTION 2.4 Committed Notes. The Committed Loans of each Lender
shall be evidenced by a Committed Note from each Borrower payable to the order
of such Lender. Each Lender shall record in its records, or at its option on
the schedule attached to its Committed Note, the date and amount of each
Committed Loan made by such Lender thereunder, each repayment or prepayment
thereof, and the dates on which the Loan Period for such Committed Loan shall
begin and end. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on
such Note. The failure to so record or any error in so recording any such
amount or any payment thereof shall not, however, limit or otherwise affect the
obligations of the Borrowers hereunder or under such Committed Note to repay
the principal amount of each Committed Loan together with all interest accruing
thereon.
SECTION 2.5 Termination Date Extension.
(a) The Company may, by notice to the Agent given not less
than 60 days prior to the first anniversary of the Effective Date,
request that the Lenders extend the Termination Date for one year
after the then scheduled Termination Date. The Agent shall notify the
Lenders of its receipt of any notice given pursuant to this Section
2.5(a) within two Business Days after the Agent's receipt thereof.
Each Lender (a "Consenting Lender") may, by irrevocable notice to the
Company and the Agent delivered to the Company and the Agent prior to
the first anniversary of the Effective Date, consent to such extension
of the Termination Date, which consent may be given or withheld by
each Lender in its absolute and sole discretion. Subject to Section
2.5(c), any such extension shall take effect on and as of the first
anniversary of the Effective Date. The Company shall not have any
right to request an extension of the Termination Date after the first
anniversary of the Effective Date.
(b) Withdrawing Lenders. No extension pursuant to
Section 2.5(a) shall be effective with respect to a Lender that either
(i) by a notice (a "Withdrawal Notice")
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<PAGE> 26
delivered to the Company and the Agent, declines to consent to such
extension or (ii) has failed to respond to the Company and the Agent
with the applicable time period (each such Lender giving a Withdrawal
Notice or failing to respond in a timely manner being "Withdrawing
Lender").
(c) Replacement of Withdrawing Lender. The Company shall
have the right during the 60 day period following the first
anniversary of the Effective Date to replace the Withdrawing Lender
with an existing Lender or a new Lender who consents to the extension
of the Termination Date (a "Replacement Lender"). In the event the
Company has not replaced the Withdrawing Lender within said 60 day
period, the Termination Date shall not be extended.
(d) Assignment by Withdrawing Lender. A Withdrawing
Lender shall be obliged, at the request of the Company and subject to
the Withdrawing Lender receiving payment in full of all amounts owing
to it under this Agreement concurrently with the effectiveness of an
assignment, to assign, without recourse or warranty and by an
Assignment Agreement, all of its rights and obligations hereunder to
any Replacement Lender nominated by the Company and willing to accept
such assignment; provided that such assignee satisfies all the
requirements of this Agreement and such assignment is consented to by
the Agent, which consent shall not be withheld or delayed
unreasonably.
(e) Scheduled Termination Date. If the scheduled
Termination Date shall have been extended in respect of Continuing
Lenders and any Replacement Lender in accordance with Section 2.5(a),
all references herein and in any Note to the "Termination Date" shall
refer to the Termination Date as so extended.
SECTION 3 BID LOANS.
SECTION 3.1 Making of Bid Loans. On the terms and subject to the
conditions of this Agreement, each Lender, severally and for itself alone, may
(but is not obligated to) offer to make Bid Loans to each Borrower from time to
time on or after the date hereof and prior to the Termination Date; provided
that the aggregate principal Dollar Amount of all outstanding Bid Loans plus
the aggregate principal Dollar Amount of all outstanding Committed Loans of
both Borrowers shall not at any time exceed the then Aggregate Commitment. For
purposes of this Section 3.1, the Dollar Amount for any Loan shall be
determined as of the most recent Determination Date for such Loan.
SECTION 3.2 Procedure for Bid Loans.
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<PAGE> 27
(a) Bid Loan Request. Not later than 10:00 a.m.,
Chicago time, on any Business Day, a Borrower may submit a Bid Loan
Request. Each Bid Loan Request shall be given to the Agent and each
Lender, shall be by telephone (promptly confirmed by facsimile) and
shall specify the proposed Funding Date which shall be a Business Day
(i) not less than one Business Day nor more than three Business Days
after the date of delivery of such Bid Loan Request in the case of Bid
Loans in Dollars and (ii) not less than three Business Days nor more
than five Business Days after the date of delivery of such Bid Loan
Request in the case of Bid Loans in Available Currencies other than
Dollars, the aggregate principal amount (the "Maximum Request") of
proposed Bid Loans, the Available Currency or Currencies and the Loan
Period(s) (up to three) potentially to be applicable to the proposed
borrowing. Each Bid Loan Request shall contemplate Bid Loans in a
minimum aggregate principal Dollar Amount of $5,000,000 (or the
equivalent in another Available Currency) for each requested Loan
Period and each requested Available Currency or a higher integral
multiple of $1,000,000, not to exceed, however, an amount equal to the
Aggregate Commitment minus the sum of the aggregate principal amount
of all outstanding Loans, calculated by the Agent as of the relevant
Funding Date, assuming that the Borrowers will pay, when due, all
Loans maturing on or prior to such Funding Date. There shall be at
least five Business Days between each Funding Date for Bid Loans.
There shall not be more than five Loan Periods for Bid Loans
outstanding at any time.
(b) Bidding Procedure. Each Lender in its discretion
may (but is not obligated to) submit a Bid to the requesting Borrower
(and not to the Agent) (i) not later than 8:45 a.m., Chicago time, on
the proposed Funding Date specified in any Bid Loan Request in the
case of Dollar Bid Loans or (ii) not later than 8:15 a.m., Chicago
time, two Business Days before the proposed Funding Date in the case
of Bid Loans in Available Currencies other than Dollars (such time
being herein called the Submission Deadline"), by telephone (promptly
confirmed by facsimile), and thereby offer to make all or any part of
any Loan or Loans described in such Bid Loan Request in an aggregate
principal amount of $5,000,000 or a higher integral multiple of
$1,000,000 for any Loan Period and any Available Currency. Each
Lender may offer to make all or any part of any Bid Loan or Loans
described in a Bid Loan Request for a single Loan Period in its Bid at
up to three separate interest rates if each such interest rate applies
to a portion of the principal amount (a Portion") of a proposed Bid
Loan in a principal amount of $5,000,000 or a higher integral multiple
of $1,000,000. The aggregate Portions of Loans for any or all Loan
Periods offered by a
21
<PAGE> 28
Lender in its Bid may exceed the Maximum Request contained in the
relevant Bid Loan Request (and may exceed such Lender's Commitment);
provided that each Bid shall set forth the maximum aggregate amount of
Bid Loans offered thereby which the requesting Borrower may accept
(the Maximum Offer"), which Maximum Offer shall not exceed the Maximum
Request. If any Bid omits information required by the form of Exhibit
B, the requesting Borrower may (but is not obligated to) attempt to
notify the Lender submitting such Bid thereof, whereupon such Lender
may resubmit such Bid if it is able to do so prior to the applicable
Submission Deadline.
(c) Acceptance of Bids. The requesting Borrower shall,
in its sole discretion but subject to Section 3.2(d), irrevocably
accept or reject each such Bid (or any Portion offered by such Bid) at
or prior to (i) 9:15 a.m., Chicago time, on the proposed Funding Date
in the case of Dollar Bid Loans or (ii) 8:45 a.m., Chicago time, two
Business Days before the proposed Funding Date in the case of Bid
Loans in Available Currencies other than Dollars, the requesting
Borrower will give notice by telephone (promptly confirmed by
facsimile) to each Lender that submitted a Bid as to the extent, if
any, that such Lender's Bid has been accepted and the details of such
acceptance. The requesting Borrower shall also, as promptly as
practicable, inform the Agent and each Lender of all Bids submitted
and the Bids (or Portions thereof) which have been accepted. If the
requesting Borrower fails to give notice of the requesting Borrower's
acceptance or rejection of any Bids at or prior to 9:15 a.m. or 8:45
a.m., Chicago time, of the applicable Submission Deadline, all such
Bids shall be deemed to have been rejected by the requesting
Borrower. The requesting Borrower shall, within one Business Day of
the requesting Borrower's acceptance of any bid, notify the Lenders
which did not bid of the amount of the Bid Loans accepted by the
requesting Borrowers and the Loan Period(s) applicable thereto. The
requesting Borrower may, from time to time by written agreement with,
and upon notice to, the Agent and the Lenders, change the times
specified in this clause (c) for notification and acceptance.
(d) Acceptance Procedures. If a Borrower accepts any
Bid offered with respect to any proposed Funding Date, such Borrower
shall accept offers for not less than $5,000,000 in Bid Loans (and for
not more than the Maximum Request) for such Funding Date. If a
Borrower accepts any Bid for any requested Loan Period, such Borrower
must accept Bids based exclusively on the successively lowest interest
rates offered for such Loan Period and no other criteria. A Borrower
may not accept Bids from any Lender for any Funding
22
<PAGE> 29
Date in an amount exceeding such Lender's Maximum Offer for such
Funding Date, and if a Borrower accepts less than all of any Lender's
Bid for any Loan Period, the amount accepted shall be an integral
multiple of $1,000,000. If two or more Lenders submit Bids with
identical interest rates for the same Loan Period and a Borrower
accepts any thereof, such Borrower shall accept all such Bids as
nearly as possible in proportion to the amount of their respective
Bids for such interest rate for such Loan Period; provided that such
Borrower shall round the Bid Loans allocated to each such Lender
(upward or downward as such Borrower shall select) to integral
multiples of $1,000,000.
(e) Funding of Agent.
(i) Not later than (i) 12:00 noon, Chicago time, on
the relevant Funding Date in the case of Dollar Bid Loans or
(ii) 12:00 noon, local time as directed by the Agent in the
case of Bid Loans in Available Currencies other than Dollars,
each Lender whose Bid was accepted shall make available to the
Agent at its head office in Chicago, Illinois (or, in the case
of Available Currencies other than Dollars, at such locations
in such jurisdictions as the Agent may direct from time to
time), in immediately available funds, the proceeds of such
Lender's Bid Loan or Loans to the applicable Borrower. The
Agent shall pay over such funds to the applicable Borrower not
later than (i) 1:00 p.m., Chicago time, in the case of Dollar
Bid Loans or (ii) 1:00 p.m., local time as directed by the
Agent in the case of Bid Loans in Available Currencies other
than Dollars, on such day if the Agent shall have received the
documents required under Section 10 with respect to such Loan
and the other conditions precedent to the making of such Loan
shall have been satisfied not later than 11:00 a.m., Chicago
time, on such day. If the Agent does not receive such
documents or such other conditions precedent have not been
satisfied prior to such time, then (A) the Agent shall not pay
over such funds to the applicable Borrower, (B) the Bid Loan
Request related to such Bid Loan or Loans shall be deemed
canceled in its entirety, (C) the Borrowers shall be liable to
each relevant Lender in accordance with Section 7.4(b) and (D)
the Agent shall return the amount previously provided to the
Agent by each applicable Lender no later than the next
following Business Day together with interest at the Federal
Funds Rate to the extent customary. Each borrowing of Bid
Loans shall be on a Business Day.
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(ii) Each Borrower agrees, notwithstanding its
previous delivery of any documents required under Section 10
with respect to a particular Loan, immediately to notify the
Agent of any failure to satisfy the conditions precedent to
the making of such Loan. The Agent shall be entitled to
assume, after it has received each of the documents required
under Section 10 with respect to a particular Loan, that each
of the conditions precedent to the making of such Loan has
been satisfied absent actual knowledge to the contrary
received by the Agent prior to the time of the receipt of such
documents. Unless the Agent shall have notified the Lenders
prior to 11:30 a.m., Chicago time, on the Funding Date of any
Loan that the Agent has actual knowledge that the conditions
precedent to the making of such Loan have not been satisfied,
the Lenders shall be entitled to assume that such conditions
precedent have been satisfied.
SECTION 3.3 Maturity of Bid Loans. Each Bid Loan shall mature on the
last day of the Loan Period applicable thereto, but in no event later than the
Termination Date.
SECTION 3.4 Bid Notes. The Bid Loans of each Lender shall be
evidenced by a Bid Note payable to the order of such Lender. Each Lender shall
record in its records, or at its option on the schedule attached to its Bid
Note, the date and amount of each Bid Loan made by such Lender, each repayment
thereof, and the dates on which the Loan Period for such Loan shall begin and
end. The aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on such Note.
The failure to so record or any error in so recording any such amount or any
payment thereof shall not, however, limit or otherwise affect the obligations
of the Borrowers hereunder or under such Bid Note to repay the principal amount
of each Bid Loan together with all interest accruing thereon.
SECTION 4 INTEREST AND FEES.
SECTION 4.1 Interest Rates. Each Borrower hereby promises to pay
interest on the unpaid principal amount of each Loan in the applicable
Available Currency for the period commencing on the date of such Loan until
such Loan is paid in full, as follows:
(a) if such Loan is a Bid Loan, at a rate per annum
equal to the Absolute Rate offered by the applicable Lender and
accepted by the applicable Borrower for such Bid Loan;
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(b) if such Loan is a Floating Rate Loan, at a rate per
annum equal to the Alternate Reference Rate plus the Margin from time
to time in effect; and
(c) if such Loan is a Eurocurrency Loan, at a rate per
annum equal to the Eurocurrency Rate (Reserve Adjusted) applicable to
such Loan plus the Margin in effect from time to time;
provided, however, that after maturity of any Loan (whether by acceleration or
otherwise), such Loan shall bear interest on the unpaid principal amount
thereof at a rate per annum equal to the (i) for any Floating Rate Loan, the
sum of two percent (2%) plus the Alternate Reference Rate from time to time in
effect; and (ii) for any Eurocurrency Loan, the sum of three percent (3%) plus
the rate of interest in effect thereon at the time of such default until the
end of the Interest Period applicable thereto and, thereafter, if such Loan is
denominated in Dollars, at a rate per annum equal to the sum of two percent
(2%) plus the Alternate Reference Rate from time to time in effect or, if such
Loan is denominated in another Available Currency, at a rate per annum equal to
the sum of the Margin applicable to Eurocurrency Loans, plus three percent (3%)
plus the rate of interest per annum as determined by the Agent (rounded
upwards, if necessary, to the nearest whole multiple of one-sixteenth of one
percent (1/16%) at which overnight or weekend deposits of the applicable
Available Currency (or, if such amount due remains unpaid more than three
Business Days, then for such other period of time not longer than one month as
the Agent may elect in its absolute discretion) for delivery in immediately
available and freely transferable funds would be offered by the Agent to major
banks in the interbank market upon request of such major banks for the
applicable period as determined above and in an amount comparable to the unpaid
principal amount of any such Eurocurrency Loan (or, if the Agent is not placing
deposits in such Available Currency in the interbank market, then the Agent's
cost of funds in such Available Currency for such period).
SECTION 4.2 Interest Payment Dates. Accrued interest on each
Floating Rate Loan shall be paid on the last day of each Fiscal Quarter and on
the Termination Date. Accrued interest on each Fixed Rate Loan shall be
payable on the last day of the Loan Period therefor (and, in the case of a
Eurocurrency Loan with a six-month Loan Period, on the day that is three months
after the first day of such Loan Period). After maturity of any Loan, accrued
interest on such Loan shall be payable on demand.
SECTION 4.3 Setting and Notice of Committed Loan Rates. The
applicable interest rate for each Committed Loan shall be determined by the
Agent, and the Agent will promptly notify the Company and each Lender of (i)
the Eurocurrency Rate for each
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Eurocurrency Loan and (ii) each change in the Margin or the Alternate Reference
Rate. Each determination of the applicable interest rate by the Agent shall be
conclusive and binding upon the parties hereto, in the absence of demonstrable
error. The Agent shall, upon written request of the Company or any Lender,
deliver to the Company or such Lender a statement showing the computations used
by the Agent in determining the interest rate applicable to any Eurocurrency
Loan. Notification to the Company under this Section 4.3 shall be deemed
notification to both the Company and APSA.
SECTION 4.4 Non-Use Fee. The Borrowers agree to pay to the Agent for
the account of the Lenders pro rata in accordance with their respective
Percentages a non-use fee computed at the Specified Rate (as defined below) per
annum on the average daily amount of the Unused Aggregate Commitment. Such
non-use fee shall be payable on the last day of each Fiscal Quarter and on the
Termination Date, in each case for the period then ending for which such
non-use fee has not previously been paid. For the purposes of calculating the
Unused Aggregate Commitment under this Section 4.4, Committed Loans denominated
in any Available Currency other than Dollars shall be converted into the Dollar
Amount applicable as of the applicable Determination Date for such Loans. For
purposes of this Section 4.4, the term "Specified Rate" means the rate per
annum set forth in the table below opposite the applicable Debt to Capital
Ratio:
SPECIFIED RATE FOR NON-USE FEE
<TABLE>
<CAPTION>
Debt to Capital Ratio
-------------------------------------------------------------------------------------------------------
Below 40% At or above 40% but below At or above 45% but At or above 50% At or above 55%
45% below 50% but below 55%
--------- ------------------------- ------------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Non-use fee 0.15% 0.20% 0.25% 0.25% 0.30%
</TABLE>
The Specified Rate shall be adjusted, to the extent applicable, 60
days (or, in the case of the last Fiscal Quarters of any Fiscal Year, 90 days,
respectively) after the end of each Fiscal Quarter based on the Debt to Capital
Ratio as of the last day of such Fiscal Quarter; it being understood that if
the Company fails to deliver the financial statements required by Section 9.1.1
or 9.1.2, as applicable, by the 60th day (or, if applicable, the 90th day)
after any Fiscal Quarter, the Specified Rate shall be 0.30% until such
financial statements are delivered.
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SECTION 4.5 Computation of Interest and Fees. Interest on the
Loans and all fees shall be computed for the actual number of days elapsed on
the basis of a year of 360 days; provided that, in the case of Loans
denominated in Sterling, interest shall be computed on the basis of a year
comprised of 365/366 days. The interest rate applicable to each Floating Rate
Loan, and (to the extent applicable) after maturity of any other type of Loan
the interest rate applicable to such Loan, shall change simultaneously with
each change in the Alternate Reference Rate. The Margin applicable to any
Committed Loan shall change simultaneously with each change in the Margin.
SECTION 4.6 Agent's Fees. The Borrowers agree promptly to pay to
the Agent such fees as may be agreed from time to time by the Company and the
Agent.
SECTION 5 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS.
SECTION 5.1 Reduction or Termination of the Commitments. The
Company may at any time on at least five Business Days' prior irrevocable
notice received by the Agent (which shall promptly on the same day or on the
next Business Day advise each Lender thereof) permanently reduce the amount of
the Commitments (such reduction to be pro rata among the Lenders according to
their respective Percentages) to an amount not less than the sum of the
aggregate principal amount of all outstanding Loans. Any such reduction shall
be in the amount of $2,000,000 or a higher integral multiple of $1,000,000.
The Company may from time to time on like irrevocable notice terminate the
Commitments upon payment in full of all Loans, all interest accrued thereon,
all fees and all other obligations of the Company then payable hereunder;
provided, however, that the Company may not at any time reduce the Commitments
below the then aggregate outstanding amount of all Bid Loans (except to the
extent the holder of any Bid Loan has given its prior written consent to the
concurrent repayment of such Bid Loan).
SECTION 5.2 Prepayments. (a) If, on any Determination Date, the
Dollar Amount of the aggregate outstanding principal amount of all Loans
exceeds (as a result of fluctuations in applicable foreign exchange rates or
otherwise) the aggregate Commitments, the Borrowers shall make a mandatory
prepayment of the Loans in an amount equal to such excess. Such payment shall
be applied (and, to the extent necessary, made in the applicable Available
Currencies) to repay first, Floating Rate Loans, second, Committed Eurocurrency
Loans, and third, Bid Loans.
(b) The Borrowers may from time to time voluntarily prepay
Committed Loans in whole or in part, without premium or penalty, provided that
(a) the applicable Borrower shall give the
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<PAGE> 34
Agent (which shall promptly advise each Lender) notice thereof not later than
10:30 a.m., Chicago time on the date of such prepayment, in the case of
Floating Rate Loans, and not later than 10:30 a.m., Chicago time two Business
Days prior to the date of such prepayment, in the case of Eurocurrency Loans,
in each case specifying the Committed Loans to be prepaid and the date (which
shall be a Business Day) and amount of prepayment, (b) each partial prepayment
of Loans shall be in an aggregate principal Dollar Amount of at least
$5,000,000 and an integral multiple of $1,000,000 and (c) any prepayment of a
Eurocurrency Loan shall be subject to the provisions of Section 7.4. No
Borrower may voluntarily prepay any Bid Loan without the prior written consent
of the holder of such Bid Loan.
SECTION 6 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
SECTION 6.1 Making of Payments. Except as provided in Section
3.2(d), all payments of principal of or interest on the Loans and all payments
of fees shall be made by the Borrowers to the Agent in immediately available
funds at its office in Chicago not later than 12:30 p.m., Chicago time (12:00
noon, local time, as directed by the Agent in the case of Loans in Available
Currencies other than Dollars), on the date due and in the Available Currency
in which such Loan or interest is denominated; any funds received after that
hour shall be deemed to have been received by the Agent on the immediately
following Business Day. The Agent shall promptly remit to each Lender its
share (if any) of each such payment. All payments under Section 7 shall be
made by the Borrowers directly to the Persons entitled thereto. If any payment
hereunder is due on a day which is not a Business Day, the due date for such
payment shall be extended to the immediately following Business Day (unless, in
the case of a Eurocurrency Loan, such immediately following Business Day would
fall in the next succeeding calendar month, in which case such due date shall
be the immediately preceding Business Day) and, in the case of principal,
additional interest shall be payable for the period of such extension.
SECTION 6.2 Order and Proration of Payments. (a) Whenever any
payment received by the Agent to be distributed to the Lenders is insufficient
to pay in full any amounts then due and payable to the Lenders, and the Agent
has not received a Payment Sharing Notice, such payment shall be distributed to
the Lenders (and for purposes of this Agreement shall be deemed to have been
applied by the Lenders, notwithstanding the fact that any Lender may have made
a different application in its books and records) in the following order:
first, to the payment of the principal amount of the Loans in the Available
Currency in which such a payment was made which are then due and payable,
ratably among the Lenders in accordance with the aggregate principal
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<PAGE> 35
amount of such Loans owed to each Lender; second, to the payment of interest
then due and payable on such Loans, ratably among the Lenders in accordance
with the aggregate amount of interest owed to each Lender; third, to the
payment of the fees payable under Sections 4.4 and 4.5, ratably among the
Lenders in accordance with the aggregate amount of fees owed to each Lender;
and fourth, to the payment of expenses payable under Section 14.5, ratably
among the Lenders in accordance with the aggregate amount of such payments owed
to each Lender.
(b) After the Agent has received a Payment Sharing Notice, all
payments received by the Agent to be distributed to the Lenders shall be
distributed to the Lenders (and for purposes of this Agreement shall be deemed
to have been applied by the Lenders, notwithstanding the fact that any Lender
may have made a different application in its books and records) in the
following order: first, to the payment of expenses payable under Section 14.5,
ratably among the Lenders in accordance with the aggregate amount of such
payments owed to each Lender; second, to the payment of fees payable under
Sections 4.4 and 4.5, ratably among the Lenders in accordance with the
aggregate amount of fees owed to each Lender; and third, to the payment of the
interest accrued on and the principal amount of all of the Loans, regardless of
whether any such amount is then due and payable, ratably among the Lenders in
accordance with the aggregate accrued interest plus the aggregate principal
amount owed to each Lender.
(c) If any Lender shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of offset or otherwise) on
account of principal of or interest on any Loan or any fees in excess of the
share of payments and other recoveries (exclusive of payments or recoveries
under Section 7) such Lender would have received if such payment or recovery
had been distributed pursuant to the provisions of Section 6.2(a) or (b)
(whichever is applicable at the time of such payment or other recovery), such
Lender shall purchase from the other Lenders, in a manner to be reasonably
specified by the Agent, such participation in the Loans held by them as shall
be necessary to cause such purchasing Lender to share the excess payment or
other recovery ratably with each of them in accordance with the order of
payments set forth in Section 6.2(a) or (b) as applicable; provided, however,
that if all or any portion of the excess payment or other recovery is
thereafter recovered from such purchasing Lender, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
SECTION 6.3 Setoff. To the extent not prohibited by applicable law
(and without waiving any other rights of the Agent or any Lender), the Agent
and each Lender shall, upon the
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<PAGE> 36
occurrence of any Event of Default, have the right to appropriate and apply to
the payment of any amount payable by the Borrowers hereunder any and all
balances, credits, deposits, accounts or moneys of either Borrower then or
thereafter with the Agent or such Lender.
SECTION 6.4 Payments Net of Taxes.
(a) All payments by the Borrowers of principal, interest, fees,
indemnities and other amounts payable hereunder and under the Notes shall be
made to the recipient thereof without setoff or counterclaim and free and clear
of, and without withholding or deduction for or on account of, any present or
future Taxes (as defined below), other than Excluded Taxes (as defined below),
now or hereafter imposed on such recipient or its income, property, assets or
franchises (such recipient's "Recipient Taxes"), except to the extent that such
withholding or deduction (i) is required by applicable law, (ii) results from
the breach by such recipient of its Exemption Agreement (as defined below) or
(iii) would not be required if such recipient's Exemption Representation (as
defined below) were true. If any such withholding or deduction is required by
applicable law, the Borrowers will:
(A) pay to the relevant authorities the full amount so
required to be withheld or deducted;
(B) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such payment
to such authorities; and
(C) except to the extent that such withholding or
deduction results from the breach, by the recipient of a payment, of
its Exemption Agreement or would not be required if such recipient's
Exemption Representation were true, pay to the Agent for the account
of the relevant recipient such additional amount as is necessary to
ensure that the net amount actually received by such recipient will
equal the full amount such recipient would have received had no such
withholding or deduction been required.
For the purposes of this Section 6.4, (x) "Taxes" means, with respect to any
Person, taxes, assessments or other governmental charges on levies imposed upon
such Person, such Person's income or any of such Person's properties,
franchises or assets; and (y) "Excluded Taxes" means, in the case of payments
made to any Lender or the Agent, all of the following: taxes imposed upon the
overall net income of such Lender or the Agent, franchise taxes imposed upon
such Lender or the Agent with respect to its net income by the jurisdiction
under the laws of which such Lender or the Agent, as the case may be, is
organized or any political subdivision thereof, and franchise taxes imposed
upon
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<PAGE> 37
such Lender or the Agent with respect to its net income by the jurisdiction in
which such Lender's or the Agent's Funding Office is located or any political
subdivision thereof.
(b) In consideration of the Borrowers' agreements in clause (a) of
this Section 6.4, each Lender which is not organized under the laws of the
United States or a State thereof hereby agrees (such Lender's "Exemption
Agreement"), to the extent permitted by applicable law (including any
applicable double taxation treaty of the jurisdiction of its incorporation and
the jurisdiction in which its Funding Office is located), to execute and
deliver to the Company (i) on or before the first date on which any payment is
to be made to such Lender hereunder, a United States Internal Revenue Service
Form 1001 or 4224 (or successor form), as appropriate (or successor forms),
properly completed and claiming a complete exemption from withholding or
deduction for or on account of Recipient Taxes of such Lender, and (ii) a new
Form 1001 or 4224 (or successor form), as appropriate, upon the expiration or
obsolescence of any previously delivered Form.
(c) Each Lender hereby represents and warrants (such Lender's
"Exemption Representation") to the Borrowers that on the date of this Agreement
(or, if later, the date such Lender becomes a party to this Agreement) it is
entitled to receive payments of principal of, and interest on, Loans made by
such Lender without withholding or deduction for or on account of such Lender's
Recipient Taxes imposed by the United States of America or any political
subdivision thereof.
(d) All obligations provided for in this Section 6.4 shall survive
termination of this Agreement.
SECTION 6.5 Currency. Each reference in this Agreement to Dollars or
to another Available Currency (the "relevant currency") is of the essence. To
the fullest extent permitted by law, the obligation of the Borrowers in respect
of any amount due in the relevant currency under this Agreement shall,
notwithstanding any payment in any other currency (whether pursuant to a
judgment or otherwise), be discharged only to the extent of the amount in the
relevant currency that the Person entitled to receive such payment may, in
accordance with normal banking procedures, purchase with the sum paid in such
other currency (after any premium and costs of exchange) on the Business Day
immediately following the day on which such Person receives such payment. If
the amount of the relevant currency so purchased is less than the sum
originally due to such Person in the relevant currency, the Borrower agrees, as
a separate obligation and notwithstanding any such judgment, to indemnify such
Person against such loss, and if the amount of the specified currency so
purchased exceeds the sum of (a) the amount originally due to the relevant
Person in the specified currency
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<PAGE> 38
plus (b) any amounts shared with other Banks as a result of allocations of such
excess as a disproportionate payment to such Person under Section 6.2(c), such
Person agrees to remit such excess to the applicable Borrower.
SECTION 7 INCREASED COSTS AND SPECIAL PROVISIONS FOR FIXED
RATE LOANS.
SECTION 7.1 Increased Costs. (a) If, after the date hereof, (i)
Regulation D of the Board of Governors of the Federal Reserve System or (ii)
the adoption of any applicable law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
Funding Office of such Lender) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency,
(A) shall subject any Lender (or any Funding Office of
such Lender) to any tax, duty or other charge with respect to its
Eurocurrency Loans, its Notes or its obligation to make Eurocurrency
Loans, or shall change the basis of taxation of payments to any Lender
(or any Funding Office of such Lender) of the principal of or interest
on its Eurocurrency Loans or any other amounts due under this
Agreement in respect of its Eurocurrency Loans or its obligation to
make Eurocurrency Loans (except for changes in the rate of any tax
assessed on or measured by the net income of such Lender or its
Funding Office imposed by the government or other authority of the
country in which such Lender is incorporated or in which such Lender's
Funding Office is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates pursuant to Section
4.1), special deposit, assessment (including any assessment for
insurance of deposits) or similar requirement against assets of,
deposits with or for the account of, or credit extended by any Lender
(or any Funding Office of such Lender); or
(C) shall impose on any Lender (or any Funding Office of
such Lender) any other condition (including, without limitation, any
requirement that such Lender purchase equity interests, or make other
investments, in the Federal Deposit Insurance Corporation) affecting
its Eurocurrency Loans, its Notes or its obligation to make or
maintain Eurocurrency Loans;
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and the result of any of the foregoing is to increase the cost to (or to impose
an additional cost on) such Lender (or any Funding Office of such Lender) of
making or maintaining any Eurocurrency Loan, or to reduce the amount of any sum
received or receivable by such Lender (or such Lender's Funding Office) under
this Agreement or under its Notes with respect thereto, then within 10 days
after demand by such Lender (which demand shall be accompanied by a statement
setting forth in reasonable detail the basis of such demand), the Borrowers
shall pay directly to such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or such reduction (without
duplication of any amounts which have been reimbursed pursuant to Section 6.4).
(b) If any Lender shall determine that the adoption, effectiveness
or phase-in of any applicable law, rule, guideline or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender (or any Funding Office of such Lender or any Person
controlling such Lender) with any guideline, 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 the capital of such Lender or any Person
controlling such Lender as a consequence of its obligations hereunder to a
level below that which such Lender or such controlling Person could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such controlling Person's policies with respect to capital
adequacy (other than changes in policy which, for internal reasons only, are
intended to materially increase capital, without reflecting any obligation to
do so)), then, from time to time, within 10 days after demand by such Lender
(which demand shall be accompanied by a statement setting forth in reasonable
detail the basis of such demand), the Borrowers shall pay directly to such
Lender such additional amount or amounts as will compensate such Lender or such
controlling Person for such reduction.
SECTION 7.2 Basis for Determining Interest Rate Inadequate or Unfair.
If prior to the first day of the Loan Period for any requested Eurocurrency
Loan:
(a) the Agent receives notice from Required Lenders that
deposits in the relevant Available Currency (in the applicable
amounts) are not being offered to such Lenders in the interbank
eurocurrency market for such Loan Period, or the Agent otherwise
determines (which determination shall be binding and conclusive on all
parties) that, by reason of
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<PAGE> 40
circumstances generally affecting the interbank eurocurrency market,
adequate and reasonable means do not exist for ascertaining the
Eurocurrency Rate; or
(b) the Agent receives notice from Required Lenders that
the Eurocurrency Rate as determined by the Agent will not adequately
and fairly reflect the cost to such Lenders of maintaining or funding
Eurocurrency Loans for such Loan Period, or that the making or funding
of Eurocurrency Loans for such Loan Period has become impracticable as
a result of an event occurring after the date of this Agreement which
in the opinion of such Lenders materially affects such Loans,
then (i) the Agent shall promptly notify the other parties thereof and (ii) so
long as such circumstances shall continue, no Lender shall be under any
obligation to make any Eurocurrency Loan.
SECTION 7.3 Changes in Law Rendering Certain Loans Unlawful. In the
event that any change in (including the adoption of any new) applicable laws or
regulations, or in the interpretation of applicable laws or regulations by any
governmental or other regulatory body charged with the administration thereof,
should make it (or in the good faith judgment of the applicable Lender raise a
substantial question as to whether it is) unlawful for a Lender to make,
continue or maintain any portion of the principal amount of any Loans, then (a)
such Lender shall promptly notify the Company and the Agent (which shall
promptly notify each of the other parties hereto), (b) upon the effectiveness
of such event and so long as such unlawfulness shall continue, the obligation
of such Lender to make Loans shall be suspended until the Lender shall notify
the Company that such suspension no longer exists, and (c) on such date as may
be required by the relevant law, regulation or interpretation, such Lender's
Loans shall be repaid.
SECTION 7.4 Funding Losses. Each Borrower hereby agrees that within
10 days after demand by any Lender (which demand shall be accompanied by a
statement setting forth the basis for the calculations of the amount being
claimed) each Borrower will indemnify such Lender against any net loss or
expense which such Lender may sustain or incur (including, without limitation,
any net loss or expense incurred by reason of the liquidation or redeployment
of deposits or other funds acquired by such Lender to fund or maintain any
Fixed Rate Loan), as reasonably determined by such Lender, as a result of (a)
any payment (including, without limitation, any payment resulting from
acceleration) of any Fixed Rate Loan of such Lender on a date other than the
last day of the Loan Period for such Loan or (b) any failure of either Borrower
to borrow any Loan on the originally scheduled Funding Date specified therefor
pursuant to
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this Agreement (including, without limitation, any failure to borrow resulting
from any failure to satisfy the conditions precedent to such borrowing). For
this purpose, all notices to the Agent or the Lenders pursuant to this
Agreement (including, without limitation, all acceptances of Bids) shall be
deemed to be irrevocable.
SECTION 7.5 Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary (but subject to
Section 7.6(a)), each Lender shall be entitled to fund and maintain its funding
of all or any part of its Loans in any manner it sees fit, it being understood,
however, that for the purposes of this Agreement all determinations hereunder
shall be made as if such Lender had actually funded and maintained each Fixed
Rate Loan during the Loan Period for such Loan through the purchase of deposits
having a maturity corresponding to such Loan Period and bearing an interest
rate equal (a) in the case of a Eurocurrency Loan, to the Eurocurrency Rate for
such Loan Period, and (b) in the case of a Bid Loan, to the interest rate
applicable to such Bid Loan for such Loan Period.
SECTION 7.6 Mitigation of Circumstances; Replacement of Affected
Lender. (a) Each Lender shall promptly notify the Company and the Agent of
any event of which it has knowledge which will result in, and will use
reasonable commercial efforts available to it (and not, in such Lender's sole
judgment, otherwise disadvantageous to such Lender) to mitigate or avoid, (i)
any obligation by either Borrower to withhold or deduct any Taxes pursuant to
Section 6.4 or pay any amounts pursuant to Section 7.1 or (ii) the occurrence
of any circumstances of the nature described in Section 7.2 or 7.3 (and, if any
Lender has given notice of any such event described in clause (i) or (ii) above
and thereafter such event ceases to exist, such Lender shall promptly so notify
the Company and the Agent). Without limiting the foregoing, each Lender will
designate a different Funding Office if such designation will avoid (or reduce
the cost to the Company of) any event described in clause (i) or (ii) of the
preceding sentence and such designation will not, in such Lender's sole
judgment, be otherwise disadvantageous to such Lender.
(b) At any time any Lender is an Affected Lender (as defined
below), the Company may replace such Affected Lender as a party to this
Agreement with one or more other bank(s) or financial institution(s) reasonably
satisfactory to the Agent, such bank(s) or financial institution(s) to have a
Commitment or Commitments, as the case may be, in such amounts as shall be
reasonably satisfactory to the Agent (and upon notice from the Company such
Affected Lender shall assign, without recourse or warranty, its Commitment, its
Loans, its Notes, and all of its other rights and obligations hereunder to such
replacement
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<PAGE> 42
bank(s) or other financial institution(s) for a purchase price equal to the sum
of the principal amount of the Loans so assigned, all accrued and unpaid
interest thereon, its ratable share of all accrued and unpaid fees and all
other obligations owed to such Affected Lender hereunder). As used in this
Section 7.6, "Affected Lender" means any Lender (i) with respect to which
either Borrower has been required to make any deduction, withholding or other
payment pursuant to Section 6.4, (ii) to which either Borrower has been
required to pay any compensation pursuant to Section 7.1 or (iii) which has
given a notice pursuant to clause (a) or (b) of Section 7.2 or clause (a) of
Section 7.3, but only so long as the circumstances giving rise to such
deduction, withholding, compensation or notice continue to exist.
SECTION 7.7 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Lender pursuant to this Section 7 shall be
conclusive absent demonstrable error, and each Lender may use reasonable
averaging and attribution methods in determining compensation pursuant to
Section 7.1 or 7.4. The provisions of this Section 7 shall survive termination
of this Agreement.
SECTION 8 REPRESENTATIONS AND WARRANTIES.
To induce the Lenders to enter into this Agreement and to make Loans
hereunder, each Borrower represents and warrants to the Agent and the Lenders
as follows:
SECTION 8.1 Organization, etc. Each of the Company and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing (or similar concept under applicable state law) under the laws of the
jurisdiction of its incorporation. Each of the Company and each Subsidiary is
duly qualified to do business, and is in good standing, in all other
jurisdictions where failure to so qualify would have a Material Adverse Effect.
Each of the Company and each Subsidiary has all requisite corporate power to
own or lease the properties used in its business and to carry on its business
as now being conducted. Each of the Borrowers has full power and authority as
proposed to be conducted, and to execute and deliver this Agreement and the
Notes and to engage in the transactions contemplated by this Agreement.
SECTION 8.2 Authorization; No Conflict. The execution and delivery
of this Agreement, the borrowings hereunder, the execution and delivery of the
Notes, and the performance by the Company of its obligations under this
Agreement and the Notes are within each of the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, have received all
necessary governmental and regulatory approval, and do not and
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will not contravene or conflict with, or result in the creation or imposition
of a lien under, any provision of law or of the charter or by-laws of such
Borrower or of any agreement, instrument, order or decree that is binding upon
such Borrower or any Subsidiary.
SECTION 8.3 Validity and Binding Nature. This Agreement is, and the
Notes when duly executed and delivered will be, legal, valid, and binding
obligations of each Borrower enforceable against such Borrower in accordance
with their respective terms, except to the extent enforceability thereof is
limited by bankruptcy, insolvency or other laws relating to, or affecting the
enforcement of, creditors' rights in general, and by general principles of
equity.
SECTION 8.4 Financial Statements.
(a) All balance sheets, all statements of earnings, stockholders'
equity and cash flow, and all other financial information which have been
furnished by or on behalf of APSA and the Company to the Lender, including (i)
the audited consolidated balance sheet at August 31, 1993 and the related
audited consolidated statements of earnings, stockholders' equity and cash
flow, for the Fiscal Year then ended, of the Company and its Subsidiaries,
certified by Deloitte & Touche, (ii) the unaudited consolidated balance sheet
dated May 31, 1994 and the related unaudited consolidated statements of
earnings and cash flow, for the Fiscal Quarter then ended, of the Company and
its Subsidiaries, as appearing in the report of the Company on Form 10-Q for
such Fiscal Quarter filed by the Company with the U.S. Securities and Exchange
Commission, (iii) the unaudited consolidated balance sheet at August 31, 1993
and related consolidated statements of earnings and shareholders equity of APSA
and its Subsidiaries and (iv) the unaudited consolidated balance sheet dated
May 31, 1994 for APSA and its Subsidiaries, have been prepared in accordance
with GAAP consistently applied, except where not applicable thereto or as
otherwise disclosed therein, throughout the periods involved and present fairly
(subject to normal year-end adjustments, if applicable) the financial condition
of the Company and its Subsidiaries or APSA and Subsidiaries, as the case may
be, as at the dates thereof and the results of their operations for the periods
then ended. The Company and its Subsidiaries did not have as of such dates any
material contingent liability or liabilities for taxes, long-term leases or
unusual forward or long-term commitments which are not reflected in the
financial statements described above, and which, in accordance with GAAP,
should have been reflected in such financial statements.
(b) With respect to any representation and warranty which is deemed
to be made after the date hereof by APSA or the
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Company, the balance sheet and statements of earnings, shareholders' equity and
cash flow, which as of such date shall most recently have been furnished by or
on behalf of APSA or the Company to the Lenders for the purposes of or in
connection with this Agreement shall have been prepared in accordance with GAAP
consistently applied (except as disclosed therein), and shall present fairly
the consolidated financial condition of the corporations covered thereby as at
the dates thereof for the periods then ended, subject, in the case of quarterly
financial statements, to normal year-end audit adjustments.
SECTION 8.5 No Material Adverse Change. Since August 31, 1993, no
event has occurred or condition has arisen that has had or is reasonably likely
to have a Material Adverse Effect.
SECTION 8.6 Litigation and Contingent Liabilities. To the best of
each Borrower's knowledge, no litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental or regulatory
proceedings are pending or threatened against either Borrower that would, if
adversely determined, be reasonably likely to have a Material Adverse Effect,
except as set forth in Item 8.6 of the Disclosure Schedule. Other than any
liability incident to such litigation or proceedings, the Company does not have
any material contingent liabilities not provided for or disclosed in the
financial statements referred to in Section 8.4.
SECTION 8.7 Liens. None of the assets of the Company or any
Subsidiary is subject to any Lien, except as permitted by Section 9.9.
SECTION 8.8 Subsidiaries. Item 8.8 of the Disclosure Schedule
correctly sets forth the corporate name, jurisdiction of incorporation and
ownership of each Subsidiary of the Company. Such Subsidiaries and each
corporation becoming a Subsidiary of the Company after the date hereof is and
will be a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and each Subsidiary of the
Company is and will be duly qualified to do business in each other jurisdiction
where failure to so qualify would have a Material Adverse Effect.
SECTION 8.9 Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement or the making of any Loan hereunder, no steps have been taken
to terminate any Pension Plan, and no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which could result in the incurrence by the
Borrowers of any material liability, fine or
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penalty. Except as disclosed in footnote M of the Company's 1993 annual
report, the Borrowers have no contingent liability with respect to any
post-retirement benefit under a Welfare Plan, other than liability for
continuation coverage described in Part 6 of subtitle B of title I of ERISA.
SECTION 8.10 Regulated Industry. Neither the Company nor any
Subsidiary is (a) an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended, or (b) a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
SECTION 8.11 Regulations G, U and X. Neither the Company nor any
Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
Margin Stock, and no proceeds of any Loan will be used for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any Margin Stock
or maintaining or extending credit to others for such purpose.
SECTION 8.12 Taxes. Each of the Company and each Subsidiary has filed
all federal and all other material tax returns and reports required by law to
have been filed by it and has paid all taxes and governmental charges thereby
shown to be owing, except any such taxes or charges which are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books.
SECTION 8.13 Environmental and Safety Matters. The Company and each
Subsidiary is in substantial compliance with all federal, state and local laws,
ordinances and regulations relating to safety and industrial hygiene or to
environmental condition, including, without limitation, all Environmental Laws
in jurisdictions in which the Company or any Subsidiary owns or operates, or
has owned or operated, a facility or site, or arranges or has arranged for
disposal or treatment of Hazardous Material, accepts or has accepted for
transport any Hazardous Material or holds or has held any interest in real
property or otherwise, except as disclosed on Item 8.13 of the Disclosure
Schedule, and, except as disclosed in items 2 and 3 of Item 8.13 of the
Disclosure Schedule, none of the matters disclosed on such Schedule has had or
is reasonably likely to have a Material Adverse Effect. No demand, claim,
notice, suit, suit in equity, action, administrative action, investigation or
inquiry, whether brought by any governmental authority, private person or
entity or otherwise, arising under, relating to or in connection with
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any Environmental Laws is pending or, to the best of the Borrowers' knowledge,
after due investigation, threatened against the Company or any of its
Subsidiaries, any real property in which the Company or any such Subsidiary
holds or has held an interest or any past or present operation of the Company
or any Subsidiary, except as disclosed on Item 8.13 of the Disclosure Schedule,
and, except as disclosed in items 2 and 3 of Item 8.13 of the Disclosure
Schedule, none of the matters disclosed on such Schedule has had or is
reasonably likely to have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries (i) is, to the best of the Borrower's knowledge, after
due investigation, the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a Release of any Hazardous
Material into the environment, (ii) has received any notice of any Hazardous
Material in or upon any of its properties in violation of any Environmental
Laws, or (iii) knows of any basis for any such investigation, notice or
violation, except as disclosed on Item 8.13 of the Disclosure Schedule, and,
except as disclosed in items 2 and 3 of Item 8.13 of the Disclosure Schedule,
none of the matters disclosed on such Schedule has had or is reasonably likely
to have a Material Adverse Effect. No Release, threatened Release or disposal
of Hazardous Material is occurring or has occurred on, under or to any real
property in which the Company or any of its Subsidiaries holds any interest or
performs any of its operations in violation of any Environmental Law except as
disclosed on Item 8.13 of the Disclosure Schedule, and, except as disclosed in
items 2 and 3 of Item 8.13 of the Disclosure Schedule, none of the matters
disclosed on such Schedule has had or is reasonably likely to have a Material
Adverse Effect.
SECTION 8.14 Compliance with Law. Except as otherwise disclosed in
the Disclosure Schedule, each of the Company and each Subsidiary is in
compliance with all statutes, judicial and administrative orders, permits and
governmental rules and regulations which are material to its business or the
non-compliance with which has had or is reasonably likely to have a Material
Adverse Effect.
SECTION 8.15 Information. All information heretofore or
contemporaneously herewith furnished by the Borrowers or any Subsidiary to any
Lender for purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all information hereafter furnished by
or on behalf of the Borrower or any Subsidiary to any Lender pursuant hereto or
in connection herewith will be, true and accurate in every material respect on
the date as of which such information is dated or certified, and such
information, taken as a whole, does not and will not omit to state any material
fact necessary to make such information, taken as a whole, not misleading.
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SECTION 8.16 Ownership of Shares. Not less than ninety-nine percent
(99%) of the issued and outstanding shares of capital stock of APSA are owned
by the Company.
SECTION 8.17 Ownership of Properties. Each of the Company and each
Subsidiary owns good and marketable title to or holds valid leasehold interests
in all of its material properties and assets, real and personal, of any nature
whatsoever, free and clear of all Liens except as permitted pursuant to Section
9.9 and none of them are in default beyond the expiration of any applicable
grace period of any material obligation under any leases creating any of their
leasehold interests in real property, and none of such property is subject to
any Lien except as permitted pursuant to Section 9.9.
SECTION 8.18 Patents, Trademarks, etc. Each of the Company and each
Subsidiary owns or licenses and possesses all such patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights and copyrights as the Company considers necessary for the
conduct of the businesses of the Company and such Subsidiaries as now conducted
without, individually or in the aggregate, any infringement upon rights of
other persons which would be reasonably likely to have a Materially Adverse
Effect, except as may be disclosed in Item 8.18 of the Disclosure Schedule.
SECTION 8.19 Insurance. The Company and its Subsidiaries maintain
with responsible insurance companies insurance (including insurance against
claims and liabilities arising out of the manufacture or distribution of any
products) with respect to their properties and businesses against such
casualties and contingencies and of such types and in such amounts as is
customary in the case of similar businesses, except as may be disclosed in Item
8.19 of the Disclosure Schedule.
SECTION 9 COVENANTS.
Until the expiration or termination of the Commitments, and thereafter
until all obligations of the Borrowers hereunder and under the Notes are paid
in full, each Borrower agrees that, unless at any time the Required Lenders
shall otherwise expressly consent in writing, it will:
SECTION 9.1 Reports, Certificates and Other Information. Furnish
to each Lender:
9.1.1 Audit Report. Promptly when available and in any event
within 90 days after the close of each Fiscal Year,
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(a) in the case of the Company a copy of the annual audit
report of the Company and its Subsidiaries for such Fiscal Year,
including therein consolidated balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Year and consolidated
statements of earnings and cash flow of the Company and its
Subsidiaries for such Fiscal Year certified, without qualification as
to going concern or scope, by independent auditors of recognized
national standing selected by the Company and reasonably acceptable to
the Required Lenders, (b) in the case of APSA, unaudited consolidated
balance sheet at the close of such Fiscal Year and related
consolidated statements of earnings and shareholders equity for such
Fiscal Year, of APSA and its Subsidiaries certified by the chief
financial officer or the Treasurer of APSA, and (c) in the case of the
Company, an unaudited consolidating balance sheet and statements of
earnings and cashflow of such Fiscal Year, with comparable information
at the close of and for the prior Fiscal Year.
9.1.2 Interim Reports. Promptly when available and in any
event within 60 days after the end of each Fiscal Quarter (except the
last Fiscal Quarter of each Fiscal Year), consolidated balance sheets
of the Company and its Subsidiaries and APSA and its Subsidiaries as
of the end of such Fiscal Quarter, consolidated statements of earnings
and (only in the case of the Company) a consolidated statement of cash
flow for such Fiscal Quarter and for the period beginning with the
first day of such Fiscal Year and ending on the last day of such
Fiscal Quarter of the Company or APSA, as the case may be, and its
respective Subsidiaries, with comparable information at the close of
and for the corresponding Fiscal Quarter of the prior Fiscal Year and
for the corresponding portion of such prior Fiscal Year, together with
a certificate of the chief financial officer or the Treasurer of the
Company or APSA, as the case may be to the effect that such financial
statements fairly present the financial condition and results of
operations of the Company and its Subsidiaries as of the date and
periods indicated (subject to normal year-end adjustments).
9.1.3 Compliance Certificate. Concurrently with each set of
financial statements delivered pursuant to Section 9.1.1 and 9.1.2, a
certificate of the chief financial officer or the Treasurer of the
Company (a) to the effect that such officer is not aware of any Event
of Default or Unmatured Event of Default that has occurred and is
continuing or, if there is any such event, describing it in reasonable
detail, and (b) containing a computation of each of (x) the financial
ratios and restrictions set forth in Section 9.6, (y) the Debt to
Capital Ratio and (z) the Margin and Non-Use Fee.
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9.1.4 Reports to SEC. Promptly upon the filing or sending
thereof, a copy of any annual, periodic or special report or
registration statement (inclusive of exhibits thereto) filed by the
Company or any Subsidiary with the SEC or any securities exchange.
9.1.5 Notice of Default, Litigation and ERISA Matters.
Immediately upon becoming aware of any of the following, written
notice describing the same and the steps being taken by the Company or
the Subsidiary affected thereby with respect thereto: (a) the
occurrence of an Event of Default or an Unmatured Event of Default;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Company to the Lenders
which has been instituted or, to the knowledge of the Company, is
threatened against the Company or any Subsidiary or to which any of
the properties of any thereof is subject which, if adversely
determined, is reasonably likely to have a Material Adverse Effect;
(c) the institution of any steps by the Company, any of its
Subsidiaries or any other Person to terminate any Pension Plan, or the
failure to make a required contribution to any Pension Plan if such
failure is sufficient to give rise to a lien under Section 302(f) of
ERISA, or the taking of any action with respect to a Pension Plan
which could result in the requirement that the Company furnish a bond
or other security to the PBGC or such Pension Plan, or the occurrence
of any event with respect to any Pension Plan which could result in
the incurrence by the Company of any material liability, fine or
penalty, or any material increase in the contingent liability of the
Company with respect to any post-retirement Welfare Plan benefit; and
(d) any other event or occurrence which has had or is reasonably
likely to have a Material Adverse Effect.
9.1.6 Other Information. From time to time such other
information concerning the Company and its Subsidiaries as any Lender
or the Agent may reasonably request.
SECTION 9.2 Books, Records and Inspections. Keep, and cause each
Subsidiary to keep, its books and records reflecting all of its business
affairs and transactions in accordance with sound business practices sufficient
to allow the preparation of financial statements in accordance with GAAP; and
permit, and cause each Subsidiary to permit, any Lender or the Agent or any
representative thereof, at reasonable times and on reasonable notice, to visit
any or all of its offices, to discuss its financial matters with its officers
and its independent auditors (and the Company hereby authorizes such
independent auditors to discuss such financial matters with any Lender or the
Agent or any representative thereof), and to examine (and, at the
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Company's or such Subsidiary's expense, make copies of) any of its books or
other corporate records.
SECTION 9.3 Insurance. Maintain, and cause each Subsidiary to
maintain, with responsible and financially-sound insurance companies or
associations, insurance in such amounts and covering such risks as is usually
maintained by companies engaged in similar businesses and owning similar
properties similarly situated, except as disclosed in Item 8.19 of the
Disclosure Schedule.
SECTION 9.4 Compliance with Law; Payment of Taxes and Liabilities.
(a) Comply, and cause each Subsidiary to comply, in all material respects with
all applicable laws, rules, regulations and orders; and (b) pay, and cause each
Subsidiary to pay, prior to delinquency, all taxes and other governmental
charges against it or any of its property, provided, however, that the
foregoing shall not require the Company or any Subsidiary to pay any such tax
or charge so long as it shall contest the validity thereof in good faith by
appropriate proceedings and shall set aside on its books adequate reserves with
respect thereto.
SECTION 9.5 Maintenance of Existence, etc. Maintain and preserve,
and (subject to Section 9.7) cause each Subsidiary to maintain and preserve,
(a) its existence and good standing in the jurisdiction of its organization and
(b) its foreign qualification in each other jurisdiction where the nature of
its business makes such qualification necessary (except in those instances in
which the failure to be qualified or in good standing will not have a Material
Adverse Effect).
SECTION 9.6 Financial Ratios and Restrictions.
9.6.1 Minimum Shareholders Equity. Not permit at any time
(a) Shareholders Equity for the Company to be less than the sum of
$81,500,000 plus 25% of Consolidated Net Income for each Fiscal
Quarter ending after August 31, 1994 (excluding any Fiscal Quarter in
which there is a loss) and (b) Shareholders Equity for APSA to be less
than $1.
9.6.2 Fixed Charge Coverage Ratio. Not permit the Fixed
Charge Coverage Ratio to be less than 1.5:10.
9.6.3 Debt to Capital Ratio. Not permit at any time the Debt
to Capital Ratio to exceed 58%.
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SECTION 9.7 Mergers, Consolidations, Purchases and Sales. Not, and
not permit any Subsidiary to, be a party to any merger or consolidation, or
purchase or otherwise acquire all or a substantial portion of the business or,
assets of, or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or, except in the ordinary course of its
business, sell, transfer, convey or lease all or a substantial part of its
assets, or sell or assign with or without recourse any receivables, except for:
(i) any such merger or consolidation, sale, transfer,
conveyance, lease or assignment of or by any Subsidiary into, with or
to the Company or into, with or to any wholly-owned Subsidiary;
(ii) any such purchase or other acquisition by the Company or
APSA of the assets or stock of any wholly-owned Subsidiary;
(iii) (A) the Permitted Receivables Securitization and (B) any
sale, transfer, conveyance or lease of any asset if (x) the aggregate
book value (disregarding any write-downs of such book value other than
ordinary depreciation and amortization) of all assets disposed of
pursuant to this clause (iii)(B)(x) in any Fiscal Year are less than
15% of the total book value of tangible assets of the Company and its
Subsidiaries as of May 31, 1994 and (y) no Event of Default or
Unmatured Event of Default exists or would result therefrom; or
(iv) any acquisition if (A) after such acquisition the Company
(if it is the acquiring entity) or a Subsidiary owns (1) at least a
majority of the securities of each class having ordinary voting power
of, or a majority of the ownership interest in, the acquired Person or
(2) more than 10% but less than a majority of the securities of each
class having ordinary voting power of, or more than 10% but less than
a majority of the ownership interest in, the acquired Person and,
immediately after giving effect to any acquisition described in
this subclause (2), the aggregate book value of all such minority
Investments in the equity securities or other ownership interests of
other Persons by the Company and its Subsidiaries does not exceed 20%
of the consolidated tangible assets of the Company and its
Subsidiaries, (B) no Event of Default or Unmatured Event of Default
exists or would result therefrom and (C) prior to the consummation of
such acquisition, the Company provides to each Lender a certificate of
the chief financial officer of the Company (attaching computations to
demonstrate compliance with all financial covenants hereunder) stating
that such acquisition complies with this Section 9.7 and
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that any other conditions under this Agreement relating to such
acquisition have been satisfied.
SECTION 9.8 Commercial Paper Lines. Not, and not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist or otherwise become
or be liable in respect of any Debt with respect to unsecured commercial paper
except to the extent the Company or such Subsidiary has unused unsecured lines
of credit backing up such commercial paper.
SECTION 9.9 Liens. Not, and not permit any Subsidiary to, create or
permit to exist any Lien on any of its real or personal properties, assets or
rights of whatsoever nature, whether now owned or hereafter acquired, except
(a) Liens for taxes or other governmental charges not at the time delinquent or
thereafter payable without penalty or being contested in good faith by
appropriate proceedings and, in each case, for which it maintains adequate
reserves; (b) Liens arising in the ordinary course of business (such as (i)
Liens of carriers, warehousemen, mechanics and materialmen and other similar
Liens imposed by law and (ii) Liens incurred in connection with worker's
compensation, unemployment compensation and other types of social security
(excluding Liens arising under ERISA) or in connection with surety and appeal
bonds, bids, performance bonds and similar obligations) for sums not overdue or
being contested in good faith by appropriate proceedings and not involving any
deposits or advances or borrowed money or the deferred purchase price of
property or services, and, in each case, for which it maintains adequate
reserves; (c) Liens identified on Item 9.9 of the Disclosure Schedule; (d)
Liens in connection with Capital Leases (to the extent permitted hereunder);
(e) any Lien arising in connection with the acquisition of fixed assets after
the date hereof, and attaching only to the property being acquired, provided
that the principal amount of the Debt secured by each such Lien shall not
exceed the purchase price of the applicable fixed asset and the aggregate
amount of all Debt secured by such Liens shall not at any time exceed
$1,000,000; (f) attachments, judgments and other similar Liens, for sums not
exceeding $1,000,000, arising in connection with court proceedings, provided
the execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings; (g) other Liens incidental to the conduct of the
business of the Company or a Subsidiary or the ownership of its property or
assets, including easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens, which Liens were not incurred
in connection with the borrowing of money and do not, in any case or in the
aggregate, interfere in any material respect with the ordinary conduct of the
business of the Company or any Subsidiary; (h) building restrictions, zoning
laws and other statutes, laws, rules, regulations, ordinances and
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restrictions, and any amendments thereto, now or at any time hereafter adopted
by any governmental authority having jurisdiction; (i) any Lien existing on any
asset of any corporation which becomes a Subsidiary of the Company after the
date hereof, which Lien was not created in contemplation of such event,
provided that (x) Liens on current assets of such corporation shall be
discharged within 120 days after such corporation becomes a Subsidiary of the
Company and (y) the aggregate amount of Debt secured by all such Liens does not
at any time exceed $5,000,000; and (k) other Liens securing obligations not at
any time exceeding $2,000,000.
SECTION 9.10 Restricted Payments, etc. Not, and not permit any
Subsidiary to, make any Restricted Payment; provided that (a) any Subsidiary
may declare and pay dividends, or make other distributions, to the Company; and
(b) so long as no Event of Default or Unmatured Event of Default exists or
would result therefrom, the Company may pay dividends to its shareholders in an
aggregate amount not to exceed the sum of (i) $12,000,000 plus (ii) 75% of the
Consolidated Net Income since May 31, 1994 (less 100% of any consolidated net
losses) plus (iii) net cash proceeds from the sale of capital stock by the
Company.
SECTION 9.11 Use of Proceeds. Use the proceeds of the Loans for
general corporate purposes; and not use or permit any proceeds of any Loan to
be used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of (a) "purchasing or carrying" any Margin Stock within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, as amended from time to time, or (b) purchasing or otherwise acquiring
any stock of any Person if such Person (or its board of directors) has (i)
announced that it will oppose such purchase or other acquisition or (ii)
commenced any litigation which alleges that such purchase or other acquisition
violates, or will violate, any applicable law.
SECTION 9.12 Maintenance of Property. Maintain, and cause each
Subsidiary to maintain, its properties which are material to the conduct of its
business in good working order and condition (ordinary wear and tear excepted).
SECTION 9.13 Employee Benefit Plans. Maintain, and cause each
Subsidiary to maintain, each Pension Plan in compliance in all material
respects with all applicable requirements of law and regulations.
SECTION 9.14 Business Activities. Not make any substantial change in
the nature of the business of the Company and its Subsidiaries, taken as a
whole, from that engaged in on the date of this Agreement.
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SECTION 9.15 Environmental Matters.
9.15.1 Environmental Obligations. (a) Comply, and cause each
Subsidiary to comply, in a reasonable manner with any applicable
Federal or state judicial or administrative order requiring the
performance at any real property owned, operated, or leased by the
Company or any Subsidiary of activities in response to any Release or
threatened Release of any Hazardous Material, except for the period of
time that the Company or such Subsidiary is diligently in good faith
contesting such order; (b) use and operate, and cause each Subsidiary
to use and operate, all of its facilities and properties in material
compliance with all Environmental Laws; (c) keep, and cause each
Subsidiary to keep, all necessary permits, approvals, certificates,
licenses and other authorizations relating to environmental matters in
effect and remain in material compliance therewith; (d) handle, and
cause each Subsidiary to handle, all Hazardous Materials in material
compliance with all applicable Environmental Laws; and (e) not, and
not permit any Subsidiary to, commence disposal of any Hazardous
Material into or onto any real property owned, operated or leased by
the Company or any Subsidiary nor allow any Lien imposed pursuant to
any Environmental Law to attach to any such real property.
9.15.2 Environmental Information. Within 60 days of receipt
thereof, notify the Agent of the receipt by the Company or any
Subsidiary of any written claim, demand, proceeding, action or notice
of liability by any Person arising out of or relating to the Release
or threatened Release of any Hazardous Material, except for any
release or threatened release with respect to which the maximum
liability of the Company and its Subsidiaries is reasonably expected
to be less than $750,000; and within 60 days of any Release,
threatened Release, or disposal of any Hazardous Material reported to
any governmental regulatory authority at any real property owned,
operated or leased by the Company or any Subsidiary notify the Agent
of such release, threat of release or disposal, except for any
release, threat of release or disposal with respect to which the
maximum liability of the Company and its Subsidiaries is reasonably
expected to be less than $750,000.
SECTION 9.16 Unconditional Purchase Obligations. Not, and not permit
any Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services, if such contract requires
that payment be made by it regardless of whether or not delivery is ever made
of such materials, supplies or other property or services.
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SECTION 9.17 Inconsistent Agreements. Not, and not permit any
Subsidiary to, enter into any agreement containing any provision which would be
violated or breached by any borrowing by the Borrower hereunder or by the
performance by the Company or any Subsidiary of any of its obligations
hereunder.
SECTION 9.18 Transactions with Affiliates. Not, and not permit any
Subsidiary to, enter into or permit to exist any transaction, arrangement or
contract with any of its Affiliates (other than the Company or any wholly-owned
Subsidiary) or any officer or director of the Company or any Affiliate which is
on terms less favorable than would be available from a Person which is not an
Affiliate. Nothing in this Section 9.19 shall prohibit any transaction
expressly permitted by Section 9.11.
SECTION 9.19 The Company's and Subsidiaries' Stock. The Company will
not, nor will it permit any of its Subsidiaries to, purchase or otherwise
acquire any shares of capital stock of the Company; and, except pursuant to
transactions permitted by Sections 9.7 not take any action, or permit any of
its Subsidiaries to take any action, which will, so long as any shares of
capital stock or indebtedness of any corporation which is a Subsidiary at the
date of this Agreement are owned by the Company or any Subsidiary, result in a
decrease in the percentage of the outstanding shares in capital stock of such
corporation owned at the date of this Agreement by the Company and
Subsidiaries.
SECTION 9.20 Negative Pledges; Subsidiary Payments. The Company will
not, nor will it permit any Subsidiary to, enter into any agreement (excluding
this Agreement and the Loan Agreement dated as of August 1, 1990 among the
Company and the lenders party thereto relating to $75,000,000 principal amount
of 9.92% Senior Notes due August 15, 2000 as in effect on the date hereof) (a)
prohibiting the creation or assumption of any Lien upon their respective
properties, revenues, or assets, whether now owned or hereafter acquired; (b)
which would restrict the ability of any Subsidiary to pay or make dividends or
distributions in cash or kind, to make loans, advances or other payments of
whatsoever nature, or to make transfers or distributions of all or any part of
its assets, in each case to the Company or to any corporation as to which such
Subsidiary is a Subsidiary; or (c) which would require the consent or waiver of
any third party to any amendment to this Agreement or any other Loan Document.
SECTION 10 CONDITIONS.
SECTION 10.1 Conditions Precedent to Initial Loan. The obligation of
each Lender to make its initial Loan is (in addition to satisfaction of the
conditions precedent set forth in
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Section 10.2) subject to the conditions precedent that the Agent shall have
received (a) evidence, reasonably satisfactory to the Agent, that all
"Commitments" under and as defined in the Existing Credit Agreements have been
terminated and all obligations of the Company thereunder have been, or
concurrently with the making of the initial Loans will be, paid in full and (b)
each of the following documents, each in form and substance satisfactory to the
Agent (and each, except for the Notes, in sufficient counterparts to provide
one for each Lender):
10.1.1 Notes. One Bid Note of each Borrower payable to the
order of each Lender and one Committed Note of each Borrower
payable to the order of each Lender.
10.1.2 Resolutions. Certified copies of resolutions of the
Board of Directors of each Borrower authorizing or ratifying the
execution, delivery and performance by such Borrower of this
Agreement, the Notes and the other documents provided for in this
Agreement to be executed by such Borrower.
10.1.3 Consents, etc. Certified copies of all documents
evidencing any necessary corporate action, consents and governmental
and regulatory approvals with respect to the execution, delivery and
performance by each Borrower of this Agreement, the Notes and the
other documents provided for in this Agreement to be executed by
such Borrower.
10.1.4 Incumbency and Signatures. A certificate of the
Secretary or an Assistant Secretary of each Borrower certifying the
names of the officer or officers of each Borrower authorized to sign
this Agreement the Notes and the other documents provided for in this
Agreement to be executed by such Borrower, together with a sample of
the true signature of each such officer (it being understood that the
Agent and each Lender may conclusively rely on such certificate until
formally advised by a like certificate of any changes therein).
10.1.5 Opinion of Counsel for the Company. The opinion of
Quarles & Brady, counsel for the Company, and Salens Hertzfeld &
Herlbronn, counsel for APSA, in the form of Exhibit F.
10.1.6 Opinion of Counsel for the Agent. The opinion of
Mayer, Brown & Platt, counsel for the Agent, in the form of Exhibit G.
10.1.7 Other. Such other documents as the Agent or any
Lender may reasonably request.
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SECTION 10.2 Conditions Precedent to All Loans. Each Lender's
obligation to make each Loan is (in addition to the conditions precedent set
forth in Section 10.1) subject to the conditions precedent that (a) no Event of
Default or Unmatured Event of Default has occurred and is continuing or will
result from the making of such Loan and (b) the representations and warranties
contained in Sections 8 (excluding Sections 8.6 and 8.8) are true and correct
as of the date of the making of such Loan, with the same effect as though made
on such date (it being understood that each request for a Loan shall
automatically constitute a representation and warranty by each Borrower that,
as at the making of such Loan, all conditions under this Section 10.2 shall be
satisfied).
SECTION 11 EVENTS OF DEFAULT AND THEIR EFFECT.
SECTION 11.1 Events of Default. Each of the following shall
constitute an Event of Default under this Agreement:
11.1.1 Non-Payment of Notes, etc. Default in the
payment when due of the principal of any Loan; or default, and
continuance thereof for five days, in the payment when due of any
interest on any Loan or any fees or other amounts payable by the
Borrowers hereunder.
11.1.2 Non-Payment of Other Indebtedness for Borrowed
Money. Default in the payment when due (subject to any applicable
grace period), whether by acceleration or otherwise, of any other Debt
of, or guaranteed by, the Company or any Subsidiary in excess in the
aggregate of $2,000,000; or default in the performance or observance
of any obligation or condition with respect to any such other
indebtedness in excess in the aggregate of $2,000,000 if the effect of
such default is to accelerate the maturity of any such indebtedness or
to permit the holder or holders thereof, or any trustee or agent for
such holders, to cause such indebtedness to become due and payable
prior to its expressed maturity.
11.1.3 Warranties. Any warranty made by either
Borrower herein is breached, or is false or misleading, in any
material respect, or any schedule, certificate, financial statement,
report, notice or other writing furnished by the Borrowers to the
Agent or any Lender is false or misleading in any material respect on
the date as of which the facts therein set forth are stated or
certified.
11.1.4 Bankruptcy, Insolvency, etc. The Company or any
Subsidiary becomes insolvent (it being understood that a Subsidiary
shall not be deemed to be insolvent solely
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because it has negative net worth) or generally fails to pay, or
admits in writing its inability to pay, debts as they become due; or
the Company or any Subsidiary applies for, consents to or acquiesces
in the appointment of a trustee, receiver or other custodian for the
Company or such Subsidiary or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or other
custodian is appointed for the Company or any Subsidiary or for a
substantial part of its property and is not discharged within 30 days;
or any bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution
or liquidation proceeding (except the voluntary dissolution, not under
any bankruptcy or insolvency law, of a Subsidiary), is commenced in
respect of the Company or any Subsidiary, and, if such case or
proceeding is not commenced by the Company or such Subsidiary, it is
consented to or acquiesced in by the Company or such Subsidiary or
remains for 30 days undismissed; or the Company or any Subsidiary
takes any corporate action to authorize, or in furtherance of, any of
the foregoing.
11.1.5 Non-Compliance with Certain Covenants. Failure
by the Borrowers to comply with or to perform any provision of Section
9.6 through 9.11, 9.17, 9.19 or 9.20.
11.1.6 Non-Compliance with Other Provisions of this
Agreement. Failure by the Borrowers to comply with or to perform any
provision of this Agreement (if such failure does not constitute an
Event of Default under any of the other provisions of this Section
11.1), and continuance of such failure for 30 days after notice thereof
to the Company from the Agent or any Lender.
11.1.7 Pension Plans. (i) Institution of any steps by
the Company or any other Person to terminate a Pension Plan if as a
result of such termination the Company could be required to make a
contribution to such Pension Plan, or could incur a liability or
obligation to such Pension Plan, in excess of $1,000,000, or (ii) a
contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under section 302(f) of ERISA.
11.1.8 Judgments. Final judgments which exceed an
aggregate of $1,000,000 (excluding any portion thereof which is
covered by insurance maintained with a responsible insurance company
which has accepted a tender of defense and indemnification without
reservation of rights) shall be rendered against the Company or any
Subsidiary and shall not have been discharged or vacated or had
execution thereof
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stayed pending appeal within 30 days after entry or filing of such
judgments.
11.1.9 Change of Control. An Impermissible Change of
Control shall occur.
11.1.10 Material Adverse Effect. Any event shall occur
which, in the opinion of the Required Lenders, has had or is
reasonably likely to have a Material Adverse Effect.
SECTION 11.2 Effect of Event of Default. If any Event of
Default described in Section 11.1.4 shall occur, the Commitments (if they have
not theretofore terminated) shall immediately terminate and all Loans and all
interest and other amounts due hereunder shall become immediately due and
payable, all without presentment, demand or notice of any kind (all of which
are hereby expressly waived by the Borrowers); and, in the case of any other
Event of Default, the Agent may with the consent of the Required Lenders, and
shall upon written request of the Required Lenders, declare the Commitments (if
they have not theretofore terminated) to be terminated and/or all Loans and all
interest and other amounts due hereunder to be due and payable, whereupon the
Commitments (if they have not theretofore terminated) shall immediately
terminate and/or all Loans and all interest and other amounts due hereunder
shall become immediately due and payable, all without presentment, demand or
notice of any kind (all of which are hereby expressly waived by the Borrowers).
The Agent shall promptly advise the Company and each Lender of any such
declaration, but failure to do so shall not impair the effect of such
declaration. Notwithstanding the foregoing, the effect as an Event of Default
of any event described in Section 11.1.1 or Section 11.1.4 may be waived by the
written concurrence of all of the Lenders, and the effect as an Event of
Default of any other event described in Section 11.1 may be waived by the
written concurrence of the Required Lenders.
SECTION 12 THE AGENT.
SECTION 12.1 Authorization. Each Lender authorizes the Agent
to act on behalf of such Lender to the extent provided herein, and in any other
document or instrument delivered hereunder or in connection herewith, and to
take such other action as may be reasonably incidental thereto. Subject to the
provisions of Section 12.3, the Agent will take such action permitted by this
Agreement or any agreement delivered in connection with this Agreement as may
be requested in writing by the Required Lenders. The Agent shall promptly
remit in immediately available funds to each Lender its share of all payments
received by the Agent for the account of such Lender.
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SECTION 12.2 Indemnification. The Lenders agree to indemnify
the Agent in its capacity as such (to the extent not reimbursed by the
Borrowers), ratably according to their respective Percentages (or, after
termination of the Commitments, ratably according to the principal amount of
the Loans held by each Lender), from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses 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 by or referred
to herein or the transactions 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 to the Agent of any portion of
the foregoing resulting solely from the Agent's or its employees' or agents'
gross negligence or willful misconduct. All obligations provided for in this
Section 12.2 shall survive termination of this Agreement.
SECTION 12.3 Action on Instructions of the Required Lenders. As
to any matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but the Agent shall in
all cases be fully protected in acting or refraining from acting upon the
written instructions (i) from the Required Lenders, except for instructions
which under the express provisions hereof must be received by the Agent from
all Lenders, and (ii) in the case of such instructions, from all Lenders. In
no event will the Agent be required to take any action which exposes the Agent
to personal liability or which is contrary to this Agreement or applicable law.
The relationship between the Agent and the Lenders is and shall be that of
agent and principal only and nothing herein contained shall be construed to
constitute the Agent a trustee for any Lender or any other holder of a Note or
of a participation therein nor to impose on the Agent duties and obligations
other than those expressly provided for herein.
SECTION 12.4 Payments. (a) The Agent shall be entitled to
assume that each Lender has made its Loan (if any) available in accordance with
Section 2.2(e) or Section 3.2(c), as applicable, unless such Lender notifies
the Agent prior to 11:00 a.m., Chicago time, on the Funding Date for such Loan
that it does not intend to make such Loan available, it being understood that
no such notice shall relieve such Lender of any of its obligations under this
Agreement. If the Agent makes any payment to a Borrower on the assumption that
a Lender has made the proceeds of such Loan available to the Agent but such
Lender has not in fact made the proceeds of such Loan available to the Agent,
such Lender shall pay to the Agent on demand an amount equal to the
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amount of such Loan, together with interest thereon for each day that elapses
from and including such Funding Date to the Business Day on which the proceeds
of such Loan become immediately available to the Agent prior to 12:30 p.m.,
Chicago time, at the Federal Funds Rate for each such day, based upon a year of
360 days. A certificate of the Agent submitted to any Lender with respect to
any amounts owing under this Section 12.4(a) shall constitute rebuttable
presumptive evidence of the amount owed to the Agent by such Lender pursuant to
this Section. If the proceeds of such Loan are not made available to the Agent
by such Lender within three Business Days of such Funding Date, the Agent shall
be entitled to recover such amount on demand from the Borrowers, together with
interest thereon for each day that elapses from and including such Funding Date
to the Business Day on which such proceeds become immediately available to the
Agent prior to 12:30 p.m., Chicago time, (i) in the case of a Bid Loan, at the
rate per annum applicable thereto, and (ii) in the case of a Committed Loan, at
the rate per annum applicable to Floating Rate Loans. Nothing in this paragraph
(a) shall relieve any Lender of any obligation it may have hereunder to make
any Loan or prejudice any right which the Borrowers may have against any Lender
as a result of any default by such Lender hereunder.
(b) The Agent shall be entitled to assume that the Borrowers have
made all payments due hereunder from the Borrowers on the due date thereof
unless it receives notification prior to any such due date from the Borrowers
that the Borrowers do not intend to make any such payment, it being understood
that no such notice shall relieve the Borrowers of any of their obligations
under this Agreement. If the Agent distributes any payment to a Lender
hereunder in the belief that the Borrowers have paid to the Agent the amount
thereof but the Borrowers have not in fact paid to the Agent such amount, such
Lender shall pay to the Agent on demand an amount equal to the amount of the
payment made by the Agent to such Lender, together with interest thereon for
each day that elapses from and including the date on which the Agent made such
payment to the Business Day on which the amount of such payment is returned to
the Agent in immediately available funds prior to 12:30 p.m., Chicago time, at
the Federal Funds Rate for each such day, based upon a year of 360 days. If
the amount of such payment is not returned to the Agent in immediately
available funds within three Business Days after demand by the Agent, such
Lender shall pay to the Agent on demand an amount calculated in the manner
specified in the preceding sentence after substituting the term "Alternate
Reference Rate" for the term "Federal Funds Rate". A certificate of the Agent
submitted to any Lender with respect to amounts owing under this Section
12.4(b) shall constitute rebuttable presumptive evidence of the amount owed to
the Agent by such Lender pursuant to this Section.
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SECTION 12.5 Exculpation. The Agent shall be entitled to rely
upon advice of counsel concerning legal matters, and upon this Agreement and
any Note, security agreement, schedule, certificate, statement, report, notice
or other writing which it believes to be genuine or to have been presented by a
proper person. Neither the Agent nor any of its directors, officers, employees
or agents shall (i) be responsible for any recitals, representations or
warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, this Agreement, any Note or any other
instrument or document delivered hereunder or in connection herewith, (ii) be
deemed to have knowledge of an Event of Default or Unmatured Event of Default
(other than any such event involving non-payment of any amount to be paid by
the Borrowers to the Agent) until after having received actual notice thereof
from the Borrowers or a Lender, (iii) be under any duty to inquire into or pass
upon any of the foregoing matters, or to make any inquiry concerning the
performance by the Borrowers or any other obligor of its obligations, or (iv)
in any event, be liable as such for any action taken or omitted by it or them,
except for its or their own gross negligence or willful misconduct. The agency
hereby created shall in no way impair or affect any of the rights and powers
of, or impose any duties or obligations upon, the Agent in its individual
capacity as a Lender.
SECTION 12.6 Credit Investigation. Each Lender acknowledges,
and shall cause each Assignee or Participant to acknowledge in its assignment
or participation agreement with such Lender, that it has (i) made and will
continue to make such inquiries and has taken and will take such care on its
own behalf as would have been the case had the Loans been made directly by such
Lender or other applicable Person to the Borrowers without the intervention of
the Agent or any other Lender and (ii) independently and without reliance upon
the Agent or any other Lender, and based on such documents and information as
it has deemed appropriate, made and will continue to make its own credit
analysis and decisions relating to this Agreement. Each Lender agrees and
acknowledges, and shall cause each Assignee or Participant to agree and
acknowledge in its assignment or participation agreement with such Lender, that
the Agent makes no representations or warranties about the creditworthiness of
the Borrowers or any other party to this Agreement or with respect to the
legality, validity, sufficiency or enforceability of this Agreement, any Note
or the value of any security therefor.
SECTION 12.7 Continental and Affiliates. Continental and each
of its successors as Agent shall have the same rights and powers hereunder as
any other Lender and may refrain from exercising the same as though it were not
the Agent, and Continental and any such successor and its affiliates may accept
deposits from, lend money to and generally engage, and continue
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to engage, in any kind of business with the Borrowers or any Affiliate thereof
as if Continental or such successor were not the Agent hereunder.
SECTION 12.8 Resignation or Removal. The Agent may resign as
such at any time upon at least 30 days' prior notice to the Company and the
Lenders, and the Agent may be removed as such at any time by vote of the
Required Lenders and notice to the Agent and the Company. In the event of any
such resignation or removal, Lenders having an aggregate Percentage of more
than 50% shall as promptly as practicable appoint a successor Agent. If no
successor Agent shall have been so appointed, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' notice of removal to the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial Lender organized under the laws of the
United States of America or of any State thereof or under the laws of another
country which is doing business in the United States of America and having a
combined capital, surplus and undivided profits of at least $300,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from all further duties and obligations under this
Agreement. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Section 12 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
SECTION 13 GUARANTEE
13.1 Guarantee from Borrowers. In order to induce the Lenders to
agree to make Loans to individual Borrowers under this Agreement, each Borrower
hereby unconditionally and irrevocably guarantees, as primary obligor and not
merely as surety) to and for the benefit of the Lenders and the Agent the due
and punctual payment of all Obligations, including, without limitation, the Bid
Loans and the Committed Loans (the "Guaranteed Indebtedness").
13.2 Expenses. Each Borrower irrevocably and unconditionally agrees
to pay any and all expenses, including reasonable attorneys' fees and
disbursements, incurred by any of the Lenders or the Agent in enforcing its or
their rights under or in connection with this Section 13.
13.3 Waivers. Each Borrower agrees that the Guaranteed Indebtedness
may be extended or renewed, in whole or in part, without notice to or further
assent from it and without impairing
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its obligations under this Section 13. Each Borrower hereby waives (a)
presentation to, demand of payment from, and protest and notice of protest to
such Borrower concerning the Guaranteed Indebtedness, (b) protest for
nonpayment of principal of or interest on the Guaranteed Indebtedness and (c)
all other notices to which it might otherwise be entitled as guarantor of the
Guaranteed Indebtedness.
13.4 No Impairment. The obligations of each Borrower under this
Section 13 shall not be impaired by reason of any claim or waiver, release,
surrender or compromise with respect to any other Borrower, and shall not be
subject to any defense or set-off by reason of the unenforceability, in whole
or in part, of the Guaranteed Indebtedness or any provision of this Agreement
with respect to any other Borrower. The obligations of each Borrower hereunder
with respect to its guaranty of the obligations of each other Borrower
hereunder shall not be impaired by (a) any lack of validity or enforceability
of this Agreement or any other Loan Document with respect to any other
Borrower, (b) the failure of any of the Lenders or the Agent to assert any
claim or demand or to enforce any right or remedy against any other Borrower or
any other Person hereunder or under the other Loan Documents or with respect to
this Agreement or the other Loan Documents, (c) any extension or renewal, in
whole or in part, of this Agreement or any other Loan Documents, (d) any
rescission, waiver, release, compromise, amendment or modification of, or any
consent to departure from, any of the terms or provisions of this Agreement or
the other Loan Documents or any agreement, (e) any failure by any Person in the
performance of any obligation with respect to this Agreement or any other Loan
Documents, (f) any act by the Agent or any Lender to obtain or retain a Lien
upon or a security interest in any property to secure any Guaranteed
Indebtedness, or to release any security for any of the Guaranteed
Indebtedness, (g) any exchange, release or nonperfection of any Lien, (h) any
bankruptcy of a Borrower or any other Person, or (i) any other act or omission
which may or might in any manner vary the risk of a Borrower, or which would
otherwise operate as a discharge of or other defense available to a Borrower,
as a matter of law.
13.5 Waiver of Resort. Each Borrower agrees that this Section 13
constitutes a guaranty of payment and not merely of collection and waives any
right to require that any resort be had by the Agent or any of the Lenders to
any security held by it for the payment of the Guaranteed Indebtedness or to
any balance or any deposit account or credit on the books of the Agent or any
Lender in favor of any Borrower or any of their Subsidiaries.
13.6 Reinstatement. Each Borrower agrees that this Section 13 shall
continue to be effective or be reinstated, as the case may be, if at any time
any part of any payment of principal of,
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or interest on, the Guaranteed Indebtedness is stayed, rescinded or must
otherwise be returned by any Lender or the Agents upon the bankruptcy or
reorganization of any Borrower or any other Person.
13.7 Payment. Upon the failure of any Borrower to pay any of the
Guaranteed Indebtedness when and as the same shall become due, whether at
maturity, by acceleration or otherwise, each Borrower hereby promises to, and
will, immediately on demand by any Lender or the Agent, pay or cause to be paid
to the Lenders or the Agent, as the case may be, an amount equal to the full
amount of the Guaranteed Indebtedness then due. All such payments shall be in
the currency in which the Guaranteed Indebtedness is denominated.
13.8 Subrogation, Waivers, etc. Each Borrower hereby agrees that,
until such time as all of the Obligations shall have been finally paid in full
in cash and performed in full, all Commitments shall have terminated, and this
guarantee shall have been discontinued as to all Borrowers, no payment made by
or on account of any Borrower pursuant to this Section 13 shall entitle the
other Borrower, by subrogation or otherwise, to any payment by such Borrower or
from or out of any property of such Borrower, and neither of the Borrowers
shall exercise any right or remedy against any other Borrower or any property
of the other Borrower by reason of any performance by any Borrower of its
obligations under this Section 13, including any claim or other rights which it
may now or hereafter acquire against the other Borrower that arise from the
existence, payment, performance or enforcement of the guarantee under this
Section 13, including any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
of the Lenders or the Agent, as the case may be, against such Borrower or any
collateral now or hereafter pledged to the Lenders, the Agent or any other
Person acting on behalf of the Lenders by such Borrower, whether or not such
claim, remedy or right arises in equity, at law or under contract, directly or
indirectly, is for cash or other property or arises by set-off or in any other
manner (as payment or security on account of such claim or other rights). If
any amount shall be paid to any Borrower in violation of the preceding sentence
and the Obligations shall not then have been paid in full, all Commitments
shall not have terminated, such amount shall be deemed to have been paid to
such Borrower for the benefit of, and held in trust for the benefit of, the
Lenders or the Agent, as applicable, and shall forthwith be paid to the Lenders
or the Agent, as applicable. Each Borrower acknowledges that it has received
and will receive direct and indirect benefits from the financing arrangements
contemplated by this Agreement and the other Loan Documents and that the
forbearance set forth in this
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Section 13.8 is knowingly granted in contemplation of such benefits.
13.9 Delay, etc. No delay on the part of any of the Lenders or either
of the Agent in exercising any rights under this Section 13 or failure to
exercise the same shall operate as a waiver of such rights. No notice to or
demand on any Borrower shall be deemed to be a waiver of any obligation of any
Borrower or the right of the Lenders or the Agent to take further action
without notice or demand as provided herein, nor in any event shall any
modification or waiver of the provisions of this Section 13 be effective unless
such modification or waiver is in writing and signed by the Lenders, the Agent
and each Borrower. Any such waiver shall apply only to the specific instance
for which it is given.
SECTION 14 GENERAL.
SECTION 14.1 Waiver; Amendments. No delay on the part of the
Agent or any Lender in the exercise of any right, power or remedy shall operate
as a waiver thereof, nor shall any single or partial exercise by any of them of
any right, power or remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement or the
Notes shall be effective unless the same shall be in writing and signed and
delivered by the Agent, by both Borrowers and by Lenders having an aggregate
Percentage of not less than the aggregate Percentage expressly designated
herein with respect thereto or, in the absence of such designation as to any
provision of this Agreement or the Notes, by the Required Lenders, and then any
amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment,
modification, waiver or consent (i) shall extend or increase the amount of the
Commitments, extend the due date for any amount payable hereunder, reduce or
waive any fee payable hereunder, reduce the rate of interest payable on the
Committed Loans, change the definition of "Required Lenders" in Section 1,
amend or modify the second sentence of Section 14.11, or change the aggregate
Percentage required to effect an amendment, modification, waiver or consent,
without, in each case, the consent of all Lenders or (ii) shall extend the
scheduled maturity or reduce the principal amount of, or rate of interest on,
any Loan without the consent of the holder of such Loan. Amendments,
modifications, waivers and consents of the type described in clause (ii) of the
preceding sentence with respect to Bid Loans or Bid Notes may be effected with
the written consent of the holder of such Bid Loans or Bid Notes and no consent
of any other Lender shall be required in connection therewith. No provisions of
Section 12 shall be amended, modified or waived without the Agent's consent.
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SECTION 14.2 Notices. Except as otherwise expressly provided
in this Agreement, any notice hereunder shall be in writing and, if by
facsimile, shall be deemed to have been given and received when sent, and, if
mailed, shall be deemed to have been given and received three Business Days
after the date when sent by registered or certified mail, postage prepaid, in
each case addressed to the applicable party at the address shown below its
signature hereto or at such other address as it may, by written notice received
by the other parties to this Agreement, have designated as its address for such
purpose. Any Lender giving any waiver, consent or notice to, or making any
request upon, either Borrower hereunder shall promptly notify each other Lender
and the Agent thereof. Any Lender giving a Payment Sharing Notice to the Agent
shall promptly notify each other Lender and the Company thereof (but the
failure to give or any delay in giving such notice to any such party shall not
affect the effectiveness of such Payment Sharing Notice). Correspondence of
the type described in Section 3.2 with respect to Bid Loans and notices of
Committed Loan Requests made by either Borrower shall be directed to the
persons specified for such purpose for each party or in subsequent writings
among the parties. Additional copies of certain notices which any party may
have requested need not be delivered at the same time as the primary notices to
such party, but the party delivering such primary notices shall use reasonable
efforts to distribute such copies on the same Business Day as that on which
such primary notices were distributed. Notices given to the Company shall be
deemed to be notices given to both the Company and APSA.
SECTION 14.3 Computations. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made, for the purpose of this Agreement, such determination or calculation
shall, at any time and to the extent applicable and except as otherwise
specified in this Agreement, be made in accordance with GAAP.
SECTION 14.4 Assignments; Participations. Each Lender may
assign, or sell participations in, its Loans and its Commitment to one or more
other Persons in accordance with this Section 14.4 (and the Borrowers consent
to the disclosure of any information provided to any Lender in connection
herewith to any actual or prospective Assignee or Participant).
14.4.1 Assignments. Any Lender may at any time assign and
delegate to any affiliate of such Lender or to any other Lender or,
with the consent of the Company and the Agent (which consents shall
not be unreasonably withheld or delayed), to any other commercial bank
or other financial institution (any Person to whom an assignment and
delegation is made being herein called an "Assignee") all or any
61
<PAGE> 68
fraction of such Lender's Committed Loans and Commitment (which
assignment and delegation shall be of a constant, and not a varying,
percentage of such assigning Lender's Committed Loans and
Commitment);provided that (i) such assignment shall be in a minimum
amount of $5,000,000 (or if less, the entire amount of such assigning
Lender's Commitment), (ii) such assignment shall be effected by an
assignment agreement substantially in the form of Exhibit H, with
appropriate insertions, and (iii) as of the date of such assignment
and delegation, the Borrowers shall not be required to pay any amount
under Section 6.4 or 7.1 that is greater than the Borrowers would have
been required to pay had no assignment and delegation been made; and
provided, further, that the Borrowers and the Agent shall be entitled
to continue to deal solely and directly with such assigning Lender in
connection with the interests so assigned and delegated to an Assignee
until such assigning Lender or such Assignee shall have:
(i) provided evidence reasonably satisfactory to the Company
and the Agent that, as of the date of such assignment and delegation,
the Borrowers will not be required to pay any costs, fees, taxes or
other amounts of any kind or nature with respect to the interest
assigned in excess of those payable by the Borrowers with respect to
such interest prior to such assignment; and
(ii) paid to the Agent for the account of the Agent a
processing fee of $3,500.
Upon receipt of the foregoing items (and, if requested by the Company or the
Agent, after execution of one or more agreements supplemental to this Agreement
among the assigning Lender, the Assignee, the Company and the Agent), (x) the
Assignee shall be deemed automatically to have become a party hereto and to the
extent that rights and obligations hereunder have been assigned and delegated
to such Assignee shall have the rights and obligations of a Lender hereunder
and under the other instruments and documents executed in connection herewith,
and (y) unless such assignment is made to an affiliate of the assigning Lender
without the consent of the Company (which shall not be unreasonably withheld),
the assigning Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it, shall be released from its obligations
hereunder. The Agent may from time to time (and upon the request of the
Company or any Lender after any change therein shall) distribute a revised
Schedule I indicating any changes in the Lenders party hereto or the respective
Percentages of such Lenders. Within five Business Days after the Company's
receipt of notice from the Agent of the effectiveness of any such assignment
and delegation, the Borrowers shall execute and deliver to the Agent (for
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<PAGE> 69
delivery to the relevant Assignee) new Notes in favor of such Assignee. The
assigning Lender, if not retaining any Commitment hereunder shall promptly mark
the predecessor Notes "exchanged" and deliver them to the Company.
Notwithstanding the foregoing provisions of this Section 14.4.1, any
Lender may at any time assign all or any portion of its Loans to a Federal
Reserve Lender (but no such assignment shall release any Lender from any of its
obligations hereunder).
14.4.2 Participations. Any Lender may at any time, sell to
one or more commercial Lenders or other Persons (any such commercial
bank or other Person being herein called a "Participant") participating
interests in any of its Loans, its direct or participation interest in
any Letter of Credit, its Commitment or any other interest of such
Lender hereunder; provided, however, that
(a) no participation contemplated by this Section 14.4.2
shall relieve such Lender from its Commitment or its other obligations
hereunder;
(b) such Lender shall remain solely responsible for the
performance of its Commitment and such other obligations;
(c) the Borrowers and the Agent shall continue to deal solely
and directly with such Lender in connection with such Lender's rights
and obligations under this Agreement;
(d) no Participant, unless such Participant is an affiliate
of such Lender, or is itself a Lender, shall be entitled to require
such Lender to take or refrain from taking any action hereunder,
except that such Lender may agree with any Participant that such
Lender will not, without such Participant's consent, take any actions
of the type described in the third sentence of Section 14.1;
(e) the Borrowers shall not be required to pay any amount
under this Agreement that is greater than the amount which the Company
would have been required to pay had no participating interest been
sold; and
(f) no Participant may further participate any interest
hereunder (and each participation agreement shall contain a
restriction to such effect).
Each Borrower acknowledges and agrees that, to the extent permitted by
applicable law (but subject to the foregoing provisions of this Section
14.4.2), each Participant shall be
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<PAGE> 70
considered a Lender for purposes of Sections 6.3, 7.1, 7.4, 13.5 and 13.6, and
by its acceptance of a participation herein, each Participant agrees to be
bound by the provisions of Section 6.2(c) as if such Participant were a Lender.
SECTION 14.5 Costs, Expenses and Taxes. Each Borrower agrees
to pay on demand (a) all reasonable out-of-pocket costs and expenses of the
Agent (including the reasonable fees and out-of-pocket expenses of counsel for
the Agent and of local counsel, if any, who may be retained by said counsel) in
connection with the preparation, execution, delivery and administration of this
Agreement, the Notes and all other instruments or documents provided for herein
or delivered or to be delivered hereunder or in connection herewith, and (b)
all out-of-pocket costs and expenses (including reasonable attorneys' fees and
legal expenses) incurred by the Agent and each Lender in connection with the
enforcement of this Agreement, the Notes or any such other instruments or
documents. In addition, each Borrower agrees to pay, and to save the Agent and
the Lenders harmless from all liability for, any stamp or similar taxes which
may be payable in connection with the execution and delivery of this Agreement,
the borrowings hereunder, the issuance of the Notes or the execution and
delivery of any other instruments or documents provided for herein or delivered
or to be delivered hereunder or in connection herewith. All obligations
provided for in this Section 14.5 shall survive termination of this Agreement.
SECTION 14.6 Regulation U. Each Lender represents that it in
good faith is not relying, either directly or indirectly, upon any margin stock
(as such term is defined in Regulation U promulgated by the Board of Governors
of the Federal Reserve System) as collateral security for the extension or
maintenance by it of any credit provided for in this Agreement.
SECTION 14.7 Captions. Section captions used in this Agreement
are for convenience only and shall not affect the construction of this
Agreement.
SECTION 14.8 Governing Law; Severability. This Agreement and
each Note shall be a contract made under and governed by the laws of the State
of Illinois applicable to contracts made and to be performed entirely within
such State. All obligations of the Borrowers and the rights of the Agent and
the Lenders expressed herein or in the Notes shall be in addition to and not in
limitation of those provided by applicable law. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without
64
<PAGE> 71
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
SECTION 14.9 Counterparts; Effectiveness. This Agreement may
be executed in any number of counterparts and by the different parties on
separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Agreement. When counterparts of this Agreement executed by each party
shall have been lodged with the Agent (or, in the case of any Lender as to
which an executed counterpart shall not have been so lodged, the Agent shall
have received telegraphic, telex or other written confirmation of execution of
a counterpart hereof by such Lender), this Agreement shall become effective and
the Agent shall so inform all of the parties hereto.
SECTION 14.10 Further Assurances. Each Borrower agrees to do
such other acts and things, and to deliver to the Agent and each Lender such
additional agreements, powers and instruments, as the Agent or any Lender may
reasonably require or deem advisable to carry into effect the purposes of this
Agreement or to better assure and confirm unto the Agent and each Lender their
respective rights, powers and remedies hereunder.
SECTION 14.11 Successors and Assigns. This Agreement shall be
binding upon each Borrower, the Lenders and the Agent and their respective
successors and assigns, and shall inure to the benefit of each Borrower, the
Lenders and the Agent and the respective successors and assigns of the Lenders
and the Agent. Neither Borrower shall assign any rights or delegate any duties
hereunder without the prior written consent of all Lenders.
SECTION 14.12 Waiver of Jury Trial. EACH OF THE BORROWERS, THE
AGENT AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE,
AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 14.13 FORUM SELECTION AND SUBMISSION TO JURISDICTION. ANY
CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
MAY BE BROUGHT AND MAINTAINED BY THE AGENT OR ANY LENDER IN ANY STATE OR
FEDERAL COURT HAVING SUBJECT MATTER JURISDICTION AND LOCATED IN CHICAGO,
ILLINOIS. FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INSTITUTED WITH RESPECT
TO ANY SUCH CLAIM, EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION AND EXCLUSIVE VENUE OF SUCH COURTS, AGREES NOT TO
INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST THE LENDER OR ANY OF ITS
DIRECTORS,
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<PAGE> 72
OFFICERS, LENDERS OR PROPERTY, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
OTHER LOAN DOCUMENTS, IN ANY COURTS OTHER THAN SUCH COURTS AND HEREBY
IRREVOCABLY APPOINTS CT CORPORATION SYSTEM (THE "PROCESS AGENT"), WITH AN
OFFICE ON THE DATE HEREOF AT 208 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 60604,
UNITED STATES, AS ITS AGENT TO RECEIVE ON BEHALF OF SUCH BORROWER AND ITS
RESPECTIVE PROPERTY, SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY
OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH
SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO SUCH
BORROWER IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, AND
EACH BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO
ACCEPT SUCH SERVICE ON ITS BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, EACH
BORROWER ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH
BORROWER AT ITS ADDRESS SPECIFIED BELOW ITS SIGNATURE BY FIRST CLASS MAIL,
POSTAGE PREPAID. EACH BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION
OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING HEREIN
CONTAINED SHALL PRECLUDE THE AGENT OR ANY LENDER FROM SERVING LEGAL PROCESS IN
ANY MATTER PERMITTED BY LAW OR, AT ITS SOLE OPTION, FROM BRINGING AN ACTION OR
PROCEEDING IN RESPECT HEREOF IN ANY OTHER COUNTRY, STATE OR PLACE HAVING
JURISDICTION OVER SUCH ACTION. EACH BORROWER IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
HAVE TO THE LAYING AND MAINTENANCE OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT LOCATED IN CHICAGO, ILLINOIS AND ANY CLAIM
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
66
<PAGE> 73
Delivered at Chicago, Illinois as of the day and year first above
written.
APPLIED POWER INC.
By: __________________________________
Title:
Address: 13000 West Silver Spring Drive
Butler, Wisconsin 53007
Telecopy No.: (414) 781-7403
Attention: Treasurer
Person to whom Bid Loan correspondence
should be addressed:
13000 West Silver Spring Drive
Butler, Wisconsin 53007
Attention: __________________________
Telephone: __________________________
Facsimile: __________________________
APPLIED POWER FINANCE S.A.
By: ___________________________________
Title:
Address: 13000 West Silver Spring Drive
Butler, Wisconsin 53007
Telecopy No.: (414) 781-7403
Attention: Treasurer
<PAGE> 74
CONTINENTAL BANK,
in its individual corporate
capacity and as Agent
By:____________________________________
Title:______________________________
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Kurt W. Anstaett
Telephone: (312) 828-6624
Facsimile: (312) 987-5500
Person to whom Bid Loan correspondence
should be addressed:
Agency & Investor Services
Attn: Ralph Lopez
231 South LaSalle Street
Chicago, Illinois 60697
Telephone: (312) 828-3706
Facsimile: (312) 974-9102
Person to whom Committed Loan Requests
should be addressed:
Agency & Investor Services
Attn: Ralph Lopez
231 South LaSalle Street
Chicago, Illinois 60697
Telephone: (312) 828-3706
Facsimile: (312) 974-9102
<PAGE> 75
ABN AMRO BANK N.V.
By:___________________________________
Title: ____________________________
By:___________________________________
Title: ____________________________
135 South LaSalle Street
Suite 425
Chicago, Illinois 60674-9135
Attention: Michiel Schwartz
Telephone: (312) 904-2994
Facsimile: (312) 606-8425
Person to whom Bid Loan correspondence
should be addressed:
Attention: Loan Administration
135 South LaSalle Street
Suite 425
Chicago, Illinois 60674-9135
Telephone: (312) 904-2961
Facsimile: (312) 606-8435
Person to whom Committed Loan Requests
should be addressed:
Attention: Loan Administration
135 South LaSalle Street
Suite 425
Chicago, Illinois 60674-9135
Telephone: (312) 904-2961
Facsimile: (312) 606-8435
<PAGE> 76
PNC BANK, NATIONAL ASSOCIATION
By:___________________________________
Title:_____________________________
Fifth Avenue and Wood Street
Pittsburgh, Pennsylvania 15222
With Notice To:
500 West Madison Street
Suite 3140
Chicago, Illinois 60661
Attention: Richard T. Jander
Telephone: (312) 906-3440
Facsimile: (312) 906-3420
Person to whom Bid Loan correspondence
should be addressed:
Attention: Richard T. Jander
500 West Madison Street
Suite 3140
Chicago, Illinois 60661
Telephone: (312) 906-3440
Facsimile: (312) 906-3420
Person to whom Committed Loan Requests
should be addressed:
Attention: Richard T. Jander
500 West Madison Street
Suite 3140
Chicago, Illinois 60661
Telephone: (312) 906-3440
Facsimile: (312) 906-3421
<PAGE> 1
EXHIBIT 4.6
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF AUGUST 31, 1994
AMONG
APPLIED POWER INC.,
BARRY WRIGHT CORPORATION,
WRIGHT LINE INC.,
AND
GB ELECTRICAL, INC.
AS SELLERS
APPLIED POWER INC.
AS SELLERS' REPRESENTATIVE AND SERVICER
AND
PNC BANK, NATIONAL ASSOCIATION AND OTHER FINANCIAL
INSTITUTIONS FROM TIME TO TIME PARTIES HERETO
AS PURCHASERS
AND
PNC BANK, NATIONAL ASSOCIATION
AS AGENT
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- - ------- ----
<S> <C> <C>
ARTICLE I
THE COMMITMENT . . . . . . . . . . . . . . . . . . . . . . 2
1.01. Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Commitment Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03. Purchase and Reinvestment Limits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04. Making Purchases from Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.05. Voluntary Termination of Commitment or Reduction
of Purchase Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.06. Investment Multiples; Number of Undivided Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.07. Limitation of Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
UNDIVIDED INTEREST AND PURCHASERS' SHARE . . . . . . . . . . . . . . . . 4
2.01. Undivided Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.02. Frequency of Computation of Undivided Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.03. Purchasers' Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.04. Loss Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.05. Earned Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.06. Servicer's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.07. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.08. Purchasers' Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
SETTLEMENTS . . . . . . . . . . . . . . . . . . . . . . . 8
3.01. Non-Liquidation Settlement Procedures for
Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.02. Liquidation Settlement Procedures for Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.03. General Settlement Procedures; Reduction of
Purchaser's Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.04. Credit Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.05. Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.06. Payments and Computations, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.07. Dividing or Combining Undivided Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.08. Treatment of Collections and Deemed Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.09. Repurchases for Administrative Convenience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.10 Sale of a Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
FEES AND YIELD PROTECTION . . . . . . . . . . . . . . . . . . . . 16
4.01. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.02. Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE V
CONDITIONS OF PURCHASES . . . . . . . . . . . . . . . . . . . . 18
5.01. Conditions Precedent to Initial Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.02. Conditions Precedent to All Purchases and
Reinvestments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- - ------- ----
<S> <C> <C>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 20
6.01. Representations and Warranties of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VII
GENERAL COVENANTS OF SELLERS . . . . . . . . . . . . . . . . . . 24
7.01. Affirmative Covenants of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.02. Reporting Requirements of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.03. Negative Covenants of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII
ADMINISTRATION AND COLLECTION . . . . . . . . . . . . . . . . . . 29
8.01. Designation of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.02. Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.03. Rights of the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.04. Responsibilities of each Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.05. Further Action Evidencing Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.06. Application of Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE IX
TERMINATION EVENTS . . . . . . . . . . . . . . . . . . . . 34
9.01. Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.02. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE X
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . 36
10.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.03. Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.04. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.05. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.06. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.07. Notices, etc. to Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XI
ASSIGNMENT OF UNDIVIDED INTERESTS . . . . . . . . . . . . . . . . . 39
11.01. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.02. Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.03. Rights of Assignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.04. Assignment by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 40
12.01. Indemnities by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
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<TABLE>
<CAPTION>
Section Page
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<S> <C> <C>
ARTICLE XIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 42
13.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.04. Binding Effect; Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.06. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.07. Captions and Cross References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.08. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.09. Allocation Among Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
</TABLE>
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<PAGE> 5
DEFINITIONAL APPENDIX
SCHEDULE I - DEFINITIONS
SCHEDULE IA - FOREIGN OBLIGORS
SCHEDULE IB - DUE DATES
SCHEDULE IC - SPECIAL CONCENTRATION LIMITS
LIST OF EXHIBITS
EXHIBIT IA Assignment
EXHIBIT IB Certificate of Assignments
EXHIBIT IC Forms of Contracts
EXHIBIT ID Description of Credit and Collection Policy
EXHIBIT IE-1 Form of Lock-Box Agreement
EXHIBIT IE-2 Form of Lock-Box Notice
EXHIBIT IF Form of Periodic Report
EXHIBIT 5.01(i) Form of Opinion of Counsel for Sellers
EXHIBIT 6.01(i) Description of Material Adverse Changes
EXHIBIT 6.01(j) Description of Litigation
EXHIBIT 6.01(n) List of Offices of Sellers where Records Are Kept
EXHIBIT 6.01(o) List of Lock-Box Banks
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<PAGE> 6
RECEIVABLES PURCHASE AGREEMENT
Dated as of August 31, 1994
THIS IS A RECEIVABLES PURCHASE AGREEMENT, among APPLIED POWER INC., a
Wisconsin corporation having its principal office at 13000 W. Silver Spring
Drive, Butler, Wisconsin 53007 ("API"), BARRY WRIGHT CORPORATION, a
Massachusetts corporation having its principal office at 40 Guest Street,
Brighton, Massachusetts ("BWC"), WRIGHT LINE INC., a Massachusetts corporation,
having its principal office at 160 Gold Star Blvd., Worcester, Massachusetts
("WLI"), GB ELECTRICAL, INC., a Wisconsin corporation, having its principal
office at 6101 N. Baker Road, Glendale, Wisconsin ("GB"; API, BWC, WLI and GB
are collectively called "Sellers" and individually "Seller"), API, as
representative of Sellers (in such capacity, the "Sellers' Representative"),
PNC BANK, NATIONAL ASSOCIATION, a national banking association having its
principal office at Fifth Avenue and Wood Street, Pittsburgh, Pennsylvania
15265 (together with the other financial institutions that may become parties
hereto from time to time, "Purchasers"), and PNC BANK, NATIONAL ASSOCIATION, a
national banking association having its principal office at Fifth Avenue and
Wood Street, Pittsburgh, Pennsylvania 15265 ("PNC Bank"), as agent for the
Purchasers (in such capacity, the "Agent"). Unless otherwise indicated,
certain terms that are capitalized and used throughout this Agreement are
defined in Schedule I.
Background
1. Each Seller has, and expects to have, Pool Receivables in
which it intends to sell interests referred to herein as Undivided Interests.
Sellers have requested Purchasers, and Purchasers have agreed, subject to the
terms and conditions contained in this Agreement, to purchase such Undivided
Interests from Sellers from time to time during the term of this Agreement.
2. Sellers and Purchasers also desire that, subject to the terms
and conditions of this Agreement, certain of the daily Collections in respect
of such Undivided Interests be reinvested in Pool Receivables through the sale
by Sellers to Purchasers of additional Undivided Interests in the Pool
Receivables, such daily reinvestment of Collections to be effected by an
automatic daily adjustment to such Undivided Interests, and to be intended to
permit each Purchaser to maintain its Total Investment fully invested in
uncollected Pool Receivables.
<PAGE> 7
3. PNC Bank has been requested, and is willing, to act as the
Agent.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
THE COMMITMENT
SECTION 1.01. Commitment. On the terms and subject to the conditions
set forth in this Agreement (including Article V):
(a) Purchases. Each Purchaser shall purchase from
Sellers undivided, percentage interests in Pool Receivables by making
Purchases of Undivided Interests from time to time during the period
from the date hereof to the Commitment Termination Date.
(b) Reinvestments. Pursuant to Section 3.01, each
Purchaser shall make Reinvestments by permitting Servicer to cause
certain of the Collections in respect of its Undivided Interests to be
applied to the purchase of additional undivided percentage interests
in the Pool Receivables, thereby resulting in an appropriate
readjustment of such Undivided Interests.
Each Purchaser's obligation to make such Purchases and Reinvestments is herein
called its "Commitment".
SECTION 1.02. Commitment Termination Date. The "Commitment
Termination Date" shall be the earlier to occur of (i) August 30, 1997 (herein,
as the same may be extended, called the "Scheduled Commitment Termination
Date"), and (ii) the date of termination of the Commitment pursuant to Section
1.05 or Section 9.02.
SECTION 1.03. Purchase and Reinvestment Limits. Under no
circumstances shall any Purchaser make any Purchase or Reinvestment to the
extent that, after giving effect to such Purchase or Reinvestment, as the case
may be:
(a) Purchase Limit. The Aggregate Purchasers'
Investments under this Agreement would exceed an amount (the "Purchase
Limit") equal to $30,000,000, as such amount may be reduced pursuant
to Section 1.05; or
(b) Participation Amounts Limit. The Aggregate
Participation Amounts under this Agreement would exceed an
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<PAGE> 8
amount (the Participation Amounts Limit") equal to 100% of the Net
Pool Balance; or
(c) Percentage Limit. Any Purchaser's Total Investment
would exceed its Percentage of the Purchase Limit.
SECTION 1.04. Making Purchases from Sellers. (a) Notice of
Purchase. Each Purchase from Sellers by Purchasers shall be made on notice
from Sellers to the Agent received by the Agent not later than 12:00 noon
(Pittsburgh time) on the second Business Day next preceding the date of such
proposed Purchase. Each such notice of a proposed Purchase shall specify the
desired amount (which shall not be less than $250,000), the amount due to each
Seller, the date (which shall be a Business Day) and duration of the initial
Yield Period for such Purchase. The Agent shall promptly thereafter notify
each Purchaser of such proposed Purchase.
(b) Funding of Purchase. On the date of each Purchase, each
Purchaser shall, upon satisfaction of the applicable conditions set forth in
Article V, make available to the Agent not later than 1:00 p.m. (Pittsburgh
time) at its office at Fifth Avenue and Wood Street, Pittsburgh, Pennsylvania
15265 its Percentage of the amount of such Purchase in immediately available
funds, and after receipt by the Agent of such funds, the Agent will make such
funds immediately available to each Seller, in the amount set forth for such
Seller in the notice delivered pursuant to Section 1.04, at such office not
later than 2:00 p.m. (Pittsburgh time).
(c) Notice of Discount Rate. The Agent shall, on the date of each
Purchase of an Undivided Interest and on the first day of each successive Yield
Period for such Undivided Interest, notify the Sellers' Representative and each
Purchaser of the Discount Rate for such Yield Period.
SECTION 1.05. Voluntary Termination of Commitment or Reduction of
Purchase Limit. Sellers' Representative may, upon at least thirty days' notice
to the Agent, terminate the Commitments in whole or reduce in part the unused
portion of the Purchase Limit; provided, however, that (i) each partial
reduction shall be in an amount equal to $1,000,000 or an integral multiple
thereof and (ii) after giving effect to such partial reduction, the remaining
Purchase Limit will not be less than $10,000,000.
SECTION 1.06. Investment Multiples; Number of Undivided Interests.
No Undivided Interest, whether created by purchase pursuant to Section 1.04 or
by reinvestment pursuant to Section 3.01 or by division pursuant to Section
3.07, shall have an
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<PAGE> 9
initial related Purchasers' Investments of less than $1,000,000 and each
Undivided Interest when created, whether by purchase, division or combination,
shall have a related Purchasers' Investments equal as near as practicable to an
integral multiple of $100,000. The number of Undivided Interests hereunder at
any one time, after giving effect to any Purchase, division or combination,
shall not exceed 5.
SECTION 1.07. Limitation of Ownership Interest. Nothing in this
Agreement shall be interpreted as providing any Purchaser with an ownership
interest in any Receivables that are not Pool Receivables.
ARTICLE II
UNDIVIDED INTEREST AND PURCHASERS' SHARE
SECTION 2.01. Undivided Interest. For purposes of this Agreement,
"Undivided Interest" means, at any time, an undivided percentage ownership
interest at such time in (i) all then outstanding Pool Receivables, (ii) all
Related Security with respect to such Pool Receivables, and (iii) all
Collections with respect to, and other proceeds of, such Pool Receivables.
Such undivided percentage interest for any time for such Undivided Interest
shall be computed as:
PA = PI + LR
--- -------
NPB NPB
where:
PA = Participation Amount of such
Undivided Interest = PI + LR;
PI = the Purchasers' Investments as to such Undivided
Interest at the time of such computation, as determined
per Section 2.03;
LR = the Loss Reserve as to such Undivided Interest, if any,
at the time of such computation, as determined per
Section 2.04; and
NPB = the Net Pool Balance at the time of such computation,
as determined per Section 2.07.
The "related" Undivided Interest with respect to any of the foregoing items
shall mean the Undivided Interest as to which such item is calculated. The
then sum of all Participation Amounts of all Undivided Interests shall
constitute "Aggregate
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<PAGE> 10
Participation Amounts". Each Purchaser shall own its Percentage of each
Undivided Interest, and any reference to a Purchaser's Undivided Interest shall
refer to such Percentage thereof.
SECTION 2.02. Frequency of Computation of Undivided Interest. Each
Undivided Interest shall be initially computed as of the opening of business of
Servicer on the date of Purchase of such Undivided Interest from Sellers.
Thereafter until such Undivided Interest shall be reduced to zero, such
Undivided Interest shall be deemed to be automatically recomputed as of the
close of business of Servicer on each day, and such Undivided Interest shall
constitute the percentage ownership interest in Pool Receivables on such date
held by the Purchasers with respect to such Undivided Interest. Such Undivided
Interest shall become zero at such time as the Purchasers shall have received
the Earned Discount for such Undivided Interest, shall have recovered the
related Purchasers' Investments and shall have received all other amounts
payable to Purchasers pursuant to this Agreement, and Servicer shall have
received the accrued Servicer's Fee for such Undivided Interest. Such
Undivided Interest shall remain constant from the time as of which any such
computation or recomputation is made until the time as of which the next such
recomputation, if any, shall be made.
SECTION 2.03. Purchasers' Investment. "Purchasers' Investments" as
to any Undivided Interest means an amount equal to the original amount paid to
Sellers for such Undivided Interest at the time of its acquisition by
Purchasers pursuant to Sections 1.01 and 1.04 and by Reinvestments pursuant to
Section 3.01, reduced from time to time by Collections received and distributed
on account of such Purchasers' Investments pursuant to Sections 3.01 and 3.02.
Each Purchaser's "Outstanding Investment" as to any Undivided Interest means an
amount equal to such Purchaser's Percentage of the Purchasers' Investments as
to such Undivided Interest. Each Purchaser's "Total Investment" at any time
means the sum of all of such Purchaser's Outstanding Investments for all
Undivided Interests. The "related" Purchasers' Investments with regard to a
Yield Period or Undivided Interest means the Purchasers' Investments calculated
with regard to such Yield Period or Undivided Interest, as the case may be.
The then sum of the Dollar amount of all Purchasers' Investments for all
Undivided Interests shall constitute "Aggregate Purchasers' Investments".
SECTION 2.04. Loss Reserve. The "Loss Reserve" for a related
Undivided Interest means, at any time (i) prior to the occurrence of a
Termination Event, zero, and (ii) after the occurrence and during the
continuance of a Termination Event, an amount determined as follows:
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<PAGE> 11
LR = RP x PI
where:
LR = the Loss Reserve of such Undivided Interest at the time of
computation;
PI = the Purchasers' Investments of such Undivided Interest on
such day, as determined pursuant to Section 2.03; and
RP = the Recourse Percentage on such day.
If the Aggregate Participation Amounts exceed the Participation Amount Limit on
the day on which a Termination Event occurs after giving effect to the
inclusion of the Loss Reserve as set forth above, Sellers jointly and
severally, on a recourse basis, agree to deposit into the Agent's Account an
amount equal to such excess; such amounts shall be held by the Agent for the
benefit of the Purchasers, and shall be applied to reduce Purchasers'
Investments on the next occurring Settlement Date(s).
SECTION 2.05. Earned Discount. The "Earned Discount" for any
Undivided Interest for each day in a related Yield Period means an amount
determined as follows:
ED = PI x DR x 1/360;
where:
ED = Earned Discount of such Undivided Interest at the time of
computation;
PI = the Purchasers' Investments of such Undivided Interest on such
day, as determined pursuant to Section 2.03; and
DR = the Discount Rate for such Undivided Interest on such day
during such Yield Period, as determined pursuant to Section
2.07.
Notwithstanding any other provision of this Agreement to the contrary, Earned
Discount shall be a joint and several recourse obligation of the Sellers. No
provision of this Agreement or the Certificates shall require the payment or
permit the collection of Earned Discount in excess of the maximum permitted by
applicable law. Earned Discount for any Undivided Interest shall not be
considered paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason.
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<PAGE> 12
SECTION 2.06. Servicer's Fee. The "Servicer's Fee" for any
Undivided Interest at any time means (i) an amount accrued for each day equal
to 1.00% per annum times the amount of the related Purchasers' Investments at
the close of business on such day, times 1/360; or (ii) on Servicer's
reasonable request from and after any time that API shall no longer be
Servicer, an alternative amount charged by Servicer to perform its obligations
under this Agreement. Notwithstanding any other provision to this Agreement to
the contrary, Servicer's Fee shall be a joint and several recourse obligation
of the Sellers.
SECTION 2.07. Certain Definitions. For purposes hereof, the
following terms shall have the meanings as indicated:
"Bank Rate" for any Yield Period for the related Undivided Interest
means an interest rate per annum equal to the Eurodollar Rate (Reserve
Adjusted) for such Yield Period; provided, however, that if it shall become
unlawful for the Agent to obtain funds in the interbank eurodollar market in
order to make, fund or maintain any Purchase hereunder, or if such funds shall
not be reasonably available to the Agent, then the "Bank Rate" for any Yield
Period for such Undivided Interest shall be equal to the Alternate Reference
Rate for such Yield Period.
"Discount Rate" for any Yield Period for any related Undivided
Interest (or portion thereof) means:
(a) in the case of an Undivided Interest (or portion
thereof) other than one referred to in clause (b), the sum of (1) the
Bank Rate for such Undivided Interest (or such portion) for such Yield
Period plus (2) the then applicable Spread; and
(c) in the case of an Undivided Interest (or portion
thereof) funded at a time when a Termination Event or Unmatured
Termination Event has occurred and is continuing, a rate per annum
equal for each day during such Yield Period to the Alternate Reference
Rate in effect on such day plus 2% per annum.
"Net Pool Balance" means at any time the Unpaid Balance of the
Eligible Receivables in the Receivables Pool at such time, as reduced by (i)
the sum of the aggregate amount by which the Unpaid Balance of all Pool
Receivables of each Obligor exceeds the Concentration Limit for such Obligor at
such time and (ii) the outstanding amounts payable by WLI to Arredi Tecnici
Villa S.p.A. at such time. For purposes hereof, "Concentration Limit" for any
Obligor means at any time the greater of (x) the Special Concentration Limit
for such Obligor and (y) 2.5% of the aggregate Unpaid Balance of the Eligible
Receivables in the Receivables Pool at such time. "Special Concentration
Limit" for
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<PAGE> 13
any Obligor means the amount designated for such Obligor on Schedule IC or the
amount designated as such by the Agent in a writing delivered to Sellers'
Representative; it being understood and agreed that the Agent, in setting any
Special Concentration Limit for any Obligor, shall be entitled to consider,
among other things, the credit exposure of each Purchaser to such Obligor
arising in connection with this Agreement and other agreements to which such
Purchaser is a party; provided that the Agent may change the Special
Concentration Limit for any Obligor, at the Agent's sole discretion, at any
time by written notice thereof to the Sellers' Representative. In the case of
any Obligor that is an Affiliate of any other Obligor (an "Affiliated
Obligor"), the Concentration Limit, the Special Concentration Limit and the
Receivables related thereto shall be calculated as if such Obligor and such
Affiliated Obligor were one Obligor.
"Spread" means (i) at any time that the Debt to Capital Ratio exceeds
50%, 0.45% per annum and (ii) at all other times, 0.30% per annum.
SECTION 2.08. Purchasers' Share. "Purchasers' Share" of any
Undivided Interest with regard to any Collections of Pool Receivables received
(or deemed received) by any Seller or Servicer on any day shall be determined
as an amount equal to such Collections, times:
(a) if such day is not a Liquidation Day, such Undivided
Interest on such day expressed as a decimal, and
(b) if such day is a Liquidation Day, either (i) such
Undivided Interest on the day immediately preceding the first
Liquidation Day to have occurred during the then current Liquidation
Period or (ii) if higher, upon the request of the Agent, such
Undivided Interest on such Liquidation Day;
provided that after such time as an Undivided Interest shall equal zero the
Purchasers' Share of Collections therefor shall also equal zero.
ARTICLE III
SETTLEMENTS
SECTION 3.01. Non-Liquidation Settlement Procedures for
Collections. (a) Daily Procedure. On each day (other than a Liquidation Day)
with regard to each Yield Period for each Undivided Interest, Servicer shall
deem an amount equal to Purchasers' Share (as determined in Section 2.08) of
Collections
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<PAGE> 14
of Pool Receivables received or deemed received on such day to be received in
respect of such Undivided Interest; and
(i) out of Purchasers' Share of such Collections of Pool
Receivables in respect of such Undivided Interest, hold in trust for
the benefit of Purchasers an amount equal to the Earned Discount and
Servicer's Fee accrued through such day for such Undivided Interest
and not previously so held for the benefit of Purchasers or paid by
the Sellers,
(ii) apply an amount equal to the remainder of Purchasers'
Share of such Collections (the "Remaining Collections") to reduce the
Purchasers' Investments of such Undivided Interest (it being
understood that such amount need not be physically paid to the Agent
or the Purchasers under this clause (ii)),
(iii) after such reduction, apply such Remaining
Collections to the Reinvestment, for the benefit of Purchasers, of
additional undivided interests in Pool Receivables by recomputation of
such Undivided Interest pursuant to Section 2.02 as of the end of such
day, thereby increasing the related Purchasers' Investments, and
(iv) pay to Sellers' Representative such Remaining
Collections.
The recomputed Undivided Interest shall constitute the percentage ownership
interest in Pool Receivables on such day held by Purchasers with regard to such
Undivided Interest.
(b) Settlement Date Procedure. On each Settlement Date for each
Undivided Interest, for each day in the related Yield Period that is not a
Liquidation Day for such Undivided Interest, Servicer shall deposit to the
Agent's Account, the amounts set aside as described in Section 3.01(a)(i); it
being understood that in the event that the amounts so set aside are
insufficient to satisfy in full the Earned Discount and accrued Servicer's Fee
payable with respect to such Undivided Interest, Sellers, jointly and
severally, agree to deposit such deficit to the Agent's Account on such
Settlement Date.
(c) Order of Application. Upon receipt by the Agent of funds
distributed pursuant to subsection (b), the Agent shall distribute to each
Purchaser such Purchaser's Percentage of such funds in payment of the Earned
Discount on such Purchaser's Outstanding Investment related to such Undivided
Interest and to Servicer in payment of the accrued Servicer's Fee payable with
respect to such Undivided Interest. If there shall be insufficient funds on
deposit for the Agent to distribute funds in payment in full of the
aforementioned amounts, the Agent shall
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<PAGE> 15
distribute funds, first, to Purchasers in payment of the Earned Discount for
such Undivided Interest, and second, in payment of the accrued Servicer's Fee
payable with respect to such Undivided Interest.
SECTION 3.02. Liquidation Settlement Procedures for Collections.
(a) Daily Procedure. On each Liquidation Day with regard to each Yield
Period for each Undivided Interest, Servicer shall set aside and hold in trust
for Purchasers, Purchasers' Share of the Collections of Pool Receivables in
respect of such Undivided Interest for such Liquidation Day by depositing such
Collections within one Business Day of Servicer's receipt of good funds
therefor into a bank account acceptable to the Agent located at PNC Bank in
which no other funds shall be deposited.
(b) Settlement Date Procedure. On each Settlement Date for each
Undivided Interest, if one or more Liquidation Days for such Undivided Interest
occurs during the related Yield Period, Servicer shall deposit to the Agent's
Account the amounts set aside pursuant to Section 3.02(a) and Sellers shall
deposit to the Agent's Account the Earned Discount for such Undivided Interest,
the Servicer's Fee payable with respect to such Undivided Interest and all
other amounts owed by Sellers to the Purchasers hereunder, provided that the
aggregate amount of such deposits shall not exceed the sum of (i) the Earned
Discount for such Undivided Interest, (ii) the related Purchasers' Investments
of such Undivided Interest, (iii) the aggregate of other amounts owed hereunder
by Sellers to the Purchasers, and (iv) the accrued Servicer's Fee payable with
respect to such Undivided Interest. Any amounts set aside pursuant to Section
3.02(a) and not required to be deposited to the Agent's Account pursuant to the
next preceding sentence shall be held for application to the next maturing
Undivided Interest.
(c) Order of Application. Upon receipt of funds deposited to the
Agent's Account pursuant to Section 3.02(b), the Agent shall distribute (i) to
each Purchaser, its Percentage of such funds (A) in payment of such Purchaser's
Percentage of the Earned Discount for such Undivided Interest, (B) in reduction
of the related Purchaser's Outstanding Investment and (C) in payment of any
other amounts owed by Sellers hereunder to such Purchaser, in each case until
reduced to zero, and (ii) any remaining funds to Servicer in payment of the
accrued Servicer's Fee payable with respect to such Undivided Interest, also
until reduced to zero. If there shall be insufficient funds on deposit for the
Agent to distribute funds in payment in full of the aforementioned amounts, the
Agent shall distribute funds, first, in payment of the Earned Discount for such
Undivided Interest, second, in reduction of related Purchasers' Investments,
third, in payment of other amounts payable to Purchasers, and fourth, in
payment of
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<PAGE> 16
the Servicer's Fee payable with respect to such Undivided Interest.
SECTION 3.03. General Settlement Procedures; Reduction of Purchaser's
Investment.
(a) Deemed Collections. If on any day the Unpaid Balance of any
Pool Receivable is (i) reduced as a result of any defective, rejected or
returned merchandise or services, any cash discount, or any adjustment by any
Seller or any Affiliate of any Seller (other than any adjustment permitted by
Section 8.02(a)(i) unless the Agent shall reasonably object thereto within 30
days of being informed thereof) or (ii) reduced or cancelled as a result of a
setoff in respect of any claim by the Obligor thereof against any Seller or any
Affiliate of any Seller or any other Person (whether such claim arises out of
the same or a related or an unrelated transaction), or (iii) reduced on account
of the obligation of any Seller to pay to the related Obligor any rebate or
refund, such Seller shall be deemed to have received on such day a Collection
of such Receivable in the amount of such reduction or cancellation. If on any
day any of the representations or warranties of any Seller set forth in Section
6.01(l) or (p) is no longer true with respect to a Pool Receivable, such Seller
shall be deemed to have received on such day a Collection of such Pool
Receivable in full.
(b) Unreinvested Collections. Collections that may not be
reinvested by means of Reinvestments in an Undivided Interest on account of the
application of the Participation Amounts Limit or the Purchase Limit pursuant
to Section 2.01 shall be so reinvested as soon as practicable without violating
such Participation Amounts Limit or Purchase Limit, as the case may be. To the
extent and so long as such Collections may not be so reinvested, Servicer shall
hold such Collections in trust for the benefit of the Purchasers, for payment
to the Agent on the Settlement Date for the Yield Period in which such
Collections are accumulated, and the related Purchasers' Investments as to such
Undivided Interest shall be deemed reduced in the amount to be paid to the
Agent only when in fact so paid. During any Liquidation Period, upon one
Business Day's written notice given by the Agent to Sellers' Representative,
Servicer shall pay in immediately available funds such Collections to the Agent
within one Business Day of receipt thereof by Servicer.
(c) Allocations of Obligor's Payments. Except as provided in
Section 3.03(a) or as otherwise required by law or the underlying Contract, all
Collections received from an Obligor of any Receivable shall be applied to
Receivables then outstanding of such Obligor in the order of the age of such
Receivables, starting with the oldest such Receivable, except if payment is
designated by such Obligor for application to specific
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Receivables, in which case it shall be applied to such specified Receivables.
SECTION 3.04. Credit Recourse. As of the last day of each calendar
month (a "Month End Date") during which a Liquidation Day has occurred, the
"Recourse Amount" shall be an amount equal to the Recourse Percentage of the
Aggregate Purchasers' Investments as of such Month End Date, if such Month End
Date is the first date on which such Recourse Amount is being calculated, or
the Recourse Amount as of the previous Month End Date in all other
circumstances, minus the Unpaid Balances on such current Month End Date of
Receivables that became Defaulted Receivables prior thereto (and on account of
which the Recourse Amount had not been previously debited ("Recourse Unpaid
Balances")) unless the Agent has notified Sellers' Representative in writing
two Business Days' before such current Month End Date to refrain from so
debiting the Recourse Amount with respect to any Defaulted Receivable, plus the
Unpaid Balances on such current Month End Date of all Receivables that were
previously debited in the calculation of the Recourse Amount on account of
being Defaulted Receivables but were no longer Defaulted Receivables on such
current Month End Date plus all Collections received or deemed received by any
Seller or Servicer during such month then ending on account of Defaulted
Receivables that had previously been debited in the calculation of the Recourse
Amount, provided that, the Recourse Amount shall never exceed 100% of Aggregate
Participation Amounts.
Sellers shall be deemed to have received Collections on each Month End
Date for a month in which a Liquidation Day has occurred in an amount equal to
the amount of the Recourse Unpaid Balances referred to above, but solely to the
extent that, after giving effect to the credits above, the Recourse Amount does
not become a negative number; provided that if the Loss Reserve is greater than
zero, and Sellers have made the payment required by the last sentence of
Section 2.04, Sellers shall have no obligation to make payments of deemed
Collections pursuant to this Section 3.04. Such Collections shall be in
addition to the Collections actually received on such date.
SECTION 3.05. Reporting. Prior to the twenty-fifth calendar day in
each month (each a "Reporting Date") Servicer shall prepare and forward to the
Agent for each Purchaser a Periodic Report, relating to each Undivided
Interest, as of the close of business of Servicer on the next preceding Month
End Date, including an aging of each Seller's Pool Receivables. At or prior to
the day Servicer is required to make a deposit with respect to a Settlement
Period pursuant to Section 3.01 or 3.02, Seller will advise the Agent of each
Liquidation Day occurring during such Settlement Period and of the allocation
of the amount of such deposit to each outstanding Undivided Interest; provided,
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however, that if API is not Servicer, API shall advise Servicer of the
occurrence of each such Liquidation Day occurring during such Settlement Period
at or prior to such Liquidation Day.
SECTION 3.06. Payments and Computations, Etc. All amounts to be
paid or deposited by Sellers hereunder shall be paid or deposited in accordance
with the terms hereof no later than 12:00 noon (Pittsburgh time) on the day
when due in lawful money of the United States of America in immediately
available funds to a special account in the name of the Agent, attention:
Commercial Loan Operations, and maintained at PNC Bank's office at Fifth Avenue
and Wood Street, Pittsburgh, Pennsylvania 15265, (the "Agent's Account").
Sellers, jointly and severally, or Servicer, as applicable, shall, to the
extent permitted by law, pay to the Agent interest on all amounts not paid or
deposited when due hereunder at 2% per annum above the Alternate Reference
Rate, payable on demand, provided, however, that such interest rate shall not
at any time exceed the maximum rate permitted by applicable law. Such interest
shall be retained by the Agent except to the extent that such failure to make a
timely payment or deposit has continued beyond the date for distribution by the
Agent of such overdue amount to the Purchasers, in which case such interest
accruing after such date shall be for the account of, and distributed by the
Agent, to the Purchasers ratably in accordance with their respective interests
in such overdue amount. All computations of interest and all computations of
Earned Discount and fees hereunder shall be made on the basis of a year of 360
days for the actual number of days (including the first but excluding the last
day) elapsed.
SECTION 3.07. Dividing or Combining Undivided Interests.
(a) Division of Undivided Interests. Sellers' Representative may,
on notice received by the Agent not later than 12:00 noon (Pittsburgh time) two
Business Days before the last day of any Yield Period for any then existing
Undivided Interest, divide such existing Undivided Interest on such last day
into two or more new Undivided Interests, each such new Undivided Interests
having Purchasers' Investments as designated in such notice and all such new
Undivided Interests collectively having aggregate Purchasers' Investments equal
to the Purchasers' Investments of such existing Undivided Interest.
(b) Combination of Undivided Interests. Sellers' Representative
may, on notice received by the Agent not later than 12:00 noon (Pittsburgh
time) two Business Days before the last day of any Yield Period for two or more
existing Undivided Interests, or before the date of any proposed Purchase of an
Undivided Interest pursuant to Sections 1.01 and 1.04, on such
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last day or such date of Purchase, as the case may be, combine into one new
Undivided Interest such existing and/or proposed Undivided Interests or any
combination thereof, such new Undivided Interest having Purchasers' Investments
equal to the aggregate Purchasers' Investments of such Undivided Interests so
combined.
(c) Effect of Division or Combination. On and after any division
or combination of Undivided Interests as described above, each of the new
Undivided Interests resulting from such division, or the new Undivided Interest
resulting from such combination, as the case may be, shall be a separate
Undivided Interest having Purchasers' Investments as set forth above, and shall
take the place of such existing Undivided Interest or Undivided Interests or
proposed Undivided Interest, as the case may be, in each case under and for all
purposes of this Agreement.
SECTION 3.08. Treatment of Collections and Deemed Collections.
Each Seller shall forthwith deliver to Servicer all Collections deemed received
by such Seller pursuant to Sections 3.03(a) and 3.04 and such Seller shall hold
or distribute such Collections as Earned Discount, accrued Servicer's Fee,
repayment of Purchasers' Investments, etc. to the same extent as if such
Collections had actually been received on such date. If Collections are then
being paid to the Agent, or lock boxes or accounts directly or indirectly owned
or controlled by the Agent, Servicer shall forthwith cause such deemed
Collections to be paid to the Agent or such lock boxes or accounts. So long as
any Seller shall hold any Collections or deemed Collections required to be paid
to Servicer or the Agent, it shall hold such Collections in trust and separate
and apart from its own funds and shall clearly mark its records to reflect such
trust.
SECTION 3.09. Repurchases for Administrative Convenience. If on the
last day of a Yield Period with respect to any Undivided Interest, the
Purchasers' Investments equal or are less than 10% of the greatest amount of
Aggregate Purchasers' Investments at any time prior to such last day, Sellers
shall be entitled to repurchase all of the Undivided Interests from Purchasers
on the respective Settlement Date. Sellers' Representative shall give the
Agent at least three Business Days' prior written notice of such repurchase and
upon payment of the repurchase price therefor, as hereinafter provided, the
Purchasers shall be obligated to reconvey their entire interest in such
Undivided Interest to the Seller or Sellers designated by Sellers'
Representative pursuant to an assignment acceptable to the parties, but without
representation or warranty except that the interest assigned is free of offset,
liens and other encumbrances created by the assignor. Sellers, jointly and
severally, shall pay such repurchase price in cash to the Agent
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in an amount equal to, for each Undivided Interest, the sum of (i) Earned
Discount for such Undivided Interest, (ii) the related Purchasers' Investments
therefor, (iii) the aggregate of other amounts then owed hereunder by Sellers
to the Purchasers, and (iv) the accrued Servicer's Fee payable with respect to
such Undivided Interest. Upon receipt of the aforesaid repurchase price with
regard to each Undivided Interest, the Agent shall distribute it (i) to
Purchasers (pro rata based on their respective Percentages) (a) in payment of
the Earned Discount for such Undivided Interest, (b) in reduction of the
related Purchasers' Investments and (c) in payment of any other amounts owed by
Sellers hereunder to Purchasers, in each case until reduced to zero, and (ii)
to Servicer in payment of the accrued Servicer's Fee payable with respect to
such Undivided Interest, also until reduced to zero.
SECTION 3.10 Sale of a Seller. In the event that API shall desire
to sell any Seller (other than API) to any person (the "Acquiring Entity"),
then, if the Agent shall so request, as a condition to the effectiveness of
such sale, API shall require the Acquiring Entity to purchase the Pool
Receivables generated by such Seller, on the last day of a Yield Period, for a
purchase price, in cash, in an amount equal to (i) the Purchasers' Investments
related to such Pool Receivables, (ii) Earned Discount on such portion of
Purchasers' Investments, (iii) the accrued Servicer's Fee payable with respect
to such portion of Purchasers' Investments and (iv) in the event that the
Purchasers' Investments with respect to Pool Receivables generated by such
Seller is greater than the Purchasers' Investments related to the Yield Period
maturing on the date of repurchase, any costs incurred by Purchasers as a
result of prepaying such excess portion of the Purchasers' Investments prior to
the last day of a Yield Period. Upon receipt of the aforesaid repurchase
price, the Agent shall distribute (i) to the Purchasers (pro rata based on
their respective Percentages) (a) in payment of the Earned Discount for the
related Purchasers' Investments and (b) in reduction of the related Purchasers'
Investments (beginning with that portion related to the Yield Period ending on
the date of repurchase, and then to the Purchasers' Investments related to the
Yield Period next maturing), (ii) to Servicer in payment of the accrued
Servicer's Fee payable with respect to such Purchasers' Investments, to the
extent paid. In the event that API sells a Seller without the occurrence of
such repurchase, then, notwithstanding the limitations on the Recourse Amount
set forth in Section 3.04, API shall repurchase any Defaulted Receivable
originally generated by such Seller.
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ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees. (a) Arrangement Fee. Sellers shall pay to
the Agent for its own account an arrangement fee as set forth in the letter
from PNC Bank to API dated August 5, 1994 ("Arrangement Fee").
(b) Commitment Fee. From the date of the initial Purchase until
the Commitment Termination Date, Sellers, jointly and severally, shall pay to
each Purchaser a commitment fee ("Commitment Fee") for each day in such period
equal to (x) 0.15% per annum (or, if the Debt to Capital Ratio exceeds 50%,
0.20% per annum) times (y) the excess, if any, of such Purchaser's Percentage
of the Purchase Limit over such Purchaser's Total Investments on such day
divided by (z) 360. Such Commitment Fee shall be paid in arrears, on each
Month End Date and on the Commitment Termination Date, in the amount of such
Commitment Fee that shall have accrued during the monthly or other period then
ending for which no such fee shall have been paid.
SECTION 4.02. Yield Protection. (a) If (i) Regulation D of the
Board of Governors of the Federal Reserve System or (ii) any Regulatory Change
occurring after the date hereof
(A) shall subject an Affected Party to any tax, duty or other
charge with respect to any Undivided Interest or Interests owned by or
funded by it, its Certificate, if any, or any obligations or right to
make Purchases or Reinvestments or to provide funding therefor, or
shall change the basis of taxation of payments to the Affected Party
of any Purchaser's Investments or Earned Discount made by or owed to
or funded by it or any other amounts due under this Agreement in
respect of any Undivided Interests owned by or funded by it or its
obligations or rights, if any, to make Purchases or Reinvestments or
to provide funding therefor (except for changes in the rate of tax on
the overall net income of such Affected Party imposed by the United
States of America or the jurisdiction in which such Affected Party's
principal executive office is located); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of Earned Discount), special deposit or
similar requirement against assets of, deposits or obligations with or
for the account of (or with or for the account of any affiliate of),
or credit extended by, any Affected Party; or
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(C) shall change the amount of capital maintained or
required or requested or directed to be maintained by such Affected
Party; or
(D) shall impose any other condition affecting any
Undivided Interests owned or funded by any Affected Party, its
Certificates, if any, or its obligations or rights, if any, to make
Purchases or Reinvestments or to provide funding therefor;
and the result of any of the foregoing is or would be
(x) to increase the cost to or to impose a cost on (I) an
Affected Party funding or making or maintaining any Purchases or
Reinvestments, or any commitment of such Affected Party with respect
to any of the foregoing, or (II) the Agent for continuing its, or any
Seller's, relationship with any Purchaser,
(y) to reduce the amount of any sum received or
receivable by an Affected Party under this Agreement or under its
Certificates, or
(z) in the reasonable determination of such Affected
Party, to reduce the rate of return on the capital of an Affected
Party as a consequence of its obligations hereunder or arising in
connection herewith to a level below that which any such Affected
Party could otherwise have achieved,
then within thirty days after demand by such Affected Party, each Seller,
jointly and severally, shall pay directly to such Affected Party its pro rata
share of such additional amount or amounts as will compensate such Affected
Party for such additional or increased cost or such reduction.
(b) Each Affected Party will promptly notify Sellers'
Representative and the Agent of any event of which it has knowledge occurring
after the date hereof which will entitle such Affected Party to compensation
pursuant to this Section 4.02; provided, however, no failure to give or delay
in giving such notification shall adversely affect the rights of any Affected
Party to such compensation; provided, further, however that no Affected Party
shall be entitled to claim additional amounts pursuant to this Section 4.02 for
any period occurring more than 120 days prior to the date of demand.
(c) In determining any amount provided for in this Section 4.02,
the Affected Party may use any reasonable averaging and attribution methods
that it shall deem applicable. Any Affected Party when making a claim under
this Section 4.02 shall submit to Sellers' Representative a statement as to
such increased cost or
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reduced return (including calculation thereof in reasonable detail), which
statement shall, in the absence of manifest error, be conclusive and binding
upon the Sellers.
ARTICLE V
CONDITIONS OF PURCHASES
SECTION 5.01. Conditions Precedent to Initial Purchase. The
initial Purchase hereunder is subject to the condition precedent that the Agent
shall have received on or before the date of such Purchase the following, each
(unless otherwise indicated) dated such date, in form and substance
satisfactory to the Agent:
(a) A Certificate duly executed by each Seller;
(b) A copy of the resolutions of the Board of Directors of each
Seller approving this Agreement, the Certificate(s) and the other Agreement
Documents to be delivered by it hereunder and the transactions contemplated
hereby, certified by its Secretary or Assistant Secretary;
(c) Good standing certificates for each Seller issued by the
Secretaries of State of Wisconsin and Massachusetts, as appropriate;
(d) A certificate of the Secretary or Assistant Secretary of each
Seller certifying the names and true signatures of the officers authorized on
its behalf to sign this Agreement, the Certificate and the other Agreement
Documents to be delivered by it hereunder (on which certificate the Agent and
each Purchaser may conclusively rely until such time as the Agent shall receive
from such Seller a revised certificate meeting the requirements of this
subsection (d));
(e) The Articles of Incorporation of each Seller, duly certified
by the Secretary of State of Wisconsin or Massachusetts, as appropriate, as of
a recent date acceptable to Agent, together with a copy of the By-laws of each
Seller, duly certified by the Secretary or an Assistant Secretary of such
Seller;
(f) Acknowledgment copies of proper Financing Statements (Form
UCC-1), filed on or prior to the date of the initial Purchase, naming each
Seller as an assignor of Receivables or an undivided interest therein and the
Agent, for the benefit of the Purchasers, as assignee, or other, similar
instruments or documents, as may be necessary or, in the opinion of the Agent,
desirable under the UCC or any comparable law of all appropriate
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jurisdictions to perfect Purchasers' ownership interests in all Undivided
Interests in which an interest may be assigned to it hereunder;
(g) A search report provided in writing to the Agent by LEXIS
Document Services, listing all effective financing statements that name any
Seller as debtor and that are filed in the jurisdictions in which filings were
made pursuant to subsection (f) above, together with copies of such financing
statements (none of which shall cover any Receivables or Contracts);
(h) Duly executed copies of Lock-Box Notices to each of the
Lock-Box Banks;
(i) A favorable opinion of Quarles & Brady, counsel to Sellers, in
substantially the form of Exhibit 5.01(i);
(j) Such powers of attorney as the Agent shall reasonably request
to enable Agent to collect all amounts due under any and all Pool Receivables;
(k) Evidence of the payment of the Arrangement Fee; and
(l) Duly executed copy of Part I of a Periodic Report together
with a completed Schedule I thereto calculated as of July 31, 1994.
SECTION 5.02. Conditions Precedent to All Purchases and
Reinvestments. Each Purchase (including the initial Purchase) hereunder and
the right of Servicer to reinvest in Pool Receivables, on behalf of Purchasers,
those Collections allocable to an Undivided Interest pursuant to Section 3.01
shall be subject to the further conditions precedent ("Conditions Precedent")
that on the date of such Purchase or Reinvestment the following statements
shall be true (and each Seller by accepting the amount of such Purchase, or a
portion thereof, or by receiving the proceeds of such Reinvestment, or a
portion thereof, shall be deemed to have certified that):
(i) The representations and warranties contained in Section
6.01 are correct on and as of such day as though made on and as of
such day and shall be deemed to have been made on such day,
(ii) No event has occurred and is continuing, or would
result from such Purchase or Reinvestment, which constitutes a
Termination Event or Unmatured Termination Event,
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(iii) After giving effect to each proposed Purchase or
Reinvestment, Aggregate Purchasers' Investments will not exceed the
Purchase Limit and Aggregate Participation Amounts will not exceed the
Participation Amounts Limit, and
(iv) The Commitment Termination Date shall not have occurred.
The absence of the occurrence of an Unmatured Termination Event shall not be a
Condition Precedent to (i) any Reinvestment being made with the proceeds of
Collections that were, on the same day, applied in reduction of the Purchasers'
Investments, or (ii) any other Reinvestment or any Purchase on any day which
does not cause the Aggregate Purchasers' Investments, after giving effect to
such Reinvestment or Purchase (and any Reinvestment referred to in clause (i)
next above) to exceed the Aggregate Purchasers' Investments as of the opening
of business on such day.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of Sellers. Each Seller
represents and warrants as follows:
(a) Organization and Good Standing. Such Seller is validly existing
as a corporation in good standing under the laws of the State of its
incorporation, with power and authority to own its properties and to conduct
its business as such properties are presently owned and such business is
presently conducted, and had at all relevant times, and now has, all necessary
power, authority, and legal right to acquire and own the Pool Receivables.
(b) Due Qualification. Such Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions where the failure to preserve and
maintain such qualification, licenses or approvals would materially adversely
affect (i) the interests of the Agent or any Purchaser hereunder, (ii) the
ability of such Seller or Servicer to perform their respective obligations
hereunder or (iii) the validity or enforceability of any Pool Receivable.
(c) Power and Authority; Due Authorization. Such Seller has (i) all
necessary power, authority and legal right to (A) execute and deliver this
Agreement and the documents to be executed and delivered in connection herewith
(together, the "Agreement Documents"), (B) carry out the terms of the Agreement
Documents, (C) sell and assign Undivided Interests on the terms
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and conditions herein provided and (ii) duly authorized such sale and
assignment to Purchasers by all necessary corporate action; and such Seller has
duly authorized by all necessary corporate action the execution, delivery, and
performance of this Agreement and the other Agreement Documents.
(d) Valid Sale; Binding Obligations. This Agreement constitutes a
valid sale, transfer, and assignment of the Undivided Interests to Purchasers,
enforceable against creditors of, and purchasers from, such Seller; and this
Agreement constitutes, and each other Agreement Document to be signed by such
Seller when duly executed and delivered will constitute, a legal, valid and
binding obligation of such Seller enforceable in accordance with its terms,
except, in the case of all the foregoing clauses, as enforceability may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered
in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the other Agreement Documents and the fulfillment of the
terms hereof will not conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or by-laws of such Seller, or any
indenture, loan agreement, mortgage, deed of trust, or other material agreement
or instrument to which such Seller is a party or by which it is bound, or
result in the creation or imposition of any Adverse Claim upon any of its
properties pursuant to the terms of any such indenture, loan agreement,
mortgage, deed of trust, or other agreement or instrument, other than this
Agreement, or violate any law or any order, rule, or regulation applicable to
such Seller of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over such Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to such Sellers' knowledge, threatened, before any court,
regulatory body, administrative agency, or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement or any other
Agreement Document, (B) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by this or any other
Agreement Document, (C) seeking any determination or ruling that might
materially and adversely affect (i) the performance by such Seller or Servicer
of its obligations under this Agreement, or (ii) the validity or enforceability
of this Agreement, the Certificates, any other Agreement Document, the
Receivables or the Contracts or (D)
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seeking to adversely affect the federal income tax attributes of the
Certificates.
(g) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
(h) Government Approvals. No authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
such Seller of this Agreement, the Certificates or any other Agreement Document
except for the filing of the UCC Financing Statements referred to in Article V,
all of which, at the time required in Article V, shall have been duly made and
shall be in full force and effect.
(i) Financial Condition. (x) The consolidated balance sheets of API
and its consolidated subsidiaries as at August 31, 1993, and the related
statements of income, shareholders' equity and cash flows of API and its
consolidated subsidiaries for the fiscal year then ended certified by Deloitte
Touche, independent accountants, and the consolidated balance sheets of API and
its consolidated subsidiaries as at May 31, 1994, and the related statements of
income, shareholders' equity and cash flows of API and its consolidated
subsidiaries for the nine month period then ended, copies of which have been
furnished to the Agent, fairly present the consolidated financial position of
API and its consolidated subsidiaries as at such date and the consolidated
results of the operations of API and its consolidated subsidiaries for the
period ended on such date, all in accordance with GAAP consistently applied,
and (y) since August 31, 1993 there has been no material adverse change in the
financial condition, business, business prospects or operations of any Seller
or of API and its consolidated subsidiaries, taken as a whole, except as
described in Exhibit 6.01(i).
(j) Litigation. No injunction, decree or other decision has been
issued or made by any court, government or agency or instrumentality thereof
that prevents, and, to such Seller's knowledge, no threat by any Person has
been made to attempt to obtain any such decision that would prevent, such
Seller from conducting a significant part of its business operations except as
described in Exhibit 6.01(j).
(k) Margin Regulations. The use of all funds acquired by Sellers
under this Agreement will not conflict with or contravene any of Regulations G,
T, U and X promulgated by the Board of Governors of the Federal Reserve System
from time to time.
(l) Quality of Title. Each Pool Receivable related to such Seller,
together with the related Contract and all purchase orders and other agreements
related to such Pool Receivable, is
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owned by such Seller, free and clear of any Adverse Claim (other than any
Adverse Claim arising solely as the result of any action taken by a Purchaser
or by the Agent) except as provided herein and when a Purchaser makes a
Purchase it shall have acquired and shall continue to have maintained a valid
and perfected first priority undivided percentage ownership interest to the
extent of its Percentage of the Undivided Interest in each Pool Receivable, and
in the Related Security and Collections with respect thereto, free and clear of
any Adverse Claim (other than any Adverse Claim arising solely as the result of
any action taken by a Purchaser or by the Agent) except as provided hereunder;
and no effective financing statement or other instrument similar in effect
covering any Pool Receivable, any interest therein, the Related Security or
Collections with respect thereto is on file in any recording office except such
as may be filed in favor of such Seller in accordance with the Contracts, in
favor of the Agent, for the benefit of the Purchasers in accordance with this
Agreement or in connection with any Adverse Claim arising solely as the result
of any action taken by a Purchaser or by the Agent.
(m) Accurate Reports. No Periodic Report (if prepared by such
Seller, or to the extent that information contained therein was supplied by
such Seller), information, exhibit, financial statement, document, book, record
or report furnished or to be furnished by any Seller to the Agent or any
Purchaser in connection with this Agreement was or will be inaccurate in any
material respect as of the date it was or will be dated or (except as otherwise
disclosed to the Agent or such Purchaser, as the case may be, at such time) as
of the date so furnished, or contained or will contain any material
misstatement of fact or omitted or will omit to state a material fact or any
fact necessary to make the statements contained therein not materially
misleading.
(n) Offices. The chief place of business and chief executive office
of such Seller are located at the address of such Seller referred to in Section
13.02 and the offices where such Seller keeps all its books, records and
documents evidencing Pool Receivables, the related Contracts and all purchase
orders and other agreements related to such Pool Receivables are located at the
addresses specified in Exhibit 6.01(n) (or at such other locations, notified to
the Agent in accordance with Section 7.01(f), in jurisdictions where all action
required by Section 8.05 has been taken and completed).
(o) Lock-Box Accounts. The names and addresses of all the Lock-Box
Banks, together with the account numbers of the lock-box accounts of such
Seller at such Lock-Box Banks, are specified in Exhibit 6.01(o) (or at such
other Lock-Box Banks and/or with such other lock-box accounts as have been
notified to the Agent in accordance with Section 7.03(d)).
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(p) Eligible Receivables. Each Receivable included in the Net Pool
Balance as an Eligible Receivable on the date of any Purchase or Reinvestment
shall in fact be an Eligible Receivable.
ARTICLE VII
GENERAL COVENANTS OF SELLERS
SECTION 7.01. Affirmative Covenants of Sellers. From the date hereof
until the first day following the Commitment Termination Date on which all
Undivided Interests shall be reduced to zero, each Seller will, unless the
Agent shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to the Pool
Receivables and related Contracts.
(b) Preservation of Corporate Existence. Except as permitted by
Section 7.03(e), preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification would materially adversely affect (i)
the interests of the Agent or any Purchaser hereunder, (ii) the ability of such
Seller or Servicer to perform their respective obligations hereunder or (iii)
the validity or enforceability of any Pool Receivable.
(c) Audits. At any time and from time to time during regular
business hours, permit the Agent and each Purchaser, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes and
disks) in the possession or under the control of such Seller relating to Pool
Receivables, including, without limitation, the related Contracts and purchase
orders and other agreements, and (ii) to visit the offices and properties of
such Seller for the purpose of examining such materials described in clause (i)
next above, and to discuss matters relating to Pool Receivables or such
Seller's performance hereunder with any of the officers or employees of Seller
having knowledge of such matters.
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Pool Receivables in the event of the
destruction of the originals thereof), and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for the
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collection of all Pool Receivables (including, without limitation, records
adequate to permit the daily identification of each new Pool Receivable and all
Collections of and adjustments to each existing Pool Receivable).
(e) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by it under the Contracts
related to the Pool Receivables and all purchase orders and other agreements
related to such Pool Receivables.
(f) Location of Records. Keep its chief place of business and chief
executive office, and the offices where it keeps its records concerning the
Pool Receivables, all related Contracts and all purchase orders and other
agreements related to such Pool Receivables (and all original documents
relating thereto), at the address(es) of such Seller referred to in Section
6.01(n) or, upon 30 days' prior written notice to the Agent, at such other
locations in jurisdictions where all action required by Section 8.05 shall have
been taken and completed.
(g) Credit and Collection Policies. Comply in all material respects
with its Credit and Collection Policy in regard to each Pool Receivable and the
related Contracts.
(h) Collections. Instruct all Obligors to cause all Collections of
Pool Receivables to be deposited directly with a Lock-Box Bank.
(i) Lock-Box Agreements. As promptly as possible, but in any
event on or prior to September 21, 1994, deliver to the Agent copies of the
Lock-Box Agreements, executed by each Lock-Box Bank.
(j) Termination Statement. Use its best efforts promptly to obtain
and file a UCC termination statement from Sanwa Business Credit Corporation
with respect to the UCC-1 financing statement filed against API with the
Wisconsin Secretary of State.
SECTION 7.02. Reporting Requirements of Sellers. From the date
hereof until the first day following the Commitment Termination Date on which
all Undivided Interests shall be reduced to zero, API will, unless the Agent
shall otherwise consent in writing, furnish, or cause to be furnished, to the
Agent:
(a) Quarterly Financial Statements. Promptly when available and in
any event within 60 days after the end of each Fiscal Quarter (except the last
Fiscal Quarter of each Fiscal
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Year), consolidated balance sheets of API and its Subsidiaries as of the end of
such Fiscal Quarter, consolidated statements of earnings and a consolidated
statement of cash flow for such Fiscal Quarter and for the period beginning
with the first day of such Fiscal Year and ending on the last day of such
Fiscal Quarter of API and its respective Subsidiaries, with comparable
information at the close of and for the corresponding Fiscal Quarter of the
prior Fiscal Year and for the corresponding portion of such prior Fiscal Year,
together with a certificate of an Authorized Financial Officer of API to the
effect that such financial statements fairly present the financial condition
and results of operations of API and its Subsidiaries as of the date and
periods indicated (subject to normal year-end adjustments).
(b) Annual Financial Statements. Promptly when available and in any
event within 90 days after the close of each Fiscal Year, a copy of the annual
audit report of API and its Subsidiaries for such Fiscal Year, including
therein consolidated balance sheets of API and its Subsidiaries as of the end
of such Fiscal Year and consolidated statements of earnings and cash flow of
API and its Subsidiaries for such Fiscal Year certified, without qualification
as to going concern or scope, by independent auditors of recognized national
standing selected by API and reasonably acceptable to the Agent, and an
unaudited consolidating balance sheet and statements of earnings and cashflow
of such Fiscal Year, with comparable information at the close of and for the
prior Fiscal Year.
(c) Compliance Certificate. Concurrently with each set of financial
statements delivered pursuant to subsections (a) and (b) next above, a
certificate of an Authorized Financial Officer of API (a) to the effect that
such officer is not aware of any Termination Event or Unmatured Termination
Event that has occurred and is continuing or, if there is any such event,
describing it in reasonable detail, and (b) containing a computation of each of
(x) the financial ratios and restrictions set forth in Section 7.03.
(d) Reports to Holders and Exchanges. In addition to the reports
required by subsections (a) and (b) next above, promptly upon the Agent's
request, copies of any reports specified therein which API sends to any of its
security holders, and any reports or registration statements that API files
with the Securities and Exchange Commission or any national securities exchange
other than registration statements relating to employee benefit plans, to stock
plans for dealers and/or distributors and to registrations of securities for
selling Security holders;
(e) ERISA. Promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event defined in Article
IV of ERISA which any Seller files under
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ERISA with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or which any Seller receives from
such Corporation;
(f) Termination Events. As soon as possible and in any event within
five Business Days after any Seller has become aware of the occurrence of each
Termination Event and each Unmatured Termination Event, a written statement of
the chief financial officer or chief accounting officer of API setting forth
details of such Termination Event or Unmatured Termination Event and the action
that the related Seller proposes to take with respect thereto;
(g) Litigation. As soon as possible and in any event within fifteen
Business Days of any Seller's knowledge thereof, notice of (i) any litigation,
investigation or proceeding which may exist at any time which could have a
material adverse effect on the business, operations, property or financial
condition of any Seller or impair the ability of any Seller to perform its
obligations under this Agreement, unless such Seller is insured (including self
retention amounts consistent with past practice and the exercise of prudent
business judgment) with respect thereto and the insurer, except to the extent
covered by permitted self insurance, has assumed responsibility therefor in
writing and (ii) any material adverse development in previously disclosed
litigation; and
(h) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the conditions or
operations, financial or otherwise, of any Seller as the Agent may from time to
time reasonably request in order to protect the interests of the Agent or of
any Purchaser under or as contemplated by this Agreement.
SECTION 7.03. Negative Covenants of Sellers. From the date hereof
until the date following the Commitment Termination Date on which all Undivided
Interests shall be reduced to zero, no Seller will, without the prior written
consent of the Agent:
(a) Sales, Liens, Etc. Except as otherwise provided herein, sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, any Seller's
undivided interest in any Pool Receivable or related Contract or Related
Security, or upon or with respect to any lock-box account to which any
Collections of any Pool Receivable are sent, or assign any right to receive
income in respect thereof.
(b) Extension or Amendment of Receivables. Except as otherwise
permitted in Section 8.02, extend, amend or otherwise
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modify the terms of any Pool Receivable, or amend, modify or waive any term or
condition of any Contract related thereto.
(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its business or in the Credit and Collection Policy,
which change would, in either case, impair the collectability of any Pool
Receivable.
(d) Change in Payment Instructions to Obligors. Add or terminate any
bank as a Lock-Box Bank from those listed in Exhibit 6.01(o) or make any change
in its instructions to Obligors regarding payments to be made to any Seller or
payments to be made to any Lock-Box Bank, unless the Agent shall have received
notice of such addition, termination or change and duly executed copies of a
Lock-Box Agreement with each new Lock-Box Bank.
(e) Mergers, Acquisitions, Sales, etc. Be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or, except in the ordinary course of its
business, sell, transfer, convey or lease all or any substantial part of its
assets, or sell or assign with or without recourse any Receivables (other than
pursuant hereto), or permit any Subsidiary to do any of the foregoing, except
for:
(i) any such merger or consolidation, sale, transfer,
conveyance, lease or assignment of or by any Subsidiary into, with or
to API or into, with or to any wholly-owned Subsidiary;
(ii) any such purchase or other acquisition by API of the
assets or stock of any wholly-owned Subsidiary;
(iii) any sale, transfer, conveyance or lease of any asset
(other than Receivables, except pursuant hereto) if (x) the aggregate
book value (disregarding any write-downs of such book value other than
ordinary depreciation and amortization) of all assets disposed of
pursuant to this clause (iii) in any Fiscal Year are less than 15% of
the total book value of tangible assets of API and its Subsidiaries as
of the last day of the most recently ended Fiscal Year and (y) no
Termination Event or Unmatured Termination Event exists or would
result therefrom;
(iv) any acquisition if (A) after such acquisition API (if it
is the acquiring entity) or a Subsidiary owns (1) at least a majority
of the securities of each class having ordinary voting power of, or a
majority of the ownership interest in, the acquired Person or (2) more
than 10% but less than a majority of the securities of each class
having ordinary voting power of, or more than 10% but
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less than a majority of the ownership interest in, the acquired
Person and, immediately after giving effect to any acquisition
described in this subclause (2), the aggregate book value of all such
minority Investments in the equity securities or other ownership
interests of other Persons by API and its Subsidiaries does not exceed
20% of the consolidated tangible assets of API and its Subsidiaries,
(B) no Termination Event or Unmatured Termination Event exists or
would result therefrom and (C) prior to the consummation of such
acquisition, API provides to each Purchaser a certificate of the chief
financial officer of API (attaching computations to demonstrate
compliance with all financial covenants hereunder) stating that such
acquisition complies with this Section 7.03(e) and that any other
conditions under this Agreement relating to such acquisition have been
satisfied; or
(v) any sale of a Seller (other than API) if API has complied
with all of the requirements of Section 3.10.
(f) Financial Covenants. (a) Minimum Shareholders' Equity. Permit at
any time Shareholders' Equity for API to be less than the sum of $81,500,000
plus 25% of Consolidated Net Income for each Fiscal Quarter ending after August
31, 1994 (excluding any Fiscal Quarter in which there is a loss).
(b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio to be less than 1.5:1.
(c) Debt to Capital Ratio. Permit at any time the Debt to Capital
Ratio to exceed 58%.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.01. Designation of Servicer. (a) The servicing, administering
and collection of the Pool Receivables shall be conducted by such Person
("Servicer") so designated from time to time in accordance with this Section
8.01. Until the Agent gives notice ("Successor Notice") to API of the
designation of a new Servicer, API is hereby designated as, and hereby agrees
to perform the duties and obligations of, Servicer pursuant to the terms
hereof. The Agent agrees not to provide API with the Successor Notice until
after the occurrence of any Termination Event ("Servicer Transfer Event"), in
which case such Successor Notice may be given at any time in Agent's
discretion.
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(b) Upon API's receipt of a Successor Notice, API agrees that it will
terminate its activities as Servicer hereunder in a manner which the Agent
believes will facilitate the transition of the performance of such activities
to the new Servicer, and the Agent (or its designee) shall assume each and all
of API's obligations to service and administer such Receivables, on the terms
and subject to the conditions herein set forth and API shall use its best
efforts to assist the Agent (or its designee) in assuming such obligations. If
API disputes the occurrence of a Servicer Transfer Event, API may take
appropriate action to resolve such dispute; provided that API must terminate
its activities hereunder as Servicer and allow the newly designated Servicer to
perform such activities on the date provided by the Agent as described above,
notwithstanding the commencement or continuation of any proceeding to resolve
the aforementioned dispute.
(c) Servicer may allow any Seller to service, administer and collect
any Receivables generated by such Seller and may with the prior consent of the
Agent, subcontract with any other person for servicing, administering or
collecting the Pool Receivables, provided that, in each case, Servicer shall
remain liable for the performance of the duties and obligations of Servicer
pursuant to the terms hereof.
SECTION 8.02. Duties of Servicer. (a) Servicer shall take or cause to
be taken all such actions as may be necessary or advisable to collect each Pool
Receivable from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy. Each of the Agent, each Purchaser and each
Seller hereby appoints as its agent Servicer, from time to time designated
pursuant to Section 8.01, to enforce its respective rights and interests in and
under the Pool Receivables, the Related Security and the Contracts. Servicer
shall set aside for the account of Sellers and each Purchaser their respective
allocable shares of the Collections of Pool Receivables in accordance with
Sections 3.01 and 3.02 but shall not be required (unless otherwise requested by
the Agent and subject to Section 3.08) to segregate the funds constituting such
portions of such Collections, or to segregate the respective allocable shares
of each Purchaser, prior to the remittance thereof in accordance with said
Sections. If instructed by the Agent, Servicer shall segregate and deposit
with a bank (which may be PNC Bank) designated by the Agent such allocable
shares of Collections of Pool Receivables, set aside for Purchasers, on the
first Business Day following receipt by Servicer of such Collections in
immediately available funds. So long as no Termination Event or Purchase
Termination Event shall have occurred and be continuing, each Seller, while API
is Servicer, may, in accordance with the Credit and Collection Policy, (i)
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extend the maturity or adjust the Unpaid Balance of any Defaulted Receivable as
it may reasonably determine to be appropriate to maximize Collections thereof,
provided that, after giving effect to such extension of maturity the Aggregate
Participation Amounts will not exceed the Participation Amounts Limit, and (ii)
adjust the Unpaid Balance of any Receivable to reflect the reductions or
cancellations described in the first sentence of Section 3.03(a). Each Seller
shall hold in trust for each Purchaser all documents, instruments and records
(including, without limitation, computer tapes or disks) that evidence or
relate to Pool Receivables generated by such Seller.
(b) Servicer shall as soon as practicable following receipt turn over
to Sellers (i) that portion of Collections of Pool Receivables not representing
Purchasers' Undivided Interest therein, less, in the event API is no longer
Servicer, all reasonable and appropriate out-of-pocket costs and expenses of
such Servicer of servicing, collecting and administering the Pool Receivables
to the extent not covered by the Servicer's Fee received by it and (ii) the
Collections of any Receivable which is not a Pool Receivable. Servicer, if
other than API, shall as soon as practicable upon demand deliver to API all
documents, instruments and records in its possession that evidence or relate to
Receivables of any Seller other than Pool Receivables, and copies of documents,
instruments and records in its possession that evidence or relate to Pool
Receivables. Servicer's authorization under this Agreement shall terminate
after the Commitment Termination Date, upon receipt by each Purchaser of an
amount equal to such Purchaser's Total Investment plus accrued Earned Discount
thereon plus all other amounts owed to Purchaser and Sellers and (unless
otherwise agreed to by the Agent and Servicer) Servicer under this Agreement.
SECTION 8.03. Rights of the Agent. (a) At any time following the
occurrence of a Termination Event, the Agent is hereby authorized to give
notice to the Lock-Box Banks of the transfer to the Agent of dominion and
control over the lock-box accounts to which the Obligors of Pool Receivables
shall make payments, as set forth in the Lock-Box Agreement, or to send the
Lock-Box Notices, as the case may be. Each Seller hereby transfers to the
Agent, effective when the Agent shall give such notice to the Lock-Box Banks,
the exclusive dominion and control over such lock-box accounts, and shall take
any further action that the Agent may reasonably request to effect such
transfer. Further, at any time the Agent may notify the Obligors of Pool
Receivables, or any of them, of the ownership of Undivided Interests by
Purchasers.
(b) At any time after the occurrence of a Termination Event:
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(i) The Agent may direct the Obligors of Pool Receivables, or
any of them, that payment of all amounts payable under any Pool
Receivable be made directly to the Agent or its designee.
(ii) API shall, at the Agent's request and at API's expense,
give notice of the ownership of the Pool Receivables by the Purchasers
to each said Obligor and direct that payments be made directly to the
Agent or its designee.
(iii) Each Seller shall, at the Agent's request, (A) assemble
all of the documents, instruments and other records (including,
without limitation, computer programs, tapes and disks) which evidence
the Pool Receivables, and the related Contracts and Related Security,
or which are otherwise necessary or desirable to collect such Pool
Receivables, and shall make the same available to the Agent at a place
selected by the Agent or its designee, and (B) segregate all cash,
checks and other instruments received by it from time to time
constituting Collections of Pool Receivables in a manner acceptable to
the Agent and shall, promptly upon receipt, remit all such cash,
checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Agent or its designee.
(iv) Each of each Purchaser and each Seller hereby authorizes
the Agent to take any and all steps in any Seller's name and on behalf
of any Seller and any Purchaser necessary or desirable, in the
determination of the Agent, to collect all amounts due under any and
all Pool Receivables, including, without limitation, endorsing any
Seller's name on checks and other instruments representing Collections
and enforcing such Pool Receivables and the related Contracts.
SECTION 8.04. Responsibilities of each Seller. Anything herein to the
contrary notwithstanding:
(a) Each Seller shall perform all of its obligations under the
Contracts related to the Pool Receivables generated by it and under the related
purchase orders and other agreements to the same extent as if Undivided
Interests had not been sold hereunder and the exercise by the Agent of its
rights hereunder shall not relieve any Seller from such obligations.
(b) Neither the Agent nor any Purchaser shall have any obligation or
liability with respect to any Pool Receivables, Contracts related thereto or
any other related purchase orders or other agreements, nor shall any of them be
obligated to perform any of the obligations of any Seller thereunder.
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(c) Each Seller hereby grants to Servicer an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to take in
the name of such Seller all steps necessary or advisable to endorse, negotiate
or otherwise realize on any writing or other right of any kind held or
transmitted by such Seller or transmitted or received by any Purchaser (whether
or not from such Seller) in connection with any Receivable.
SECTION 8.05. Further Action Evidencing Purchases. Each Seller agrees
that from time to time, at its expense, it will promptly execute and deliver
all further instruments and documents, and take all further action that the
Agent may reasonably request in order to perfect, protect or more fully
evidence the Undivided Interests purchased by Purchasers hereunder, or to
enable any Purchaser or the Agent to exercise or enforce any of their
respective rights hereunder or under their Certificates. Without limiting the
generality of the foregoing, each Seller will upon the request of the Agent:
(i) execute and file such financing or continuation statements, or amendments
thereto or assignments thereof, and such other instruments or notices, as may
be necessary or appropriate; (ii) mark conspicuously each Contract evidencing
each Pool Receivable generated by it with a legend, acceptable to the Agent,
evidencing that such Undivided Interests have been sold in accordance with this
Agreement; and (iii) mark its master data processing records evidencing any
Pool Receivables and related Contracts with such legend. Each Seller hereby
authorizes the Agent to file one or more financing or continuation statements,
and amendments thereto and assignments thereof, relative to all or any of the
Pool Receivables and the Related Security now existing or hereafter arising in
the name of such Seller. If any Seller fails to perform any of its agreements
or obligations under this Agreement, the Agent may (but shall not be required
to) itself perform, or cause performance of, such Agreement or obligation, and
the expenses of the Agent incurred in connection therewith shall be payable by
Sellers, jointly and severally, as provided in Section 12.01.
SECTION 8.06. Application of Collections. Any payment by an Obligor in
respect of any indebtedness owed by it to a Seller shall, except as otherwise
specified by such Obligor or otherwise required by contract or law and unless
otherwise instructed by the Agent, be applied as a Collection of any Pool
Receivable or Receivables of such Obligor to the extent of any amounts then due
and payable thereunder before being applied to any other indebtedness of such
Obligor.
ARTICLE IX
TERMINATION EVENTS
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SECTION 9.01. Termination Events. Each of the following events shall
be a "Termination Event" hereunder:
(a) (i) Servicer (if API) shall fail to perform or observe any term,
covenant or agreement hereunder in its capacity as Servicer (other than as
referred to in clause (ii) next following) and such failure shall remain
unremedied for three Business Days or (ii) either Servicer (if API) or any
Seller shall fail to make any payment or deposit to be made by it hereunder
when due; or
(b) Any representation or warranty made or deemed to be made by any
Seller (or any of its officers) under or in connection with this Agreement or
any Periodic Report or Settlement Statement or other information or report
delivered pursuant hereto shall prove to have been false or incorrect in any
material respect when made; or
(c) Any Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed
or observed and any such failure shall remain unremedied for ten Business Days
after written notice thereof shall have been given by the Agent to Sellers'
Representative; or
(d) A default shall have occurred and be continuing under or any
instrument, contract, indenture or agreement evidencing, securing or providing
for the issuance of indebtedness for borrowed money in excess of $2,000,000 of,
or guaranteed by, any Seller or any Affiliate of any thereof, which default if
unremedied, uncured, or unwaived (with or without the passage of time or the
giving of notice) would permit acceleration of the maturity of such
indebtedness and such default shall have continued unremedied, uncured or
unwaived for a period long enough to permit such acceleration and any notice of
default required to permit acceleration shall have been given; or
(e) The Delinquency Ratio exceeds 14.5%; or
(f) An Event of Bankruptcy shall have occurred and remained continuing
with respect to any Seller or any Affiliate of any thereof; or
(g) (i) Any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings not disclosed in
writing by Sellers' Representative to the Agent and Purchasers prior to the
date of execution and delivery of this Agreement is pending against any Seller
or (ii) any material development not so disclosed has occurred in any
litigation (including, without limitation, derivative actions), arbitration
proceedings or governmental proceedings so disclosed,
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which, in the case of clause (i) or (ii), in the reasonable opinion of the
Agent is likely to materially adversely affect the financial position or
business of any Seller or impair the ability of any Seller to perform its
obligations under this Agreement; or
(h) Aggregate Participation Amounts shall exceed the Participation
Amounts Limit; or
(i) The Pool Losses to Liquidations Ratio exceeds 12.75%; or
(j) There shall have occurred any event which materially adversely
affects the collectability of the Pool Receivables or there shall have occurred
any other event which materially adversely affects the ability of any Seller or
Servicer to collect Pool Receivables or the ability of any Seller or Servicer
to perform hereunder or the warranty in Section 6.01(i)(y) shall not be true at
any time; or
(k) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Internal Revenue Code with regard to any of the assets
of any Seller and such lien shall not have been released and such lien shall
not have been released within 8 Business Days, or the Pension Benefit Guaranty
Corporation shall, or shall indicate its intention to, file notice of a lien
pursuant to Section 4068 of the Employee Retirement Income Security Act of 1974
with regard to any of the assets of any Seller and such lien shall not have
been released within 8 Business Days; or
(l) One Person, or a group of Persons acting in concert that are
unacceptable to the Agent or the Purchasers obtain, in one or more
transactions, control of more than 50% of the issued and outstanding shares of
capital stock of API having the power to elect a majority of directors of API;
or any Seller other than API ceases to be a wholly-owned Subsidiary of API); or
(m) The Dilution Ratio exceeds 8.5%; or
(n) The Net Charge-Off Ratio exceeds 2%.
SECTION 9.02. Remedies.
(a) Optional Termination. Upon the occurrence of a Termination Event
(other than a Termination Event described in subsection (f) or (h) of Section
9.01), the Agent shall, at the request, or may, with the consent, of the
Majority Purchasers, by notice to Sellers' Representative declare the
Commitment Termination Date to have occurred.
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(b) Automatic Termination. Upon the occurrence of a Termination Event
described in subsection (f) or (h) of Section 9.01, the Commitment Termination
Date shall be deemed to have occurred automatically upon the occurrence of such
event; provided however, that with respect to the occurrence of a Termination
Event described in subsection (h) of Section 9.01 the settlement procedures
described in Section 3.02 shall become applicable upon the occurrence of such
event and no further Purchases or Reinvestments of Collections shall be made;
and provided, further, that if the Aggregate Participation Amounts are reduced
below the Participation Amounts Limit within 1 Business Day, and if no other
Termination Event has occurred, then following such reduction, the Commitment
shall be reinstated as if the Commitment Termination Date had not occurred upon
the occurrence of such event.
(c) Additional Remedies. Upon any termination of the facility pursuant
to this Section 9.02, the Agent and each Purchaser shall have, in addition to
all other rights and remedies under this Agreement or otherwise, all other
rights and remedies provided under the UCC of each applicable jurisdiction and
other applicable laws, which rights shall be cumulative. Without limiting the
foregoing the occurrence of a Termination Event shall not deny to any Purchaser
any remedy in addition to termination of the Commitment to which such Purchaser
may be otherwise appropriately entitled, whether at law or in equity.
ARTICLE X
THE AGENT
SECTION 10.01. Authorization and Action. Each Purchaser hereby
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.
SECTION 10.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or the Agent under or in connection with this
Agreement (including, without limitation, the Agent's servicing, administering
or collecting Pool Receivables as Servicer pursuant to Section 8.01), except
for its or their own gross negligence or willful misconduct. Without limiting
the generality of the foregoing, the Agent: (i) may consult with legal counsel
(including counsel for Sellers), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (ii) makes no
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warranty or representation to any Purchaser and shall not be responsible
to any Purchaser for any statements, warranties or representations made in or
in connection with this Agreement; (iii) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement on the part of any Seller or to
inspect the property (including the books and records) of any Seller; (iv)
shall not be responsible to any Purchaser for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
the Certificates or any other instrument or document furnished pursuant hereto;
and (v) shall incur no liability under or in respect of this Agreement by
acting upon any notice (including notice by telephone), consent, certificate or
other instrument or writing (which may be by telex) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 10.03. Agent and Affiliates. With respect to any Certificate
held by PNC Bank, it shall have the same rights and powers under this
Agreement as would a Purchaser if it were holding such Certificate and may
exercise the same as though it were not the Agent. PNC Bank and its Affiliates
may generally engage in any kind of business with any Seller or any Obligor,
any of their respective Affiliates and any Person who may do business with or
own securities of any Seller or any Obligor or any of their respective
Affiliates, all as if PNC Bank were not the Agent and without any duty to
account therefor to any Purchaser.
SECTION 10.04. Indemnity. Each Purchaser agrees (which agreement shall
survive any termination of this Agreement) to indemnify the Agent, on a pro
rata basis, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of this
Agreement, the Certificates and the other Agreement Documents, including the
reimbursement of the Agent for all reasonable out-of-pocket expenses (including
attorneys' fees) incurred by the Agent hereunder or in connection herewith or
in enforcing the obligations of any Seller under this Agreement, the
Certificates and the other Agreement Documents, in all cases as to which the
Agent is not reimbursed by the Sellers; provided that no Purchaser shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
determined by a court of competent jurisdiction in a final proceeding to have
resulted from the Agent's gross negligence or willful misconduct. The Agent
shall not be required to take any action hereunder, under the Certificates or
under any other Agreement Document, or to prosecute or defend any
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suit in respect of this Agreement, the Certificates or any other Agreement
Document, unless indemnified to its satisfaction by the Purchasers against
loss, costs, liability, and expense, which indemnity need not indemnify the
Agent for its gross negligence or willful misconduct. If any indemnity in
favor of the Agent shall become impaired, it may call for additional indemnity
and cease to do the acts indemnified against until such additional indemnity is
given. The Agent may delegate its duties hereunder to Affiliates, agents or
attorneys-in-fact selected in good faith by the Agent.
SECTION 10.05. Successor. The Agent may resign as such at any time
upon at least thirty days' prior notice to the Sellers' Representative and all
Purchasers. If the Agent at any time shall resign, the Majority Purchasers may
appoint a successor Agent; provided that, if such successor Agent is not a
Purchaser, such successor Agent shall be reasonably acceptable to the Sellers'
Representative. If the Majority Purchasers do not make such appointment within
thirty days, the retiring Agent shall appoint a new Agent from among the
Purchasers or, if no Purchaser accepts such appointment, from among commercial
banking institutions or trust institutions generally. Upon the acceptance of
any appointment as Agent by a successor Agent, such successor Agent shall
thereupon become the Agent hereunder and shall be entitled to receive from the
prior Agent such documents of transfer and assignment as such successor Agent
may reasonably request, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement, the Certificates and the other
Facility Documents. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Agreement and the other Agreement
Documents shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
SECTION 10.06. Credit Decisions. Each Purchaser acknowledges that it
has, independently of the Agent and each other Purchaser, and based on the
financial information referred to in Section 6.01(i) and such other documents,
information, and investigations as it has deemed appropriate, made its own
credit decision to make its Purchases from time to time. Each Purchaser also
acknowledges that it will, independently of the Agent and each other Purchaser,
and based on such other documents, information, and investigations as it shall
deem appropriate at any time, continue to make its own credit decisions as to
exercising or not exercising from time to time any rights and privileges
available to it under this Agreement, the Certificates or the other Agreement
Documents.
SECTION 10.07. Notices, etc. to Agent. The Agent shall give prompt
notice to each Purchaser of each notice or request given to the Agent by any
Seller pursuant to the terms of this
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Agreement and of each Termination Event or Unmatured Termination Event of
which the Agent has actual knowledge. The Agent will promptly distribute to
each Purchaser copies of all other communications and financial statements
received by the Agent from any Seller for distribution to the Purchasers by the
Agent in accordance with the terms of this Agreement. The Agent shall not be
deemed to have actual knowledge of any event unless an authorized corporate
officer of the Agent whose duties include administration of this Agreement has
discovered or has received actual notice of such event.
ARTICLE XI
ASSIGNMENT OF UNDIVIDED INTERESTS
SECTION 11.01. Assignments. Any Purchaser may assign its Commitment
and any Undivided Interest owned by it to any other Person proposed by Purchaser
and consented to by the Agent and the Sellers' Representative, which consent
shall not be unreasonably withheld, provided that such assignment (i) shall be
in an amount at least equal to $5,000,000 and (ii) shall not result in more
than 4 Purchasers. Within five Business Days after notice of such proposed
assignment, Sellers' Representative agrees to advise the Agent of its consent
or non-consent thereto. All of the aforementioned assignments shall be upon
such terms and conditions as the relevant Purchaser and the assignee may
mutually agree. Each assigning Purchaser shall pay the Agent a fee of $3,500
in connection with each such assignment, which fee shall be payable on the
effective date of such assignment.
SECTION 11.02. Documentation. Each assignment by a Purchaser hereunder
shall be evidenced by an Assignment. If requested by the Agent, Sellers agree
to execute and deliver new Certificates in replacement of the original
Certificate in order to reflect such assignment.
SECTION 11.03. Rights of Assignee. Upon the assignment of any
Commitment and Undivided Interest (or portion thereof) from any Purchaser
pursuant to this Article XI, the respective assignee receiving such
assignment shall have all of the rights of a Purchaser hereunder with respect
to such Undivided Interest (or portion thereof).
SECTION 11.04. Assignment by Sellers. No Seller shall assign its
rights or obligations under this Agreement and the other Agreement Documents
without the prior written consent of the Agent and each Purchaser.
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ARTICLE XII
INDEMNIFICATION
SECTION 12.01. Indemnities by Sellers. Without limiting any other
rights which any such Person may have hereunder or under applicable law,
Sellers, jointly and severally, hereby agree to indemnify each of the
Agent, each Purchaser, PNC Bank, each of PNC Bank's Affiliates, their
respective successors, transferees and assigns and all officers, directors,
shareholders, controlling persons, employees and agents of any of the foregoing
(each an "Indemnified Party"), forthwith on demand, from and against any and
all damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or as a result of this Agreement or any
of the other Agreement Documents or the transactions contemplated thereby or
the use of the proceeds by the Sellers therefrom, including, without
limitation, in respect of the ownership or funding of an Undivided Interest or
in respect of any Receivable or any Contract, excluding, however, recourse
(except as otherwise specifically provided in this Agreement) for Defaulted
Receivables. Without limiting the foregoing, Sellers, jointly and severally,
shall indemnify each Indemnified Party for Indemnified Amounts relating to or
resulting from:
(i) the transfer by any Seller of any interest in any
Receivable other than an Undivided Interest;
(ii) the breach of any representation or warranty made by any
Seller (or any of its officers) under or in connection with this
Agreement, any Periodic Report or any other information or report
delivered by any Seller pursuant hereto, which shall have been false
or incorrect in any material respect when made or deemed made;
(iii) the failure by any Seller to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or the
related Contract, or the nonconformity of any Pool Receivable or the
related Contract with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in each
Purchaser an undivided percentage ownership interest, to the extent of
each Undivided Interest owned by it hereunder, in the Receivables in,
or purporting to be in, the Receivables Pool, free and clear of any
Adverse Claim, other than an Adverse Claim arising solely as a result
of an act of such Purchaser or the Agent (when used in this clause
(iv), an Adverse Claim shall include any lien for taxes whether
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accrued and payable or not), whether existing at the time of the
Purchase of such Undivided Interest or at any time thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to
any receivables in, or purporting to be in, the Receivables Pool,
whether at the time of any Purchase, Reinvestment or at any subsequent
time, or the failure of the Purchasers' interests in Pool Receivables
to be perfected as a result of the failure to comply with the Federal
Assignment of Claims Act, the laws of any foreign jurisdiction or
otherwise;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy) of the Obligor to the payment of any
Receivable in, or purporting to be in, the Receivables Pool
(including, without limitation, a defense based on such Receivable's
or the related Contract's not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance with
its terms), or any other claim resulting from the sale of the
merchandise or services related to such Receivable or the furnishing
or failure to furnish such merchandise or services;
(vii) any failure of API, as Servicer or otherwise, to
perform its duties or obligations in accordance with the provisions of
Article VII;
(viii) any products liability claim arising out of or in
connection with merchandise or services that are the subject of any
Pool Receivable; or
(ix) any tax or governmental fee or charge (but not including
taxes upon or measured by net income), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and
expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the purchase
or ownership of any Undivided Interest, or other interest in the Pool
Receivables or in any goods which secure any such Pool Receivables.
If any Indemnified Party shall have notice of any attempt to impose or
collect any tax or governmental fee or charge for which
indemnification will be sought from Sellers hereunder, such
Indemnified Party shall give prompt and timely notice of such attempt
to Sellers' Representative and Sellers' Representative shall have the
right, at its expense, to conduct or participate in any proceedings
resisting or objecting to the imposition or collection of any such
tax, governmental fee or charge.
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Indemnification hereunder shall be in an amount necessary to
make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the payment of any of the
aforesaid taxes and the receipt of the indemnity provided hereunder or
of any refund of any such tax previously indemnified hereunder,
including the effect of such tax or refund on the amount of tax
measured by net income or profits which is or was payable by the
Indemnified Party.
Notwithstanding anything to the contrary herein, an Indemnified Party shall
refund to the Sellers any amount received from the Sellers for losses, damages,
costs and expenses incurred by such Indemnified Party which a court of
competent jurisdiction has found, in a final nonappealable order, resulted from
such Indemnified Party's bad faith, gross negligence or willful misconduct
(individually and not as a co-conspirator with a Seller or any Affiliate
thereof). No Seller shall be liable for any settlement of any claim or action
effected without its written consent at a time when no Termination Event had
occurred and was continuing, provided such consent was not unreasonably delayed
or withheld. If for any reason the indemnification provided above in this
Section 12.01 is unavailable to an Indemnified Party or is insufficient to hold
an Indemnified Party harmless to the extent contemplated by such
indemnification, then Sellers, jointly and severally, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by such Indemnified Party on the one hand
and Sellers on the other hand but also the relative fault of such Indemnified
Party as well as any other relevant equitable considerations.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by any Seller
therefrom shall in any event be effective unless the same shall be in writing
and signed by (i) Sellers, the Agent and the Majority Purchasers (with respect
to an amendment) or (ii) the Agent and the Majority Purchasers (with respect to
a waiver or consent by them) or Sellers (with respect to a waiver or consent by
them), as the case may be, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given,
provided, that, without the consent of each Purchaser, no such amendment or
waiver shall (i) reduce the amount of, or change the date of payment of, any
Earned Discount, any fee or such Purchaser's Outstanding
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Investment, (ii) extend the Commitment Termination Date, (iii) change
the definition of Majority Purchasers or this proviso or (iv) release any
interest in Pool Receivables, except as expressly set forth herein. This
Agreement, together with the other Agreement Documents, contains a final and
complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof, superseding
all prior oral or written understandings.
SECTION 13.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent
by certified mail, postage prepaid, or by facsimile, to the intended party at
the address or facsimile number of such party set forth under its name on the
signature pages hereof or at such other address or facsimile number as shall be
designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective, (i) if personally
delivered, when received, (ii) if sent by certified mail, three Business Days
after having been deposited in the mail, postage prepaid, (iii) if sent by
overnight delivery service, the next Business Day, and (iv) if transmitted by
facsimile, when sent, receipt confirmed by telephone or electronic means,
except that notices and communications pursuant to Article I shall not be
effective until received.
SECTION 13.03. No Waiver; Remedies. No failure on the part of the
Agent, any Purchaser, any Seller or the Sellers' Representative to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 13.04. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of Sellers, the Agent, the Purchasers and
their respective successors and permitted assigns, and the provisions of
Section 4.02 and Article XII shall inure to the benefit of the Affected Parties
and the Indemnified Parties, respectively, and their respective successors and
assigns. This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until such time, after the Commitment Termination Date, as no
Undivided Interest shall be outstanding. The rights and remedies with respect
to any breach of any representation and warranty made by each Seller pursuant
to Article VI and the
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indemnification and payment provisions of Article XII and Sections 4.02
and 13.06 shall be continuing and shall survive any termination of this
Agreement.
SECTION 13.05. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Illinois,
except to the extent that the validity or perfection of the interests of
Purchasers in the Receivables, or remedies hereunder in respect thereof, are
governed by the laws of a jurisdiction other than the State of Illinois.
SECTION 13.06. Costs, Expenses and Taxes. In addition to its
obligations under Article XII, Sellers, jointly and severally, agree to pay on
demand:
(a) all costs and expenses in connection with the preparation,
execution and delivery of this Agreement, the Certificates, the other Agreement
Documents and any other documents to be delivered hereunder, including, without
limitation, any amendments, waivers, consents, supplements or other
modifications to any Agreement Documents and the reasonable fees and expenses
of counsel for the Agent, Purchasers and PNC Bank with respect thereto and all
costs and expenses in connection with the administration (including periodic
auditing) and enforcement of this Agreement or the Agreement Documents,
including, without limitation, the reasonable fees and expenses of counsel,
incurred by any Affected Party, including, those costs and expenses incurred
with respect to advising the Agent, Purchasers, PNC Bank, PNC Bank's Affiliates
and any other Affected Party as to their respective rights and remedies under
this Agreement; and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of
this Agreement, the Certificates or the other documents to be delivered
hereunder, and agrees to indemnify each Indemnified Party against any
liabilities with respect to or resulting from any delay in paying or omission
to pay such taxes and fees.
SECTION 13.07. Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this
Agreement to any underscored Section or Exhibit are to such Section or Exhibit
of this Agreement, as the case may be.
SECTION 13.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so
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executed shall be deemed to be an original and all of which when taken
together shall constitute one and the same Agreement.
SECTION 13.09. Allocation Among Sellers. API hereby agrees to take, or
cause to be taken, all steps necessary to allocate the liabilities and the
benefits under this Agreement among the Sellers on the basis of the aggregate
Unpaid Amount of Pool Receivables generated by each such Seller from time to
time. To the extent that any Seller makes a payment, whether from Collections
of Receivables generated by such Seller or otherwise, for any liability
hereunder, in excess of its pro rata share, such Seller shall have a claim for
contribution, which claim shall be subordinated to all of the claims of the
Purchaser, the Agent, the Affected Parties and the Indemnified Parties
hereunder, against the other Sellers to the extent necessary to result in a pro
rata payment by all of the Sellers. Each Seller hereby agrees to promptly pay
any such claims for contribution.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
Percentage PNC BANK, NATIONAL ASSOCIATION,
100% as a Purchaser
By
Name Printed: Richard T. Jander
Title: Assistant Vice President
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
with notice to:
PNC Bank, National Association
500 West Madison, Suite 3140
Chicago, Illinois 60661
Phone: (312) 906-3440
Facsimile: (312) 906-3420
Attention: Richard T. Jander
PNC BANK, NATIONAL ASSOCIATION,
as the Agent
By
Name Printed: Richard T. Jander
Title: Assistant Vice President
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Eurodollar Office:
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
with notice to:
PNC Bank, National Association
500 West Madison, Suite 3140
Chicago, Illinois 60661
Phone: (312) 906-3440
Facsimile: (312) 906-3420
Attention: Richard T. Jander
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APPLIED POWER INC.,
as a Seller and initial Servicer
By
Name Printed: Karen Trickle
Title: Assistant Treasurer
Address: 13000 W. Silver Spring Drive
Butler, Wisconsin 53007
Facsimile No.: 414/783-9790
Attention: Treasurer
BARRY WRIGHT CORPORATION,
as a Seller
By
Name Printed: Terence Dooher
Title: Treasurer
Address: 40 Guest Street
Brighton, Massachusetts 02135
Facsimile No.: 617/254-7381
Attention: Treasurer
GB ELECTRICAL, INC., as a Seller
By
Name Printed: Karen Trickle
Title: Assistant Treasurer
Address: 6101 N. Baker Road
Glendale, Wisconsin 53209
Facsimile No.: 414/228-1616
Attention: Vice President
WRIGHT LINE INC., as a Seller
By
Name Printed: Karen Trickle
Title: Assistant Treasurer
Address: 160 Gold Star Boulevard
Worcester, MA 01606
Facsimile No.: 508/752-4909
Attention: Treasurer
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DEFINITIONAL APPENDIX
TO RECEIVABLES PURCHASE AGREEMENT
SCHEDULE I
DEFINITIONS
1.1. Definitions. As used in this Agreement, unless the context
requires a different meaning, the following terms have the meanings as
indicated:
"Adverse Claim" means a lien, security interest, charge, or
encumbrance, or other right or claim of any Person other than (i) a potential
claim or right (that has not yet been asserted) of a trustee appointed for an
Obligor in connection with any Event of Bankruptcy or (ii) an unfiled lien for
taxes accrued but not yet payable.
"Affected Party" means each of each Purchaser, any permitted assignee
of a Purchaser, the Agent, PNC Bank and any holding company of PNC Bank.
"Affiliate" when used with respect to a Person means any other Person
controlling, controlled by, or under common control with, such Person.
"Affiliated Obligor" has the meaning set forth in the definition of
"Net Pool Balance" in Section 2.07.
"Agent" has the meaning set forth in the preamble.
"Agent's Account" has the meaning set forth in Section 3.06.
"Aggregate Participation Amounts" has the meaning set forth in Section
2.01.
"Aggregate Purchasers' Investments" has the meaning set forth in
Section 2.03.
"Agreement" means this Receivables Purchase Agreement, as it may be
amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof.
"Agreement Documents" has the meaning set forth in Section 6.01(c).
"Alternate Reference Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of
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(a) the rate of interest most recently announced by PNC Bank
at its principal office in Pittsburgh, Pennsylvania as its prime rate;
and
(b) the Federal Funds Rate (as defined below) most recently
determined by PNC Bank plus 1.0%.
For purposes of this definition, "Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal (for each day during such period) to
(i) 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 for
such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York; or
(ii) if such rate is not so published for any day
which is a Business Day, the average of the quotations for
such day on such transactions received by PNC Bank from three
federal funds brokers of recognized standing selected by it.
The Alternate Reference Rate is not necessarily intended to be the lowest rate
of interest determined by PNC Bank in connection with extensions of credit.
"API" has the meaning set forth in the preamble.
"Arrangement Fee" has the meaning set forth in Section 4.01(a).
"Authorized Financial Officer" of a Person means the chief financial
officer, chief accounting officer, controller, treasurer, assistant treasurer
or vice president - finance of such Person.
"Assignment" means an assignment, in substantially the form of Exhibit
IA, by which a Purchaser's Commitment (or portion thereof) or its interest in
Undivided Interests previously purchased hereunder may be assigned, with such
changes as to which the assigning Purchaser, the related assignee and the Agent
may agree.
"Bank Rate" has the meaning set forth in Section 2.07.
"Business Day" means a day on which both (a) the Agent at its
principal office in Pittsburgh, Pennsylvania is open for
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business and (b) commercial banks in New York City are not authorized or
required to be closed for business.
"BWC" has the meaning set forth in the preamble.
"Capital Lease" means, with respect to any Person, any lease of (or
other agreement conveying the right to use) any real or personal property
which, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.
"Certificate" means a certificate of assignment, by Sellers to each
Purchaser, in the form of Exhibit IB, evidencing each Undivided Interest owned
by such Purchaser.
"Collections" means, with respect to any Receivable, all funds which
either (a) are received by any Seller or Servicer from or on behalf of the
related Obligors in payment of any amounts owed (including, without limitation,
purchase prices, finance charges, interest and all other charges) in respect of
such Receivable, or applied to such amounts owed by such Obligors (including,
without limitation, insurance payments that any Seller or Servicer applies in
the ordinary course of its business to amounts owed in respect of such
Receivable and net proceeds of sale or other disposition of repossessed goods
or other collateral or property of the Obligor or any other party directly or
indirectly liable for payment of such Receivable and available to be applied
thereon), or (b) are deemed to have been received by any Seller or any other
Person as a Collection pursuant to Section 3.03 or 3.04; provided that, prior
to such time as API shall cease to be the Servicer, late payment charges,
collection fees and extension fees shall not be deemed to be Collections.
"Commitment" has the meaning set forth in Section 1.01.
"Commitment Fee" has the meaning set forth in Section 4.01(b).
"Commitment Termination Date" has the meaning set forth in Section
1.02.
"Computation Period" means any period of four consecutive Fiscal
Quarters ending on the last day of a Fiscal Quarter.
"Conditions Precedent" has the meaning set forth in Section 5.02.
"Concentration Limit" has the meaning set forth in the definition of
"Net Pool Balance" in Section 2.07.
"Consolidated Interest Expense" means, for any period, the
consolidated interest expense of API and its Subsidiaries for
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such period, as determined in accordance with GAAP and in any event including,
without duplication, all commissions, discounts and other fees and charges owed
with respect to letters of credit and banker's acceptances, net costs under
interest rate protection agreements and the portion of any Capital Leases
allocable to consolidated interest expense.
"Consolidated Net Income" means, for any period, all amounts which, in
conformity with GAAP, would be included under net income on a consolidated
income statement of API and its Subsidiaries for such period.
"Contract" means a contract between a Seller and any Person, or an
invoice from a Seller to any Person, in one of the forms of contracts or
invoices, as appropriate, set forth in Exhibit IC or otherwise approved by the
Agent, pursuant to or under which such Person shall be obligated to make
payments to a Seller from time to time.
"Credit and Collection Policy" means those credit and collection
policies and practices relating to Contracts and Receivables described in
Exhibit ID, as modified without violating Section 7.03(c).
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, whether or not evidenced by bonds,
debentures, notes or similar instruments, (b) all obligations of such Person as
lessee under Capital Leases which have been recorded as liabilities on a
balance sheet of such Person, (c) all obligations of such Person to pay the
deferred purchase price of property or services (other than current accounts
payable in the ordinary course of business), (d) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness shall
have been assumed by such Person (it being understood that if such Person has
not assumed or otherwise become personally liable for any such indebtedness,
the amount of the Debt of such Person in connection therewith shall be limited
to the lesser of the face amount of such indebtedness or the fair market value
of all property of such Person securing such indebtedness), (e) all
obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn) and banker's acceptances issued for
the account of such Person, (f) all obligations of such Person in respect of
Hedging Arrangements, (g) all Suretyship Liabilities of such Person and (h) all
Debt (as defined above) of any partnership in which such Person is a general
partner. The amount of the Debt of any Person in respect of Hedging
Arrangements shall be deemed to be the unrealized net loss position of such
Person thereunder (determined for each counterparty individually, but netted
for all Hedging Arrangements maintained with such counterparty).
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"Debt to Capital Ratio" means the ratio of (a) Funded Debt to (b)
Total Capital.
"Defaulted Receivable" means a Receivable: (i) as to which any
payment, or part thereof, remains unpaid for sixty (60) days from the original
due date for such payment, (ii) as to which the obligor thereof is the obligor
on any other Defaulted Receivable or with regard to which an Event of
Bankruptcy has occurred and remains continuing, (iii) as to which payments have
been extended, or the terms of payment thereof rewritten, without the Agent's
consent or (iv) which, consistent with the Credit and Collection Policy, would
be written off a Seller's books as uncollectible.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and: (i) as to which any payment, or part thereof, remains unpaid
for thirty (30) days or more from the original due date for such payment; or
(ii) which, consistent with the Credit and Collection Policy, would be
classified as delinquent by a Seller.
"Discount Rate" has the meaning set forth in Section 2.07.
"Delinquency Ratio" means the percentage that (x) is the aggregate
Unpaid Balances of all Delinquent Receivables as of a Month End Date was of (y)
the aggregate Unpaid Balance of all Pool Receivables as of such Month End Date.
"Designated Obligor" means, at any time, all Obligors of any Seller
except any such Obligor as to which the Agent has, at least three Business Days
prior to the date of determination, given notice to Sellers' Representative
that such Obligor shall not be considered a Designated Obligor.
"Dilution Ratio" means the percentage that (x) the aggregate amount of
credits, offsets, reductions, discounts or adjustments to the Unpaid Balance of
Pool Receivables granted or allowed by the Sellers, or any of them, during a
month was of (y) the Unpaid Balance of all Pool Receivables as of the Month End
Date for such month.
"Dollars" means dollars in lawful money of the United States of
America.
"Earned Discount" has the meaning set forth in Section 2.05.
"Eligible Receivable" means, at any time and with respect to any
Undivided Interest, a Receivable evidenced by a Contract:
(i) which, (i) if the perfection of Purchasers' undivided
ownership interests therein is governed by the
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laws of a jurisdiction where the Uniform Commercial Code -- Secured
Transactions is in force, constitutes an account or general intangible
as defined in the Uniform Commercial Code as in effect in such
jurisdiction, and (ii) if the perfection of Purchasers' undivided
ownership interest therein is governed by the law of any jurisdiction
where the Uniform Commercial Code -- Secured Transactions is not in
force, Sellers have furnished to the Agent such opinions of counsel
and other evidence as has reasonably been requested, establishing to
the reasonable satisfaction of the Agent that Purchasers' undivided
ownership interest and other rights with respect thereto are not
significantly less protected and favorable than such rights under the
Uniform Commercial Code;
(ii) the primary Obligor of which is not an Affiliate of any of the
parties hereto, and is either a United States resident or is listed on Schedule
IA;
(iii) if the primary Obligor of which is the United States government
or a subdivision or agency thereof, the Unpaid Balance of all such Receivables
owed by the United States government or a subdivision or agency thereof is less
than 10% of the Net Pool Balance;
(iv) the Obligor of which is a Designated Obligor;
(v) the Obligor of which is not the Obligor of any Defaulted
Receivable, the Unpaid Balance of which exceeds 25% of the aggregate Unpaid
Balance of all Receivables of such Obligor;
(vi) which is not a Defaulted Receivable;
(vii) with regard to which the warranty in Section 6.01(l) is true
and correct;
(viii) the balance of which is required to be paid within the number
of days of the original billing date therefor set forth opposite the name of
the Seller that generated such Receivable on Schedule IB, unless the Unpaid
Balance of such Receivable, when combined with the Unpaid Balance of all other
Pool Receivables that are the subject of extended terms, does not exceed 27% of
the Net Pool Balance;
(ix) the sale of an Undivided Interest in which does not contravene
or conflict with any law;
(x) which is denominated and payable only in Dollars drawn on an
account in the United States;
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(xi) which arises under a Contract that has been duly authorized and
that, together with such Receivable, is in full force and effect and
constitutes the legal, valid and binding obligation of the Obligor of such
Receivable enforceable against such Obligor in accordance with its terms and is
not subject to any dispute, offset, counterclaim or defense whatsoever (except
the discharge in bankruptcy of such Obligor);
(xii) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and regulations relating to
usury, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy) and with
respect to which no party to the Contract related thereto is in violation of
any such law, rule or regulation in any material respect if such violation
would impair the collectability of such Receivable;
(xiii) which (A) satisfies all applicable requirements of the Credit
and Collection Policy and (B) complies with such other criteria and
requirements (other than those relating to the collectability of such
Receivable) as the Agent may from time to time specify to Sellers'
Representative following thirty days' notice;
(xiv) the face amount of which does not include any amounts
representing sales tax; and
(xv) as to which the Agent has not notified Sellers' Representative
that the Agent has determined, in its sole discretion, that such Receivable (or
class of Receivables) is not acceptable for purchase hereunder.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurodollar Rate (Reserve Adjusted)" means, with respect to any
Undivided Interest (or portion thereof) for any Yield Period, a rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant
to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurodollar
Reserve Percentage
where: "Eurodollar Rate" means, with respect to any Undivided Interest (or
portion thereof) for any Yield Period, the rate per annum at which Dollar
deposits in immediately available funds are offered to the Eurodollar Office of
the Agent two Eurodollar Business Days prior to the beginning of such Yield
Period by
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major banks in the major interbank eurodollar market as at or about 12:00,
noon, Pittsburgh time, for delivery on the first day of such Yield Period, for
the number of days comprised therein and in an amount equal or comparable to
the amount of the related Purchasers' Investments of such Undivided Interest
(or such portion) for such Yield Period. "Eurodollar Business Day" means a day
of the year on which dealings are carried on in the eurodollar interbank market
and banks are open for business in New York City. "Eurodollar Office" shall
mean the office of the Agent designated as such with its signature hereto and,
thereafter, such other office or offices of the Agent (as designated from time
to time by notice from the Agent to Sellers' Representative) which shall be
funding the Undivided Interests of the Agent hereunder or such other office or
offices through which the Agent determines the Eurodollar Rate. A Eurodollar
Office of the Agent may be, at the option of the Agent, either a domestic or
foreign office. "Eurodollar Reserve Percentage" means, with respect to each
Yield Period, the then applicable percentage (expressed as a decimal)
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining reserve requirements applicable to "Eurocurrency
Liabilities" pursuant to Regulation D or any other then applicable regulation
of the Board of Governors (or any successor) that prescribes reserve
requirements applicable to "Eurocurrency Liabilities" as presently defined in
Regulation D.
"Event of Bankruptcy" shall be deemed to have occurred with respect to
a Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or
all or substantially all of its assets, or any similar action with respect to
such Person under any law relating to bankruptcy, insolvency, reorganization,
winding up or composition or adjustment of debts, and such case or proceeding
shall continue undismissed, or unstayed and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person shall be
entered in an involuntary case under the federal bankruptcy laws or other
similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt arrangement,
dissolution or other similar law now or hereafter in effect, or shall consent
to the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar
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official) for, such Person or for any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
to, or admit in writing its inability to, pay its debts generally as they
become due, or, if a corporation or similar entity, its board of directors
shall vote to implement any of the foregoing.
"Fiscal Quarter" means any fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of API and its Subsidiaries, which
period shall be the 12-month period ending on August 31 of each year.
"Fixed Charge Coverage Ratio" means, for any Computation Period, the
ratio of
(a) the sum of
(i) Consolidated Net Income for such period,
plus
(ii) the aggregate amount deducted in respect of
federal, state, local and foreign income taxes
in determining such Consolidated Net Income,
plus
(iii) Consolidated Interest Expense for such period,
plus
(iv) the aggregate amount deducted in respect of
leases that were not Capital Leases in
determining such Consolidated Net Income,
plus
(v) the aggregate amount deducted in respect of
amortization of intangible assets (including
goodwill) in determining such Consolidated Net
Income,
to
(b) the sum of
(i) Consolidated Interest Expense for such period,
plus
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(ii) the aggregate amount deducted in respect of
leases that were not Capital Leases in
determining such Consolidated Net Income.
"Funded Debt" of any Person at any date of determination means the sum
of all Debt described in clauses (a) and (b) of the definition of "Debt".
"GAAP" means those U.S. generally accepted accounting principles
applied in the preparation of the audited financial statements referred to in
Section 6.01(i).
"GB" has the meaning set forth in the preamble.
"Hedging Arrangement" means any interest rate swap, cap or collar
agreement, currency swap agreement or other arrangement designed to hedge
interest rate and/or currency risk.
"Indemnified Amounts" has the meaning set forth in Section 12.01.
"Indemnified Party" has the meaning set forth in Section 12.01.
"Investment" means, with respect to any Person:
(a) any loan or advance made by such Person to any other
Person; and
(b) any capital contribution made by such Person to, or
ownership or similar interest held by such Person in, any other
Person.
The amount of any Investment shall be the original principal or
capital amount thereof less all returns of principal or equity thereon (and
without adjustment by reason of the financial condition of such other Person)
and shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to
the fair market value of such property.
"Liquidation Day" for any Undivided Interest means any of (i) each day
which occurs on or after the date designated by the Agent to Sellers'
Representative to be the "Liquidation Commencement Date", provided such date is
designated on at least one Business Day's notice during a time when any of the
conditions set forth in Section 5.02 are not satisfied, (ii) each day which
occurs on or after the Commitment Termination Date for such Undivided Interest,
or (iii) each day which occurs thirty days after Sellers' Representative shall
have given written
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notice to the Agent that Sellers no longer wishes to sell undivided interests
in the Receivables Pool to Purchasers. There shall be no Liquidation Day for
any Undivided Interest after it shall equal zero.
"Liquidation Period" means one or more contiguous Liquidation Days.
"Liquidations" means for any period, the Collections of a Seller for
such period.
"Lock-Box Agreement" means an agreement, in substantially the form of
Exhibit IE-1, executed by a Seller and a Lock-Box Bank.
"Lock-Box Bank" means any of the banks holding one or more lock-box
accounts for receiving Collections from Pool Receivables.
"Lock-Box Notice" means a notice to a Lock-Box Bank, in substantially
the form of Exhibit IE-2, executed by a Seller.
"Loss Reserve" has the meaning set forth in Section 2.04.
"Majority Purchasers" means Purchasers having aggregate Percentages in
excess of 67%.
"Month End Date" has the meaning set forth in Section 3.04.
"Net Charge-Off Ratio" means the percentage that (x) the aggregate net
charge-offs and net write-offs of Pool Receivables recognized during any month
was of (y) Liquidations of Pool Receivables during such month.
"Net Pool Balance" has the meaning set forth in Section 2.07.
"Obligor" means a Person obligated to make payments pursuant to a
Receivable.
"Outstanding Investment" has the meaning set forth in Section 2.03.
"Participation Amounts" with respect to any Undivided Interest at any
time means the sum of Purchasers' Investments and the Loss Reserve with respect
to such Undivided Interest at such time.
"Participation Amounts Limit" has the meaning set forth in Section
1.03(b).
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"Percentage" with respect to any Purchaser, means the percentage set
forth for such Purchaser on the signature page hereto, as it may be adjusted
from time to time pursuant to an Assignment.
"Periodic Report" means a report, in substantially the form of Exhibit
IF, furnished by Servicer to the Agent for each Purchaser pursuant to Section
3.05.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, government or any agency or political subdivision thereof or any other
entity.
"PNC Bank" has the meaning set forth in the preamble.
"Pool Losses to Liquidations Ratio" means the percentage that (x) the
aggregate Unpaid Balances of all Defaulted Receivables recognized during the
month ending on the most recent Month End Date was of (y) Liquidations of Pool
Receivables during such period.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Purchase" means a purchase by Purchasers of an Undivided Interest
from Sellers pursuant to Article II; it being understood, that a Reinvestment
is not a "Purchase".
"Purchase Limit" has the meaning set forth in Section 1.03(a).
"Purchase Termination Event" means any failure to satisfy the
condition set forth in Section 5.02.
"Purchaser" has the meaning set forth in the preamble.
"Purchasers' Investments" has the meaning set forth in Section 2.03.
"Purchasers' Share" has the meaning set forth in Section 2.08.
"Receivable" means any right to payment from an obligor, whether
constituting an account, chattel paper, instrument or general intangible,
arising from the sale of products by a Seller in the ordinary course of its
business, and includes the right to payment of any interest or finance charges
and other obligations of such obligor with respect thereto.
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"Receivables Pool" means at any time all then outstanding Receivables
which (i) were generated by a Seller in the ordinary course of business, and
(ii) as to which the Obligors thereunder are Designated Obligors. If, with
respect to any Undivided Interest, a Receivable is a Pool Receivable on the day
immediately preceding the Termination Date for such Undivided Interest, such
Receivable shall continue to be considered a Pool Receivable with respect to
such Undivided Interest at all times thereafter.
"Recourse Amount" has the meaning set forth in Section 3.04.
"Recourse Percentage" means the greatest of (i) 16%, (ii) the Net
Charge-Off Ratio (rounded upwards to the nearest 1/10 of 1%) multiplied by 4
plus 11% and (iii) the Delinquency Ratio (rounded upwards to the nearest 1/10
of 1%) multiplied by 1.2.
"Recourse Unpaid Balances" has the meaning set forth in Section 3.04.
"Regulatory Change" means, relative to any Affected Party
(a) any change in (or the adoption, implementation, phase-in or
commencement of effectiveness of) any
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to such
Affected Party of (A) any court, government authority charged with the
interpretation or administration of any law referred to in clause
(a)(i) or of (B) any fiscal, monetary or other authority having
jurisdiction over such Affected Party; or
(iii) generally accepted accounting principles or regulatory
accounting principles applicable to such Affected Party and affecting
the application to such Affected Party of any law, regulation,
interpretation, directive, requirement or request referred to in
clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement, request or
accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above.
"Reinvestment" means the purchase of additional undivided interests
that are added to a related Undivided Interest with
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proceeds of Collections that initially were applied to reduce such Undivided
Interest pursuant to Section 3.01.
"Related Security" means, with respect to any Pool Receivable: (i)
all of any Seller's right, title and interest in and to all security agreements
or other agreements that relate to such Pool Receivable; (ii) all of any
Seller's interest in the merchandise (including returned merchandise), if any,
relating to the sale which gave rise to such Pool Receivable; (iii) all other
security interests or liens and property subject thereto from time to time
purporting to secure payment of such Pool Receivable, whether pursuant to the
Contract related to such Pool Receivable or otherwise; (iv) all UCC financing
statements covering any collateral securing payment of such Pool Receivable;
and (v) all guarantees and other agreements or arrangements of whatever
character from time to time supporting or securing payment of such Pool
Receivable whether pursuant to the Contract related to such Pool Receivable or
otherwise. The interest of the Purchasers' in any Related Security is only to
the extent of the Purchasers' Undivided Interest, as more fully described in
the definition of an Undivided Interest.
"Remaining Collections" has the meaning set forth in Section
3.01(a)(ii).
"Reporting Date" has the meaning set forth in Section 3.05.
"Repurchase Termination Date" for any Undivided Interest means that
Business Day which Sellers' Representative designates, or, if any of the
Conditions Precedent in Section 5.02 are not satisfied (other than the absence
of an Unmatured Termination Event), such Business Day which the Agent
designates, as the Repurchase Termination Date for such Undivided Interest by
notice to the Agent (if Sellers' Representative so designates) or to Seller's
Representative (if the Agent so designates) at least one Business Day prior to
such Business Day.
"Scheduled Commitment Termination Date" has the meaning set forth in
Section 1.02.
"Seller" and "Sellers" have the meanings set forth in the preamble.
"Sellers' Representative" has the meaning set forth in the preamble.
"Servicer" means at any time the Person then authorized pursuant to
Article VIII to service, administer and collect Pool Receivables.
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"Servicer Transfer Event" has the meaning set forth in Section 8.01(a).
"Servicer's Fee" has the meaning set forth in Section 2.07.
"Settlement" means the payments and other actions provided for on the
last day of each Settlement Period.
"Settlement Date" means the last day of each Yield Period.
"Settlement Period" for any Undivided Interest means each period
commencing on the first day of each Yield Period for such Undivided Interest
and ending on the last day of such Yield Period, and, on and after the
Termination Date for such Undivided Interest, such period (including, without
limitation, a daily period) as shall be selected from time to time by the Agent
or, in absence of any such selection, each period of thirty days from the last
day of the immediately preceding Settlement Period; provided, however, that
with respect to any Yield Period of one day as described in clause (ii) of the
proviso clause of the definition of "Yield Period", the related Settlement
Period shall be the first day following such Yield Period.
"Shareholders' Equity" means, at any date of determination, all
amounts which would be included under shareholders' equity on a consolidated
balance sheet of API and its Subsidiaries or APSA and its Subsidiaries, as the
case may be.
"Special Concentration Limit" has the meaning set forth in the
definition of "Net Pool Balance" in Section 2.07.
"Subsidiary" means a corporation of which any Seller and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares as
have more than 50% of the ordinary voting power for the election of directors.
"Successor Notice" has the meaning set forth in Section 8.01(a).
"Suretyship Liability" means any agreement, undertaking or other
contractual arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect agreement,
contingent or otherwise, to provide funds for payment, to supply funds to or
otherwise to invest in a debtor, or otherwise to assure a creditor against
loss) any indebtedness, obligation or other liability (including accounts
payable) of any other Person (other than by endorsements of instruments in the
course of collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any Person's
obligation under any Suretyship Liability shall (subject to any limitation set
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forth therein) be deemed to be the principal amount of the indebtedness,
obligation or other liability guaranteed thereby.
"Termination Date" for any Undivided Interest means the earlier of (i)
the Repurchase Termination Date for such Undivided Interest and (ii) the
Commitment Termination Date.
"Termination Event" has the meaning set forth in Section 9.01.
"Total Capital" at any date of determination means the sum of
(a) Funded Debt,
plus
(b) all federal, state, local and foreign income taxes carried as
deferred income taxes in accordance with GAAP on the consolidated balance sheet
of API and its Subsidiaries,
plus
(c) Shareholders' Equity of the Company and its Subsidiaries.
"Total Investment" has the meaning set forth in Section 2.03.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the applicable jurisdiction or jurisdictions.
"Undivided Interest" has the meaning set forth in Section 2.01.
"Unmatured Termination Event" means any event which, with the giving
of notice or lapse of time, or both, would become a Termination Event.
"Unpaid Balance" of any Receivable means at any time the unpaid amount
thereof (but excluding all late payment charges, delinquency charges, and
extension or collection fees to the extent such charges or fees, if collected,
would not be Collections).
"WLI" has the meaning set forth in the preamble.
"Yield Period" means with respect to any Undivided Interest (or
portion thereof) (i) prior to the Termination Date, the period, commencing on
the date of the initial Purchase of such Undivided Interest or on the prior
Settlement Date, as the case
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may be, of one, two or three months, as designated by the notice by Sellers'
Representative received by the Agent (including notice by telephone, confirmed
in writing) not later than 12:00 noon (Pittsburgh time) two Business Days prior
to such date of Purchase or Settlement Date, except that if the Agent shall not
have received such notice prior to such day, such period shall be one month;
and (ii) after the Termination Date, such number of days as the Agent shall
select; provided, however, that (I) any such Yield Period which would otherwise
end on a day which is not a Business Day shall be extended to the next
succeeding Business Day (unless the related Undivided Interest shall be
accruing Earned Discount at a rate determined by reference to the Eurodollar
Rate (Reserve Adjusted), in which case if such succeeding Business Day is in a
different calendar month, such Yield Period shall instead be shortened to the
next preceding Business Day); (II) in the case of Yield Periods of one day for
any Undivided Interest, (A) the initial Yield Period shall be the day of the
related Purchase; (B) any subsequently occurring Yield Period which is one day
shall, if the immediately preceding Yield Period is more than one day, be the
last day of such immediately preceding Yield Period, and if the immediately
preceding Yield Period is one day, be the day next following such immediately
preceding Yield Period; and (C) any Yield Period of one day which occurs on a
day immediately preceding a day which is not a Business Day shall be extended
to the next succeeding Business Day; and (III) in the case of any Yield Period
for any Undivided Interest which commences before the Termination Date for such
Undivided Interest and would otherwise end on a date occurring after such
Termination Date, such Yield Period shall end on such Termination Date and the
duration of each such Yield Period which commences on or after the Termination
Date for such Undivided Interest shall be of such duration as shall be selected
by the Agent. The "related" Yield Period for any Undivided Interest at any
time means the Yield Period pursuant to which Earned Discount is then accruing
for such Undivided Interest.
1.2. Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles. All terms used in Article 9 of the UCC in the State of Illinois,
and not specifically defined herein, are used herein as defined in such Article
9.
1.3. Computation of Time Periods. Unless otherwise stated in this
Agreement, in the computation of a period of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".
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EXHIBIT 10.1
AGREEMENT
Agreement made this 9th day of May, 1994 by and between Applied Power
Inc. ("API") and Richard G. Sim ("Sim").
WITNESSETH:
For and in consideration of the mutual promises of the parties and for
other valuable consideration, receipt of which is hereby acknowledged by each
party, the parties hereto agree as follows:
1. Employment Agreement. The Employment Agreement between API and Sim,
dated July 5, 1985, and the First Amendment to the Employment Agreement, dated
September 2, 1986, are hereby terminated, effective as of the date hereof.
2. Salary Continuation. Sim shall continue to receive his then current
salary for a period of one year following his termination of employment with
API, and a pro-rata portion of his bonus award earned for the fiscal year of
termination as determined after the end of such fiscal year, if such
termination occurs because of Sim's death or permanent disability that prevents
him from fulfilling his duties to API.
3. Long-term Disability Benefit. API will maintain its present long-term
disability benefit plan, or a substantially similar program providing
comparable (or greater) benefits, as to Sim during the term of this Agreement.
In the event Sim qualifies for long-term disability benefits under such plan,
API shall supplement any plan benefit payable to Sim to the extent necessary to
provide to Sim a total long-term disability benefit payment that is equal to
thirty percent (30%) of his then base pay. Such supplemental amount shall be
payable on the same terms and conditions, and based on the same definitions and
procedures, as are set forth in the long-term disability plan and shall be
provided to Sim at no cost to him.
4. Miscellaneous. This Agreement shall be governed by and construed
under the laws of the State of Wisconsin. If any provision in this Agreement
shall be held invalid and unenforceable for any reason, such provision shall be
deemed deleted and shall not affect the validity and enforceability of all
other provisions contained herein. No modification of this Agreement shall be
effective unless made in writing and signed by the parties. This Agreement
shall be binding upon and inure to the benefit of the parties, their respective
successors, representatives and heirs.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
APPLIED POWER INC.
By: /s/ Richard M. Jones
Richard M. Jones Chairman,
Compensation Committee of the
Board of Directors
ATTEST:
/s/ David B. Wescoe
-------------------
David B. Wescoe
/s/ Richard G. Sim
-------------------
Richard G. Sim
<PAGE> 1
EXHIBIT 10.5(b)
EXCERPT FROM MINUTES OF THE APPLIED POWER INC.
COMPENSATION COMMITTEE MEETING
HELD ON MAY 3, 1994
FY94 CORPORATE BONUS PLAN Mr. Sim reviewed the status of the corporate bonus
for fiscal 1994. Mr. Sim recommended that the Committee approve including $.10
per share to the Company's earnings per share measure based upon the inclusion
of the Wright Line unit in the Company's continuing operations. Following
discussion, the Committee unanimously approved increasing the Company's
earnings per share targets for fiscal 1994 bonus purposes by $.10, from $1.25
to $1.35 per share.
<PAGE> 1
EXHIBIT 10.6
Executive Staff F'95 Bonus Plan Criteria
Executive Staff Measurements
The fiscal 1995 bonus plan for executive staff will consist of the following:
a) 40% Return on Net Assets (RONA)
b) 40% Earnings Per Share (EPS)
c) 20 % Personal Objectives
For all officers, personal objectives have been established which represent key
program/project leadership activities for the current year.
Supporting Definitions:
Average Net Assets: Average quarterly net assets. Net assets equal total
assets less current liabilities and debt included in current liabilities.
Earnings Per Share: Net Income divided by Average Number of Common Shares
Outstanding during the period.
Return on Net Assets: After tax Income (excluding interest) divided by
Average Net Assets. RONA is a financial indicator of the ability of the
Company to generate profits utilizing available assets in an efficient manner.
Personal Objectives: Represent key program/project leadership activities for
the current year.
NOTE: With regard to personal objectives, the objectives will serve as a
guideline, however recommendations to the Committee by the CEO will take into
account evolving priorities during the year.
Bonus recommendations are presented to the Compensation Committee for their
approval after the fiscal year results are available.
<PAGE> 2
Executive Staff F'95 Measurements and Bonus Plan
<TABLE>
<CAPTION>
100%
Bonus Measurement: * 50% (Target) 200%
------- --------- --------
<S> <C> <C> <C>
40% Return on Net Assets 10.0% 11.0% 13.5%
40% Earnings Per Share $1.45 $1.60 $1.90
20% Personal Objectives - - -
<CAPTION>
Proposed Bonus
Name Functional Area Payout @ 100%
- - ---------------------------------------------------------------------
<S> <C> <C>
Sim * CEO - API $232,000
Arzbaecher CFO $70,000
Dorszynski Tax & Treasury $29,000
Foote Business Development $50,000
Knutson Technology $35,000
Lampereur Controller $28,000
</TABLE>
* Except in the case of Sim, where 50% of the bonus measurement is based on
Return on Net Assets, 50% is based on Earnings Per Share and there is no
provision for Personal Objectives.
<PAGE> 3
Group Executive F'95 Measurements and Bonus Plan
Group Executive Measurements
The Fiscal 1995 bonus plans for Group Executive Operating Officers will consist
of the following:
a) 20% Applied Power Financial Results (RONA and EPS)
b) 60% Group Business Results (1) (2)
c) 20% Personal Objectives
The business unit financial targets for fiscal 1995 have been established based
upon the business plans submitted by each business unit, current year Corporate
contribution requirements for profitability, and agreed upon long term
investments. Operating Officers will be eligible for the personal objective
portion of the bonus if Corporate meets the established minimum financial
threshold (RONA and EPS).
(1) CMM = Operating Profit - (20% x Monthly Net Assets)
(2) Targeted bonus plan levels for CMM may be modified during the plan year due
to mergers and acquisitions.
NOTE: With regard to personal objectives, the objectives will serve as a
guideline, however recommendations to the Committee by the CEO will take into
account evolving priorities during the year.
Bonus recommendations are presented to the Compensation Committee for their
approval after the fiscal year results are available.
<PAGE> 4
Group Executive F'95 Bonus Plan
Bonus Measurements:
20% Applied Power Financial Results (RONA and EPS)
60% Business Group Results (CMM)
20% Personal Objectives
<TABLE>
<CAPTION>
CMM $MM Total
Business -------------------------- Bonus Payout (1)
Name Unit 50% 100% 200% @ 100%
(Target) (Target)
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Albrecht ESG $4 $8 $10 $90,000
Deuster DPG $14 $17 $19 $100,000
</TABLE>
CMM = Operating Profit - (20% x Monthly Net Assets)
(1) 100% Total Bonus Payout Level for attaining API, Business Group CMM and
Personal Objectives.
<PAGE> 5
Business Unit F'95 Bonus Plan
Bonus Measurements:
Lecher: van Eyck:
80% Combined Management Measure (CMM) 50% Sales
20% Personal Objectives 50% Personal Objectives
<TABLE>
<CAPTION>
CMM $MM Total
Business -------------------------- Bonus Payout (1)
Name Unit 50% 100% 200% @ 100%
(Target) (Target)
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lecher GB Electrical $3.50 $4.00 $5.00 $70,000
Sales
----------------------------
van Eyck Asian Operations (2) $30.00 $32.00 $36.00 Y8mm (3)
</TABLE>
CMM = Operating Profit - (20% x Monthly Net Assets)
(1) 100% Total Bonus Payout Level for attaining CMM and Personal
Objectives.
(2) Asian Operations include operating responsibilities for ongoing
business in Japan & Korea as well as overall business
development for API business units.
(3) Using 100 yen = $1 US and 800 won = $1
US.
<PAGE> 1
EXHIBIT 11
APPLIED POWER INC.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Years ended August 31,
----------------------------------------------
PRIMARY 1994 1993 1992
- - ------- ---- ----- ----
<S> <C> <C> <C>
Average shares outstanding 13,057 12,977 12,938
Net effect of dilutive options based
on the treasury stock method
using average market price 232 122 143
-------- -------- ---------
Total 13,289 13,099 13,081
Net Earnings (Loss)
Earnings from continuing operations
before cumulative effect of
accounting change $ 16,896 $ 7,086 $ 8,453
Cumulative effect of accounting change (4,355)
Discontinued operations (348) (3,782) (32,858)
-------- -------- ---------
Net Earnings $ 16,548 $ (1,051) $ (24,405)
Primary Earnings (Loss) per share:
Earnings from continuing operations
before cumulative effect of
accounting change $ 1.27 $ 0.54 $ 0.65
Cumulative effect of of accounting change (0.33)
Discontinued operations (0.03) (0.29) (2.51)
-------- -------- ---------
Net Earnings $ 1.25 $ (0.08) $ (1.87)
======== ======== =========
FULLY DILUTED
- - -------------
Average shares outstanding 13,057 12,977 12,938
Net effect of dilutive options based
on the treasury stock method
using the greater of average
or year-end market price 420 127 147
-------- -------- ---------
Total 13,477 13,104 13,085
Net Earnings (Loss):
Earnings from continuing operations
before cumulative effect of
accounting change $ 16,896 $ 7,086 $ 8,453
Cumulative effect of accounting change (4,355)
Discontinued operations (348) (3,782) (32,858)
-------- -------- ---------
Net Earnings $ 16,548 $ (1,051) $(24,405)
Primary Earnings (Loss) per share:
Earnings from continuing operations
before cumulative effect of
accounting change $ 1.25 $ 0.54 $ 0.65
Cumulative effect of accounting change (0.33)
Discontinued operations (0.03) (0.29) (2.51)
-------- -------- ---------
Net Earnings $ 1.23 $ (0.08) $ (1.87)
======== ======== =========
(B) (A) (A)
</TABLE>
(A) Antidilutive
(B) Dilution of less than 3%, therefore not presented in Consolidated Statement
of Earnings.
<PAGE> 1
EXHIBIT 21
The following table sets forth the name and jurisdiction of incorporation of
the Registrant's significant subsidiaries. All subsidiaries are 100% owned
except as noted.
Jurisdiction of
Name of Subsidiary Incorporation
UNITED STATES:
Applied Power International Ltd. Nevada
Applied Power Investments II Inc. Nevada
Barry Controls Corporation Delaware
Barry Wright Corporation Massachusetts
Barry Wright Real Estate Corporation Nevada
Columbus Products Corporation Wisconsin
GB Electrical, Inc. Wisconsin
Westfield Equipment Corporation Wisconsin
Wright Line Inc. Massachusetts
Wright Line Real Estate Corporation Nevada
OUTSIDE THE UNITED STATES:
AP International Corporation Barbados
APITECH Europa B.V. Netherlands
APITECH Hydraulic GmbH Germany
Applied Power Asia Pte. Ltd. Singapore
Applied Power Australia Limited Australia
Applied Power Canada Ltd. Ontario, Canada
Applied Power do Brasil Equipamente Ltda. Brazil
Applied Power Europa B.V. Netherlands
Applied Power Export Corp. U.S. Virgin Islands
Applied Power Far East Ltd. Japan
Applied Power Finance B.V. Netherlands
Applied Power Finance S.A. France
Applied Power GmbH Germany
Applied Power International, S.A. France
Applied Power International, S.A. Switzerland
Applied Power Italiana S.p.A. Italy
Applied Power Korea Ltd. (90% controlled) South Korea
Applied Power (Mexico) S.A. de C.V. Mexico
Applied Power Moscow CIS
Applied Power New Zealand Limited New Zealand
Barry Controls GmbH Germany
Barry Controls U.K. Ltd. United Kingdom
BCI Barry Controls International GmbH Germany
DETEC Germany
Enerpac Asia Pte. Ltd. Singapore
Enerpac Hydraulic Technology (India) Pte. Ltd. India
Enerpac Limited United Kingdom
Enerpac Nederland B.V. Netherlands
Enerpac S.A. France
Power-Packer France S.A. France
Norelem S.A. France
Power-Packer do Brasil Limitada Brazil
Power-Packer Espana, S.A. Spain
Power-Packer Europa B.V. Netherlands
Sanwa-Packer, Ltd. (34%) Japan
Toyo Hydraulic Equipment Co., Ltd. Japan
Applied Power Holding GmbH Germany
All of the foregoing subsidiaries are included in the consolidated financial
statements filed herewith.
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements of
Applied Power Inc. on Forms S-8 No. 33-18140, No. 33-21250, No. 33-24197, No.
33-38719, No. 33-38720 and No. 33-62658 of our reports dated September 30,
1994, which reports express an unqualified opinion and include an explanatory
paragraph relating to the change in method of accounting for postretirement
benefits to conform with Statement of Financial Accounting Standards No. 106,
appearing in this Annual Report on Form 10-K of Applied Power Inc. for the year
ended August 31, 1994
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
November 17, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> AUG-31-1994
<EXCHANGE-RATE> 1
<CASH> 1,907
<SECURITIES> 0
<RECEIVABLES> 61,680
<ALLOWANCES> 3,131
<INVENTORY> 94,949
<CURRENT-ASSETS> 174,809
<PP&E> 138,792
<DEPRECIATION> 71,047
<TOTAL-ASSETS> 317,402
<CURRENT-LIABILITIES> 101,965
<BONDS> 77,956
<COMMON> 2,630
0
0
<OTHER-SE> 104,681
<TOTAL-LIABILITY-AND-EQUITY> 317,402
<SALES> 433,644
<TOTAL-REVENUES> 433,644
<CGS> 270,120
<TOTAL-COSTS> 270,120
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,362
<INCOME-PRETAX> 25,298
<INCOME-TAX> 8,402
<INCOME-CONTINUING> 16,896
<DISCONTINUED> (348)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,548
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.23
</TABLE>
