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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, 1995
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)
<TABLE>
<S> <C>
WISCONSIN 39-0168610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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:
<TABLE>
<S> <C>
CLASS A COMMON STOCK, NEW YORK STOCK EXCHANGE
$.20 PAR VALUE PER SHARE (Name of each exchange on which registered)
(Title of each class)
</TABLE>
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 October 31, 1995, the aggregate market value of Common Stock held by
non-affiliates was approximately $413.4 million, and there were 13,408,190
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 11, 1996 are incorporated by reference into
Part III hereof.
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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 divided into three business segments:
<TABLE>
<S> <C>
Distributed 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
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.
</TABLE>
Financial information by segment and geographic area, as well as
information related to export sales, is included in Note M -- "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.
All numbers in the report are in thousands of US Dollars unless otherwise
indicated.
DESCRIPTION OF BUSINESS SEGMENTS
DISTRIBUTED PRODUCTS
Distributed Products, 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 Distributed Products
businesses supply approximately 5,000 SKU's each to a broad customer base.
Geographic expansion offers a source of growth potential for the Distributed
Products businesses.
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 approximately 5,000 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.
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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 ("OEMs").
Enerpac has engineering, manufacturing and warehousing operations in the
United States, the Netherlands, Mexico, France, South Korea and Japan, with
sales and service operations in a number of other countries. The manufacturing
operations in the Netherlands were recently consolidated into the United States,
with the Netherlands' location primarily serving as a European warehouse.
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 tripled
its sales since being acquired by the Company in 1988. It has completed three
acquisitions between October, 1993 and September, 1995, including Palmer
Industries (a manufacturer of plastic and metal staples), New England Controls
(an electrical switch manufacturer) and Vision Plastics (a plastic cable tie
manufacturer). GB'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
electrical switches.
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, Wal-Mart, 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, North
Carolina, California and Connecticut. GB's products are primarily distributed
through its International 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 Asia.
ENGINEERED SOLUTIONS
Engineered Solutions, consisting of Power-Packer, APITECH and Barry
Controls, focuses on developing and marketing value-added solutions for OEMs in
the transportation, construction, aerospace, defense and industrial markets.
Technical sales force members from each of the Engineered Solutions units often
work together to develop and market Engineered Solutions products in one
technology solution package. These value-added technology solutions offer
cost-effective systems to meet the needs of Engineered Solutions' 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
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throughout Europe, Japan, South Korea, South America 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 license agreement. Air
suspension systems improve the ride characteristics of trucks, enhance driver
comfort and safety while reducing 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 control, 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 ValveTM 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, Palfinger, 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 Delphi that are part of the system that provides a semi-active suspension
capability in certain Cadillac models. Sales to GM Delphi are a significant
portion of APITECH's business.
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
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components for a variety of applications including computers, appliances, power
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 held for sale and included in
discontinued operations since the third quarter of 1992. For further
information, refer to Note B -- "Discontinued Operations" in Notes to
Consolidated Financial Statements.
During the past three 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, engineering test
and development and scientific laboratory 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 cabinets,
workstations and work surfaces used in the computerized 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
direct salespeople, sales representatives and dealers, depending on the country.
Products are primarily sold to commercial and governmental end-users. Sales to
the government, which have averaged approximately 30% of total Wright Line net
sales over the past three years, are made pursuant to a contract between Wright
Line and the US Government's General Services Administration.
COMPETITION
The Company competes on the basis of product design, quality, availability,
performance, customer service and price. The Company believes that its technical
skills, global presence, shared technology base, close working relationships
with customers as well as its patents bolster its competitive position.
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 $8,725, $7,446 and $5,878 in fiscal years 1995, 1994
and 1993, 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
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(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, 1995, the Company had approximately $88,200 in backlog
orders, compared to approximately $81,200 at August 31, 1994. Substantially all
orders are expected to be completed prior to August 31, 1996. 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, 1995, Applied Power employed 2,840 people on a full-time
basis, 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 seven
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 its financial position. Liabilities are recorded when
environmental remediation is probable, and the costs can be reasonably
estimated. Environmental remediation accruals of $573 and $567 were included in
the Consolidated Balance Sheet at August 31, 1995 and 1994, respectively. For
further information, refer to Note N -- "Contingencies and Litigation" in Notes
to Consolidated Financial Statements.
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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
- - ------------------------------------------------------------------- --------------- ------------
<S> <C> <C>
DISTRIBUTED PRODUCTS
Enerpac
Columbus, Wisconsin.............................................. 130,000 Leased
Veenendaal, Netherlands.......................................... 97,000 Owned
Pachuca, Mexico.................................................. 69,000 Leased
Troyes, France................................................... 67,000 Leased
Tokyo, Japan..................................................... 45,000 Leased
Seoul, South Korea............................................... 22,000 Leased
GB Electrical
Glendale, Wisconsin.............................................. 239,000 Leased
Matthews, North Carolina......................................... 33,000 Owned
Alexandria, Minnesota............................................ 25,000 Owned
Milford, Connecticut............................................. 11,000 Owned
San Diego, California............................................ 21,000 Owned
ENGINEERED SOLUTIONS
Power-Packer
Oldenzaal, Netherlands........................................... 74,000 Owned
Westfield, Wisconsin............................................. 48,000 Leased
APITECH
Butler, Wisconsin................................................ 48,000 Leased
Barry Controls
Brighton, Massachusetts.......................................... 227,000 Leased
Burbank, California.............................................. 126,000 Leased
Hersham, England................................................. 39,000 Leased
WRIGHT LINE
Worcester, Massachusetts......................................... 225,000 Owned
</TABLE>
In addition to these properties, the Company utilizes a number of smaller
facilities in South Korea, Spain, Italy, Canada, Brazil, France, Germany,
Australia, Russia, Singapore, India, China, the United Kingdom and the United
States. The Company's headquarters are based in a 68,000 square foot leased
office 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 is currently making additions to the Wright
Line facility in Worcester which are expected to be completed within the next
year. The Company intends to construct, lease or acquire a larger manufacturing
and warehousing facility in South Korea within the next two years to support its
expansion in that emerging market. Funding for this project is expected to come
from operating cash flow.
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
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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 are listed below.
<TABLE>
<CAPTION>
NAME AGE POSITION
- - ------------------------------ --- --------------------------------------------------------
<S> <C> <C>
Richard G. Sim................ 51 Chairman, President and Chief Executive Officer;
Director
William J. Albrecht........... 44 Senior Vice President, Engineered Solutions
Robert G. Deuster............. 45 Senior Vice President, Distributed Products
Gustav H.P. Boel.............. 52 Vice President, President of Enerpac
Philip T. Burkart............. 38 Vice President, President of Wright Line Inc.
Theodore M. Lecher............ 44 Vice President, President GB Electrical, Inc.
Robert C. Arzbaecher.......... 35 Vice President, Chief Financial Officer
Louis E. Font................. 42 Vice President, Human Resources
Dale A. Knutson............... 63 Vice President, Technology
Philip M. Van Praag........... 49 Vice President, Chief Information Officer
Douglas R. Dorszynski......... 43 Vice President, Tax and Treasurer
Andrew G. Lampereur........... 32 Controller
Anthony W. Asmuth III......... 53 Secretary
</TABLE>
Richard G. Sim was elected President and Chief Operating Officer in August,
1985, Chief Executive Officer effective September, 1986 and Chairman of the
Board effective November, 1988. From January, 1982 through August, 1985, Mr. Sim
was a General Manager in the General Electric Medical Systems Business Group. He
is also a director of The Gehl Company, IPSCO Inc. and Falcon Building Products,
Inc.
William J. Albrecht was named Senior Vice President of Engineered Solutions
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 Distributed
Products 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.
Gustav H.P. Boel was elected Vice President of the Company and named
President of Enerpac in November, 1995. From 1991 until that time, he was
Managing Director of Power-Packer Europe. From 1990 to 1991, Mr. Boel was
Technical Director for Groeneveld, located in Holland. Prior to 1990, he spent
nineteen years with Enerpac in the Netherlands, where he last held the position
of Managing Director.
Philip T. Burkart was elected Vice President of the Company in November,
1995 and named the President of Wright Line Inc. in August, 1994. From 1990 to
1994, Mr. Burkart held various positions within Wright Line Inc. including:
General Manager, Vice President, Marketing and Operations and Director of
Marketing. Prior to joining the Company, Mr. Burkart was a Marketing Manager for
GE Medical Systems.
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
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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.
Robert C. Arzbaecher was named Vice President and Chief Financial Officer
in October, 1994. He had served as Vice President, Finance of Distributed
Products 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.
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 Distributed Products. 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.
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.
Philip M. Van Praag was named Vice President and Chief Information Officer
in November, 1995. Prior to joining the Company in 1994 as Chief Information
Officer, Mr. Van Praag was with R.R. Donnelley & Sons since 1989, where he last
held the position of Director of Information Systems. From 1979 to 1989, Mr. Van
Praag held various positions with Hughes Aircraft Company.
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.
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. Quarles & Brady performs
legal services for the Company and certain of its subsidiaries. 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.
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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, 1995, the approximate number of record
shareholders of common stock was 468. 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>
1995...................... June 1 to August 31 $33 3/8 $24 1/2
March 1 to May 31 27 23 1/4
December 1 to February 28 25 3/4 20 3/4
September 1 to November 30 25 1/8 21 5/8
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
</TABLE>
Quarterly dividends of $0.03 per share were declared and paid for each of
the quarters above.
ITEM 6. SELECTED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED AUGUST 31,
------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Sales................................. $527.1 $433.6 $398.7 $404.3 $400.6
Gross Profit.............................. 201.4 163.5 151.0 154.9 157.1
Earnings(Loss)
Continuing Operations................... 25.0 16.9 7.1(1) 8.5(1) 10.8(1)
Discontinued Operations................. -- (0.4) (3.8) (32.9) (2.9)
Extraordinary Loss...................... (4.9) -- -- -- --
Cumulative Effect of Accounting
Change............................... -- -- (4.4) -- --
------ ------ ------ ------ ------
Net Earnings(Loss)...................... $ 20.1 $ 16.5 $ (1.1) $(24.4) $ 7.9
Earnings(Loss) Per Share
Continuing Operations................... $ 1.82 $ 1.27 $ 0.54(1) $ 0.65(1) $ 0.83(1)
Discontinued Operations................. -- (0.03) (0.29) (2.51) (0.23)
Extraordinary Loss...................... (0.36) -- -- -- --
Cumulative Effect of Accounting
Change............................... -- -- (0.33) -- --
------ ------ ------ ------ ------
Net Earnings(Loss) Per Share............ $ 1.46 $ 1.25 $(0.08) $(1.87) $ 0.60
Dividends Per Common Share................ $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12
</TABLE>
<TABLE>
<CAPTION>
AUGUST 31,
------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total Assets.............................. $332.9 $317.4 $306.3 $301.5 $326.2
Long-term Obligations..................... $ 74.3 $ 88.7 $ 97.5 $108.0 $118.6
Shareholders' Equity...................... $131.7 $107.3 $ 88.0 $ 96.6 $116.8
Actual Shares Outstanding................. 13.4 13.2 13.0 13.0 12.9
</TABLE>
- - -------------------------
(1) Earnings from Continuing Operations for 1993, 1992 and 1991 reflect
after-tax restructuring charges of $5.0 ($0.38 per share), $3.1 ($0.24 per
share) and $3.0 ($0.23 per share), respectively. In addition, 1992 includes
a liquidation of LIFO inventory which had the effect of increasing earnings
by $1.3 ($0.10 per share).
10
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31, PERCENTAGE OF NET SALES
-------------------------- -----------------------
RESULTS OF CONTINUING OPERATIONS 1995 1994 1993 1995 1994 1993
------ ------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Net Sales...................................... $527.1 $433.6 $398.7 100.0% 100.0% 100.0%
Gross Profit................................... 201.4 163.5 151.0 38.2 37.7 37.9
Operating Expenses............................. 149.2 121.3 117.3 28.3 28.0 29.4
Restructuring Expenses......................... -- -- 7.7 -- -- 1.9
Operating Earnings............................. 52.2 42.2 26.0 9.9 9.7 6.5
Other Expenses................................. 15.3 16.9 16.4 2.9 3.9 4.1
Earnings Before Income Taxes................... 36.9 25.3 9.6 7.0 5.8 2.4
Income Tax Expense............................. 11.9 8.4 2.5 2.3 1.9 0.6
Earnings Before Accounting Change and
Extraordinary Loss........................... 25.0 16.9 7.1 4.7 3.9 1.8
Extraordinary Loss............................. (4.9) -- -- 0.9 -- --
Cumulative Effect of Accounting Change......... -- -- (4.4) -- -- 1.1
Net Earnings.............................. $ 20.1 $ 16.9 $ 2.7 3.8% 3.9% 0.7%
</TABLE>
The preceding table sets forth the results of continuing operations of the
Company for the years ended August 31, 1995, 1994 and 1993.
The Company recorded restructuring charges, extraordinary losses 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, extraordinary losses and the
cumulative effect of accounting changes:
<TABLE>
<CAPTION>
EARNINGS COMPARISON 1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Earnings from Continuing Operations............................... $20.1 $16.9 $ 2.7
Restructuring -- after tax........................................ -- -- 5.0
Extraordinary Loss................................................ 4.9 -- --
Cumulative Effect of Accounting Change............................ -- -- 4.4
----- ----- -----
Totals....................................................... $25.0 $16.9 $12.1
===== ===== =====
</TABLE>
Earnings have grown over the last three years as a result of higher sales
volume, improved operating margins and lower financing costs.
NET SALES
Net sales increased 22% in 1995 with all three segments posting
double-digit sales growth percentages. Ignoring the favorable impact on
translated sales from the weaker US Dollar, sales increased 18% over 1994.
<TABLE>
<CAPTION>
PERCENTAGE CHANGE
SALES FROM PRIOR YEAR
-------------------------- --------------------
GEOGRAPHIC SALES 1995 1994 1993 1995 1994 1993
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
North America...................................... $323.0 $279.6 $259.7 16% 8% 4 %
Latin America...................................... 12.0 11.3 10.2 6 11 6
Europe............................................. 136.8 99.2 87.3 38 14 (14 )
Japan and Asia Pacific............................. 55.3 43.5 41.5 27 5 (2 )
------ ------ ------ ---- ---- ----
Totals........................................ $527.1 $433.6 $398.7 22% 9% (1 )%
====== ====== ====== ==== ==== ====
</TABLE>
11
<PAGE> 12
Improving economic conditions experienced in the last half of fiscal 1994
carried into 1995, with significant strengthening in Europe and North America.
Sales in Japan and Asia Pacific increased 27% in 1995, but were 14% higher in
real terms. The weak US Dollar relative to the Japanese Yen during 1995 distorts
this comparison. Conversely, Latin America sales growth in real terms was 23%,
but the significant devaluation of the Mexican Peso in December, 1994
unfavorably impacted the translation into US Dollars.
<TABLE>
<CAPTION>
PERCENTAGE CHANGE
SALES FROM PRIOR YEAR
-------------------------- --------------------
SEGMENT SALES 1995 1994 1993 1995 1994 1993
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Distributed Products............................... $264.9 $222.0 $212.9 19% 4% 1 %
Engineered Solutions............................... 192.2 162.3 147.6 18 10 2
Wright Line........................................ 70.0 49.3 38.2 42 29 (19 )
-- --
------ ------ ------ ---
Totals........................................ $527.1 $433.6 $398.7 22% 9% (1 )%
====== ====== ====== == == ===
</TABLE>
Total sales from Distributed Products, which consists of Enerpac and GB
Electrical, increased 19% in 1995, benefiting from improved economic conditions
in North America and Europe, further expansion into developing markets in
Southeast Asia, Latin America, and South America and approximately $4.0 million
from minor acquisitions. The impact of the weaker US Dollar favorably impacted
Distributed Products sales in 1995 relative to 1994, as sales generated by units
outside the US translated into higher US Dollars in 1995. Ignoring currency rate
changes, Distributed Products sales grew 16% in 1995.
Engineered Solutions, consisting of Barry Controls, APITECH and
Power-Packer, had an 18% increase in sales in 1995. Ignoring currency rate
changes, sales grew 14%. The majority of the growth took place in Power-Packer
which enjoyed a 45% increase in sales, resulting from strong demand from
European OEM truck and automobile manufacturers. Barry Controls and APITECH had
sales increases of 5% and 4%, respectively. In addition to improved economic
conditions, Engineered Solutions sales grew from the sale of products introduced
in recent years. Sales of the LAN Management System ("LMS") product line, which
was introduced in the second half of 1993, continued to have a significant
impact on Wright Line sales, which grew 42% in 1995. Sales to government
agencies increased 25% in 1995, also having a considerable impact on Wright
Line's growth.
Total sales in 1994 were 9% higher than 1993, reflecting geographic
expansion and the start of improved economic conditions in North America. With
the exception of the truck and automotive sectors in Europe, sales in Europe and
Japan in 1994 were lower than the prior year due to weak economic conditions.
Sales in 1994 of newly introduced products, such as Power-Packer's
multi-cylinder convertible top actuation systems, Barry Control's Duo-Plexx and
industrial products, APITECH's suspension and motion control systems and Wright
Line's LMS product line more than offset declines in cyclical markets that Barry
Controls competes in, including commercial aerospace and defense. Foreign
currency translation did not materially impact the sales comparison between 1994
and 1993.
Price changes and acquisitions have not had a significant impact on the
comparability of net sales during the last three years.
GROSS PROFIT
Gross profit increased to $201.4 million in 1995, compared to $163.5
million and $151.0 million in 1994 and 1993, respectively. The improvement in
gross profit resulted primarily from the sales increases in 1995 and 1994.
<TABLE>
<CAPTION>
GROSS PROFIT PERCENTAGES BY SEGMENT 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Distributed Products...................................................... 42.1% 43.4% 45.4%
Engineered Solutions...................................................... 28.8 28.1 27.3
Wright Line............................................................... 48.8 42.6 36.5
---- ---- ----
Totals............................................................... 38.2% 37.7% 37.9%
==== ==== ====
</TABLE>
12
<PAGE> 13
Items influencing overall gross profit percentages include relative sales
mix between Distributed Products, Engineered Solutions and Wright Line, as well
as production levels. Engineered Solutions' gross profit percentages are lower
than either Wright Line or Distributed Products because a much higher proportion
of its sales are made to OEM customers (which generate lower margins than
non-OEM customers). As a result, the lower the proportion of its sales to total
Company sales, the higher the Company's overall gross profit percentage. Gross
profit percentages from Distributed Products were lower in 1995 and 1994,
relative to 1993, as a result of inefficiencies during the consolidation of
Enerpac manufacturing, higher discounts to distributors and increased shipments
to OEM customers. Engineered Solutions and Wright Line gross profit percentages
improved in 1994 due to the benefits of prior year restructuring, as well as
higher production levels. Both achieved additional improvement in 1995 due to
favorable product mix and the impact of higher production levels on fixed
manufacturing costs.
<TABLE>
<CAPTION>
PERCENTAGE CHANGE
EXPENSES FROM PRIOR YEAR
---------------------------- ----------------------
OPERATING EXPENSES 1995 1994 1993 1995 1994 1993
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Engineering.................................. $ 17.1 $ 13.5 $ 12.3 27% 10% 13%
Selling and Marketing........................ 89.0 72.0 68.1 24 6 1
Administration............................... 43.1 35.8 36.9 20 (3) 7
------ ------ ------ -- -- --
Totals................................ $149.2 $121.3 $117.3 23% 3% 4%
====== ====== ====== == == ==
</TABLE>
OPERATING EXPENSES
Engineering expense increased 39% over the last two years to $17.1 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.
Selling and marketing expenses increased from $68.1 million in 1993 to
$72.0 million in 1994 and $89.0 million in 1995. The majority of the increase
since 1993 related to variable selling expenses, primarily commissions. Wright
Line has a direct salesforce whose compensation is commission-based. As a result
of its 83% sales growth over the last two years, its selling and marketing
expenses have increased significantly. As Wright Line becomes a larger part of
the total Company, it will exert more influence on the year-to-year growth in
operating expenses. In addition to variable selling costs, total operating costs
have increased as a result of expenditures for geographic expansion into
emerging markets. During the last few years, the Company opened sales offices in
Russia, India and China, and has significantly increased its presence in Latin
America and Southeast Asia.
Administration expense increased 17% from 1993 to 1995. Geographic
expansion expenditures, higher information technology, legal and bonus costs and
the impact of minor acquisitions were the primary reasons for the increase.
RESTRUCTURING EXPENSE
The Company recorded $7.7 million of pre-tax restructuring charges ($0.38
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. Substantially all of the restructuring costs had been incurred as of
August 31, 1995, consisting of severance and consolidation expenditures.
<TABLE>
<CAPTION>
OTHER EXPENSE(INCOME) 1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Net financing costs.................................................. $10.3 $11.4 $12.5
Amortization expense................................................. 3.3 5.1 4.9
Other -- net......................................................... 1.7 0.4 (1.0)
</TABLE>
13
<PAGE> 14
OTHER EXPENSE(INCOME)
The reduction in financing costs during the last three years reflects lower
market interest rates and reduced debt levels. The Company refinanced certain
debt in 1995, which also had the impact of lowering its financing costs. For
further information, see "Liquidity and Capital Resources" below.
Amortization expense increased in 1994 due to incremental amortization of
intangible assets added in 1993 and 1994 from acquisitions (see "Liquidity and
Capital Resources" below), but declined in 1995 as certain intangible assets
from the GB Electrical acquisition in 1988 became fully amortized.
"Other -- net" includes foreign exchange (gains)losses and miscellaneous
other (income)expense. A net foreign exchange gain was realized in 1993, while
the Mexican Peso devaluation in 1995 caused a $1.3 million foreign exchange loss
in 1995.
INCOME TAX EXPENSE
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. 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.
EXTRAORDINARY LOSS
The Company recorded an extraordinary loss of $4.9 million, or $0.36 per
share, in 1995 in connection with the March 30, 1995 extinguishment of its $64.4
million 9.92% Senior Unsecured Notes. The pre-tax extraordinary loss of $7.3
million was comprised of an estimated make whole provision of $4.1 million,
costs associated with the cancellation of underlying interest rate swap
agreements of $3.0 million and the write-off of $0.2 million of deferred
financing costs. For further information, see Note G -- "Long-term Debt" in
Notes to Consolidated Financial Statements.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS
The Company adopted Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other than Pensions" ("SFAS
106"), on September 1, 1992, which 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 ($0.33 per share) in
1993. For further information, see Note K -- "Postretirement Benefits" in Notes
to Consolidated Financial Statements.
The adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS 109") in 1993 had no material impact on net
earnings or cash flows. 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.
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 UK and the US in 1994. The net assets and results of operations for the
retained Wright Line business were reclassified from discontinued to continuing
operations for the periods it was held for sale. 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. For
further information, see Note B -- "Discontinued Operations" in Notes to
Consolidated Financial Statements.
14
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
Outstanding debt at August 31, 1995 totaled $87.0 million, a reduction of
$16.5 million since the beginning of the year. End-of-year debt to total capital
was approximately 37%, its lowest point since 1989. Approximately $23.8 million
of cash was generated from operating activities in 1995, $16.0 million of which
was used to fund capital expenditures. Dividends of $1.6 million were paid
during the year. The Company utilized approximately $2.8 million of cash during
1995 to acquire New England Controls, Inc., and Enerpac's master distributor in
Brazil. The resulting cash flow was used to reduce debt.
Increases in primary working capital (net receivables plus net inventory
less trade accounts payable) used approximately $22.4 million of cash during
1995 as a result of higher sales volume (receivables) and geographic expansion
(inventory). The Company believes that primary working capital will grow further
in 1996 as a result of anticipated business expansion.
The Company extinguished all $64.4 million of its 9.92% Senior Unsecured
Notes on March 30, 1995. The funds used to retire the debt and disburse the make
whole payments totaling $4.0 million were obtained from new borrowings,
including those under a temporary expansion of the Company's then existing $40.0
million multi-currency revolving credit agreement. The Company replaced the
original $40.0 million multi-currency credit agreement and the temporary $40.0
million expansion with the proceeds from a new $120.0 million multi-currency
credit agreement in August, 1995. The new facility expires August, 2000. To
reduce interest rate risk associated with the refinancing, the Company entered
into interest rate caps on a notional $60.0 million in borrowings that limits
the maximum applicable base rate (three month LIBOR) to 8.0%. Currently, the
Company incurs interest at a rate of .45 of 1% above IBOR. The interest rate
caps expire in March, 1997. For additional information, see Note G -- "Long-term
Debt" in Notes to Consolidated Financial Statements.
The Company also replaced its former $25.0 million accounts receivable
financing facility in 1995 with a new facility that expires in August, 1998 and
provides up to $50.0 million of multi-currency accounts receivable financing. An
incremental $11.2 million of receivables were financed in 1995, bringing the
total balance financed to $36.2 million at August 31, 1995. Proceeds were used
to reduce debt. For additional information, see Note D -- "Accounts Receivable
Financing" in Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
PERCENTAGE OF
DOLLARS TOTAL CAPITALIZATION
------------------------------ ------------------------
TOTAL CAPITALIZATION 1995 1994 1993 1995 1994 1993
------ ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Total Debt............................. $ 87.0 $103.5 $117.9 37% 45% 53%
Shareholders' Equity................... 131.7 107.3 88.0 56 48 39
Deferred Taxes......................... 16.4 16.8 17.6 7 7 8
------ ------ ------ --- --- ---
Totals............................ $235.1 $227.6 $223.5 100% 100% 100%
====== ====== ====== === === ===
</TABLE>
Outstanding indebtedness declined $14.4 million in 1994. The Company
generated $22.5 million of cash in operating activities during the year and used
$12.7 million on capital expenditures and $2.4 million for acquisitions.
Dividends of $1.6 million were also paid. Total borrowings decreased $6.9
million in 1993. Cash of $12.7 million was generated from operations. Major
expenditures included $12.2 million for fixed asset additions. Dividends
totaling $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 non-committed lines and the $120.0 million
multi-currency credit agreement totaled $41.0 million and $46.0 million,
respectively, as of August 31, 1995. The Company believes that such
availability, plus funds generated from operations will be adequate to fund
operating activities, including modestly higher capital expenditures and working
capital, for the foreseeable future.
15
<PAGE> 16
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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Quarterly financial data for 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995
------------------------------------------
FIRST SECOND THIRD FOURTH
------ ------ ------ ------
<S> <C> <C> <C> <C>
Continuing Operations
Net Sales.......................................... $125.8 $124.5 $139.4 $137.4
Gross Profit....................................... 48.2 47.3 53.6 52.3
Earnings Before Extraordinary Loss................. 5.5 4.6 7.3 7.6
Extraordinary Loss................................... -- (4.9) -- --
------ ------ ------ ------
Net Earnings(Loss)................................... $ 5.5 $ (0.3) $ 7.3 $ 7.6
====== ====== ====== ======
Earnings(Loss) Per Share
Continuing Operations.............................. $ 0.40 $ 0.34 $ 0.53 $ 0.55
Extraordinary Loss................................. -- (0.36) -- --
------ ------ ------ ------
Net Earnings(Loss) Per Share....................... $ 0.40 $(0.02) $ 0.53 $ 0.55
====== ====== ====== ======
<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 Before Discontinued Operations............ 2.9 3.3 5.4 5.3
Discontinued Operations.............................. (0.3) -- -- --
------ ------ ------ ------
Net Earnings(Loss)................................... $ 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) -- -- --
------ ------ ------ ------
Net Earnings(Loss) Per Share....................... $ 0.20 $ 0.25 $ 0.40 $ 0.40
====== ====== ====== ======
</TABLE>
The Consolidated Financial Statements are included on pages 20 to 34 and
are incorporated by reference herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
16
<PAGE> 17
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 11, 1996 (the "1996 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 1996 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 1996
Annual Meeting Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. Consolidated Financial Statements
See "Index to Consolidated Financial Statements and Financial
Statement Schedules" on page 18, the Independent Auditors' Report on
page 19 and the Consolidated Financial Statements on pages 20 to 34,
all of which are incorporated herein by reference.
2. Financial Statement Schedules
See "Index to Consolidated Financial Statements and Financial
Statement Schedules" on page 18 and the Financial Statement Schedule
on page 35, all of which are incorporated herein by reference.
3. Exhibits
See "Index to Exhibits" on pages 37 to 39, which is incorporated
herein by reference.
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K dated as of August 16,
1995 announcing that its GB Electrical unit had signed a letter of
intent to acquire the business of Vision Plastics Manufacturing
Company.
17
<PAGE> 18
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report....................................................... 19
Consolidated Statement of Earnings for the years ended August 31, 1995, 1994 and
1993............................................................................ 20
Consolidated Balance Sheet as of August 31, 1995 and 1994.......................... 21
Consolidated Statement of Shareholders' Equity for the years ended August 31, 1995,
1994 and 1993................................................................... 22
Consolidated Statement of Cash Flows for the years ended August 31, 1995, 1994 and
1993............................................................................ 23
Notes to Consolidated Financial Statements......................................... 24-34
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedule VIII -- Valuation and Qualifying Accounts................................. 35
</TABLE>
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.
18
<PAGE> 19
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, 1995 and 1994, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended August 31, 1995. Our audits also
included the consolidated financial statement schedule listed in the Index at
Item 14. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Applied Power Inc. and
subsidiaries at August 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended August 31,
1995 in conformity with generally accepted accounting principles. Also, in our
opinion, such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
As discussed in Note K 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 29, 1995
19
<PAGE> 20
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
--------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net sales..................................................... $527,058 $433,644 $398,727
Cost of products sold......................................... 325,621 270,120 247,741
-------- -------- --------
Gross Profit................................................ 201,437 163,524 150,986
Engineering, selling and administrative expenses.............. 149,210 121,315 117,295
Restructuring expenses........................................ -- -- 7,721
-------- -------- --------
Operating Earnings from Continuing Operations............... 52,227 42,209 25,970
Other Expense(Income)
Net financing costs......................................... 10,291 11,362 12,469
Amortization of intangible assets........................... 3,369 5,092 4,914
Other -- net................................................ 1,694 457 (1,003)
-------- -------- --------
Earnings from Continuing Operations Before Income Tax
Expense..................................................... 36,873 25,298 9,590
Income Tax Expense............................................ 11,868 8,402 2,504
-------- -------- --------
Earnings from Continuing Operations........................... 25,005 16,896 7,086
Discontinued Operations, net of income taxes
Loss(Income) from operations previously offset against
reserve for estimated loss on disposition................ -- (348) 1,618
Provision for loss on disposition........................... -- -- (5,400)
-------- -------- --------
Loss from Discontinued Operations............................. 0 (348) (3,782)
-------- -------- --------
Earnings before Extraordinary Loss and Cumulative Effect of
Accounting Change........................................... 25,005 16,548 3,304
Extraordinary Loss from Early Extinguishment of Debt, net of
$2,423 tax benefit.......................................... (4,920) -- --
Cumulative Effect of Accounting Change -- Postretirement
Benefits.................................................... -- -- (4,355)
-------- -------- --------
Net Earnings(Loss)............................................ $ 20,085 $ 16,548 $ (1,051)
======== ======== ========
Earnings(Loss) Per Share
Continuing Operations....................................... $ 1.82 $ 1.27 $ 0.54
Discontinued Operations..................................... -- (0.03) (0.29)
Extraordinary Loss.......................................... (0.36) -- --
Cumulative Effect of Accounting Change...................... -- -- (0.33)
-------- -------- --------
Net Earnings(Loss) Per Share.................................. $ 1.46 $ 1.25 $ (0.08)
======== ======== ========
Weighted Average Shares Outstanding (In Thousands)............ 13,746 13,289 13,099
</TABLE>
The accompanying notes are an integral part of these financial statements
20
<PAGE> 21
APPLIED POWER INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AUGUST 31,
--------------------
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents............................................. $ 911 $ 1,907
Accounts receivable, less allowances of $3,593 and $3,131,
respectively....................................................... 71,000 64,259
Inventories........................................................... 103,358 94,949
Prepaid income tax.................................................... 10,297 7,972
Prepaid expenses...................................................... 4,898 5,722
-------- --------
Total Current Assets............................................. 190,464 174,809
Other Assets............................................................ 6,274 6,390
Goodwill, net of accumulated amortization of $11,256 and $9,404,
respectively.......................................................... 57,346 56,708
Other Intangibles, net of accumulated amortization of $18,798 and
$17,141, respectively................................................. 10,427 11,750
Property, Plant and Equipment
Property.............................................................. 1,909 1,643
Plant................................................................. 28,850 27,724
Machinery and equipment............................................... 122,615 109,425
-------- --------
153,374 138,792
Less: Accumulated depreciation........................................ (84,939) (71,047)
-------- --------
Net Property, Plant and Equipment....................................... 68,435 67,745
-------- --------
Total Assets..................................................... $332,946 $317,402
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings................................................. $ 12,620 $ 14,707
Trade accounts payable................................................ 37,530 35,219
Accrued compensation and benefits..................................... 19,707 16,335
Income taxes payable.................................................. 7,575 8,190
Current maturities of long-term debt.................................. 187 10,792
Other current liabilities............................................. 19,828 16,722
-------- --------
Total Current Liabilities........................................ 97,447 101,965
Long-term Debt, less current portion.................................... 74,156 77,956
Deferred Income Tax..................................................... 16,386 16,768
Other Deferred Liabilities.............................................. 13,271 13,402
Shareholders' Equity
Class A common stock, $0.20 par value per share, authorized 40,000,000
shares, issued and outstanding 13,406,590 and 13,152,454 shares,
respectively....................................................... 2,681 2,630
Additional paid-in capital............................................ 28,328 23,648
Retained earnings..................................................... 94,285 75,802
Cumulative translation adjustments.................................... 6,392 5,231
-------- --------
Total Shareholders' Equity....................................... 131,686 107,311
-------- --------
Total Liabilities and Shareholders' Equity....................... $332,946 $317,402
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
21
<PAGE> 22
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31, 1995, 1994 AND 1993
-----------------------------------------------
CLASS
A ADDITIONAL CUMULATIVE
COMMON PAID-IN RETAINED TRANSLATION
STOCK CAPITAL EARNINGS ADJUSTMENTS
------ ---------- -------- -----------
<S> <C> <C> <C> <C>
Balances at September 1, 1992......................... $2,592 $ 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 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 23,648 75,802 5,231
Net earnings for the year........................... -- -- 20,085 --
Cash dividends declared -- $0.12 per share.......... -- -- (1,602) --
Exercise of stock options........................... 51 4,168 -- --
Other............................................... -- 512 -- --
Currency translation adjustments.................... -- -- -- 1,161
------ ------- ------- -------
Balances at August 31, 1995........................... $2,681 $ 28,328 $ 94,285 $ 6,392
====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements
22
<PAGE> 23
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
---------------------------------
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Net Income from Continuing Operations........................ $ 20,085 $ 16,896 $ 2,731
Adjustments to reconcile earnings from continuing operations
to net cash provided by operating activities:
Depreciation and amortization.............................. 18,456 19,406 19,767
Other non-cash charges..................................... 4,920 -- 8,710
Provision for deferred taxes............................... (2,707) (789) (6,425)
Changes in operating assets and liabilities, excluding the
effects of business acquisitions and disposals:
Accounts receivable..................................... (15,413) (12,855) (2,073)
Inventories............................................. (8,170) (7,182) (9,515)
Prepaid expenses and other assets....................... (2,077) 3,156 2,167
Trade accounts payable.................................. 1,231 8,509 694
Other liabilities....................................... 7,499 (4,663) (3,339)
--------- -------- --------
Net Cash Provided by Operating Activities.................... 23,824 22,478 12,717
Investing Activities
Proceeds on the sale of property, plant and equipment...... 614 1,342 2,073
Additions to property, plant and equipment................. (15,986) (12,707) (12,217)
Business acquisitions...................................... (2,758) (2,446) --
Other...................................................... 162 142 627
--------- -------- --------
Net Cash Used in Investing Activities........................ (17,968) (13,669) (9,517)
Financing Activities
Proceeds from issuance of long-term debt................... 116,055 13,959 3,484
Principal payments on long-term debt....................... (123,997) (33,755) (12,528)
Refinancing expenditures................................... (4,370) -- --
Net (repayments) borrowings on short-term credit
facilities.............................................. (2,092) (5,700) 4,926
Net commercial paper (repayments) borrowings............... (6,671) 9,947 --
Additional receivables financed............................ 11,200 -- --
Dividends paid on common stock............................. (1,602) (1,569) (1,558)
Stock option exercises and other........................... 4,219 1,879 754
--------- -------- --------
Net Cash Used in Financing Activities........................ (7,258) (15,239) (4,922)
Effect of Exchange Rate Changes on Cash...................... 406 132 (436)
--------- -------- --------
Net Cash Used in Continuing Operations....................... (996) (6,298) (2,158)
Discontinued Operations Activities
Proceeds from sale of Datafile............................. -- 6,222 --
Other...................................................... -- 663 31
--------- -------- --------
Net Cash Provided by Discontinued Operations................. 0 6,885 31
--------- -------- --------
Net (Decrease) Increase in Cash and Cash Equivalents......... (996) 587 (2,127)
Cash and Cash Equivalents -- Beginning of Year............... 1,907 1,320 3,447
--------- -------- --------
Cash and Cash Equivalents -- End of Year..................... $ 911 $ 1,907 $ 1,320
========= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
23
<PAGE> 24
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
periods of fifteen to forty years. Other intangible assets, consisting primarily
of purchased patents, trademarks and noncompete agreements, are amortized over
periods from two to seventeen years. The Company periodically evaluates the
carrying value of intangible assets in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
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 totaled approximately
$8,725, $7,446 and $5,878 in 1995, 1994 and 1993, respectively.
Financing Costs: Net financing costs represents interest expense on debt
obligations, investment income, and accounts receivable financing costs.
Income Taxes: The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." For further information, see Note L -- "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 stock options, which are considered 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 --
net in the Consolidated Statement of Earnings.
Financial Instruments: The Company utilizes interest rate swap and cap
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. At
August 31, 1995, the Company had one immaterial forward contract expiring on
September 1, 1995, which hedged an existing exposure. Other than foreign
currency forward
24
<PAGE> 25
contracts and interest rate swap and cap agreements, the Company does not
utilize or trade derivative financial instruments.
Reclassifications: Certain amounts shown for 1994 and 1993 have been
reclassified to conform to the current year presentation.
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 refocused
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 $6,222. A short
time later, Wright Line sold its Tapeseal product line to a third party for
future compensation.
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 $31,307 ($2.51 per share) and
$5,400 ($0.41 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 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.
NOTE C -- ACQUISITIONS
The Company acquired all of the outstanding stock of New England Controls,
Inc. ("NECON") on June 28, 1995 for approximately $2,059 in cash. Approximately
$1,536 of the purchase price was assigned to Goodwill. NECON, based in Milford,
Connecticut, manufactures electrical switches for the electrical wholesale,
retail and OEM markets. The operating results of NECON subsequent to June 28,
1995 are included in the Consolidated Statement of Earnings.
On September 1, 1994, the Company acquired the assets of Enerpac's master
distributor in Brazil for $699 in cash. Approximately $350 of the purchase price
was assigned to Goodwill. The operating results of this business subsequent to
such date are included in the Consolidated Statement of Earnings.
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.
All acquisitions were accounted for using the purchase method.
25
<PAGE> 26
NOTE D -- ACCOUNTS RECEIVABLE FINANCING
As a part of its overall financing strategy, the Company sells to financial
institutions undivided participation interests in designated pools of accounts
receivable, with limited recourse. 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.
In August, 1995, the Company entered into a new multi-currency accounts
receivable financing agreement that allows up to the equivalent of $50,000 of
sold receivables at any one time. Previously, the Company was a party to an
agreement that provided up to $30,000 of accounts receivable financing for US
Dollar denominated receivables. The new accounts receivable financing agreement
expires in August, 1998.
At August 31, 1995 and 1994, accounts receivable were reduced by $36,200
and $25,000, respectively, representing receivable interests sold under this
program.
Accounts receivable financing costs totaling $1,892, $1,076 and $795 for
the years ended August 31, 1995, 1994 and 1993, respectively, are included in
the accompanying Consolidated Statement of Earnings.
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 58% and 59%
of total inventories in 1995 and 1994, 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 $10,296 and $9,748 at August 31,
1995 and 1994, respectively.
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 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.
NOTE F -- SHORT-TERM BORROWINGS
The Company had borrowings under unsecured non-committed lines of credit
with banks aggregating approximately $12,620 and $14,707 at August 31, 1995 and
1994, respectively. Interest rates vary depending on the currency being
borrowed. The weighted average interest rate on the short-term borrowings was
9.38% at August 31, 1995. The amount of unused available borrowings under such
lines of credit was approximately $41,000 at August 31, 1995.
NOTE G -- LONG-TERM DEBT
<TABLE>
<CAPTION>
AUGUST 31,
---------------------
Borrowings under: 1995 1994
------- --------
<S> <C> <C>
$120,000 Multi-currency revolving credit agreement.................. $70,717 $ --
$40,000 Multi-currency revolving credit agreement................... -- 13,959
9.92% Senior Unsecured Notes........................................ -- 64,492
Commercial paper.................................................... 3,276 9,947
Other notes......................................................... 350 350
------- -------
Total long-term debt.................................................. 74,343 88,748
Less current maturities............................................. (187) (10,792)
------- -------
Long-term Debt, less current portion.................................. $74,156 $ 77,956
======= =======
</TABLE>
Refinancing: During the second quarter of 1995, the Company recorded an
extraordinary loss of $4,920 ($0.36 per share) in anticipation of the March 30,
1995 extinguishment of the outstanding $64,350 9.92%
26
<PAGE> 27
Senior Unsecured Notes. The pre-tax extraordinary loss of $7,343 was comprised
of an estimated make whole provision of $4,050, costs associated with the
cancellation of underlying interest rate swap agreements of $3,047, and the
write-off of deferred financing costs of $246.
Funds used to retire the Senior Unsecured Notes and pay the make whole
obligation were obtained from new borrowings under an existing $40,000
Multi-currency revolving credit agreement and a temporary $40,000 expansion to
the existing Multi-currency revolving credit agreement. These borrowings were
extinguished on August 21, 1995, and all amounts outstanding were simultaneously
reborrowed under a new $120,000 Multi-currency revolving credit agreement (the
"New Multi-currency Credit Agreement").
The New Multi-currency Credit Agreement provides total unsecured credit
availability of $120,000, bears interest at a floating rate of IBOR plus .3 - .5
of 1% annually, and expires in August, 2000. Interest is payable monthly.
Pursuant to the agreement, borrowings may be denominated in various currencies
at the Company's option. A commitment fee, currently computed at a rate of .175
of 1% annually, is payable quarterly on the average unused credit line. The
unused credit line at August 31, 1995 was $46,007.
The New Multi-currency Credit Agreement contains 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 agreement requires the Company to maintain certain financial ratios. As of
August 31, 1995, the Company was in compliance with all debt covenants. Under
the most restrictive covenant, approximately $35,795 of retained earnings was
available for the payment of future dividends on common stock as of August 31,
1995.
Commercial paper outstanding at August 31, 1995 and 1994 totaled $3,276 and
$9,947, respectively, net of discount, and carried average interest rates of
5.94% and 4.73%, respectively. The Company has the ability and intent to
maintain these commercial paper obligations, classified as long term, for more
than one year. Amounts outstanding as commercial paper reduce the amount
available for borrowing under the New Multi-currency Credit Agreement.
Interest Rate Financial Instruments: As part of its interest rate
management program, the Company periodically enters into interest rate swap and
cap agreements with respect to portions of its outstanding debt. Interest rate
swap agreements typically convert the variable nature of debt to fixed rate, or
vice versa. Interest rate caps limit the maximum interest rate that is paid. As
of August 31, 1995, the Company had interest rate caps in place on a notional
$60,000 in borrowings that limits the maximum applicable base rate (three month
LIBOR) to 8.0%. Currently, the Company incurs interest at .45 of 1% above IBOR.
The interest rate caps expire in March, 1997, and were recorded at a value of
$225 at August 31, 1995.
Fair Values: The fair value of the Company's short-term borrowings and
long-term debt approximated book value as of August 31, 1995. 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, 1995. The
fair value of the Company's interest rate cap agreement and foreign currency
forward exchange contract at August 31, 1995 approximated book value.
Aggregate Maturities: Aggregate maturities of long-term debt outstanding at
August 31, 1995, were: $187 in 1996; $75 in 1997; $81 in 1998; $7 in 1999 and
$73,993 in 2000.
The Company paid $10,363, $10,695 and $11,894 for financing costs in 1995,
1994 and 1993, respectively, excluding the make whole payments associated with
refinancing the 9.92% Senior Unsecured Debt.
NOTE H -- LEASES
The Company leases certain facilities, computers, 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.
27
<PAGE> 28
Future obligations on non-cancelable operating leases in effect at August
31, 1995 were: $10,941 in 1996; $9,745 in 1997; $7,491 in 1998; $4,992 in 1999;
$4,530 in 2000; and $21,778 thereafter.
Total rental expense under operating leases was $11,076, $11,379 and
$12,250 in 1995, 1994 and 1993, respectively.
NOTE I -- INCENTIVE STOCK OPTION PLANS
At August 31, 1995, 2,127,835 shares of Class A common stock were reserved
for issuance under the Company's stock option plans.
Employee Plans: The Company has three non-qualified 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. 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.
Options may be granted to officers and key employees. Options generally
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 summary of option activity under the three plans is as follows:
<TABLE>
<CAPTION>
NUMBER OF PRICE
SHARES RANGE
--------- ---------------
<S> <C> <C>
Outstanding at September 1, 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
Granted......................................................... 227,740 24.13 - 29.25
Exercised....................................................... (250,136) 2.21 - 24.13
Cancelled....................................................... (119,450) 15.44 - 29.25
--------- ---------------
Outstanding at August 31, 1995.................................... 1,443,689 $ 2.21 - $29.25
--------- ---------------
Exercisable at August 31, 1995.................................... 811,564 $ 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.
28
<PAGE> 29
A summary of option activity under this plan is as follows:
<TABLE>
<CAPTION>
NUMBER OF PRICE
SHARES RANGE
--------- ---------------
<S> <C> <C>
Outstanding at September 1, 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
Granted......................................................... 5,000 25.00
Exercised....................................................... (4,000) 12.75 - 24.13
------ -------------
Outstanding at August 31, 1995.................................... 20,000 $12.75 - $25.00
------ -------------
Exercisable at August 31, 1995.................................... 15,000 $12.75 - $24.13
====== =============
</TABLE>
NOTE J -- EMPLOYEE STOCK OWNERSHIP AND RETIREMENT 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 plan administrator acquires shares of Class
A common stock on the open market and allocates such shares to accounts set
aside for Company employees' retirements. Contributions equal 3% of each
employee's annual cash compensation except "initial participants," who received
no allocation of shares until 1995. During the years ended August 31, 1995, 1994
and 1993, pre-tax expense related to the ESOP Plan was $1,720, $534 and $450,
respectively.
The Company also offers an employee 401(K) Savings Plan (the "Savings
Plan") to encourage eligible employees to save on a regular basis for their
retirements. All full-time US employees are eligible to participate in the
Savings Plan, and generally may contribute up to 15% of their base compensation.
Effective January 1, 1995, the Company's annual match equals approximately 25%
of each participant's first 3% of earnings. Expense attributable to the Savings
Plan was $643, $293 and $307 for 1995, 1994 and 1993, respectively.
Non-US Employees: The Company contributes to a number of retirement
programs for employees outside the US. Pension expense amounted to $821, $631
and $1,213 in 1995, 1994 and 1993, respectively. 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 K -- 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.
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.
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.
29
<PAGE> 30
Net periodic postretirement benefit expense for 1995, 1994 and 1993
included the following components:
<TABLE>
<CAPTION>
1995 1994 1993
----- ---- ----
<S> <C> <C> <C>
Service cost of benefits earned........................................ $ 9 $ 9 $ 12
Interest cost on accumulated postretirement benefit obligation......... 482 553 694
Amortization of unrecognized gain...................................... (180) (91) --
----- ---- ----
Total Postretirement Benefit Expense.............................. $ 311 $471 $706
===== ==== ====
</TABLE>
The Company's accumulated postretirement benefit obligation for such
benefits is as follows:
<TABLE>
<CAPTION>
AUGUST 31,
----------------
1995 1994
------ ------
<S> <C> <C>
Retirees.................................................................... $4,887 $5,686
Vested former employees..................................................... 1,419 1,595
Active employees............................................................ 238 229
------ ------
Subtotal.................................................................... 6,544 7,510
Unrecognized gain........................................................... 3,037 1,966
------ ------
Accumulated Postretirement Benefit Obligation............................... $9,581 $9,476
====== ======
</TABLE>
The Company's postretirement benefit obligations are not funded. Benefits
paid in 1995, 1994 and 1993 were $24, $202 and $420 lower than that expensed
during those years, respectively.
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 both 1995 and 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 L -- INCOME TAXES
Income tax expense for continuing operations consists of the following:
<TABLE>
<CAPTION>
Currently Payable: 1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Federal........................................................ $ 7,007 $ 4,475 $ 5,926
Foreign........................................................ 6,313 3,621 2,590
State.......................................................... 1,255 1,095 413
----- ---- ----
Subtotals........................................................ 14,575 9,191 8,929
----- ---- ----
Deferred (Credits):
Federal........................................................ (2,582) (2,166) (4,390)
Foreign........................................................ 230 1,672 (1,845)
State.......................................................... (355) (295) (190)
----- ---- ----
Subtotals........................................................ (2,707) (789) (6,425)
----- ---- ----
Totals.................................................... $11,868 $ 8,402 $ 2,504
===== ==== ====
</TABLE>
30
<PAGE> 31
Components of deferred income tax benefits include the following:
<TABLE>
<CAPTION>
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Compensation and other employee benefits......................... $ (443) $ (962) $ (149)
Inventory items.................................................. 26 (519) (201)
Depreciation and amortization.................................... (956) (1,798) (3,366)
Restructuring expenses........................................... 574 2,504 (2,366)
Deferred income.................................................. (1,225) (119) (29)
Book reserves and other items.................................... (683) 105 (314)
------- ------- -------
Totals......................................................... $(2,707) $ (789) $(6,425)
======= ======= =======
</TABLE>
Income tax expense differs from the amounts computed by applying the
Federal income tax rate to earnings before income tax expense. A reconciliation
of income taxes at the US statutory rate to the effective tax rate follows:
<TABLE>
<CAPTION>
PERCENT OF PRE-TAX
EARNINGS
------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate............................................... 35.0% 35.0% 34.0%
State income taxes, net of Federal effect............................ 1.6 2.1 1.8
Non-deductible amortization.......................................... 1.2 1.8 5.3
Adjustment of deferred tax balances.................................. -- -- (6.4)
Net effects of foreign tax rates and credits......................... (5.6) (4.2) (8.0)
Other items.......................................................... -- (1.5) (0.6)
---- ---- ----
Effective Tax Rate................................................. 32.2% 33.2% 26.1%
==== ==== ====
</TABLE>
Temporary differences and carryforwards which gave rise to the deferred tax
assets and liabilities included the following items:
<TABLE>
<CAPTION>
DEFERRED TAX ASSETS: 1995 1994
------- -------
<S> <C> <C>
Operating loss and foreign tax credit carryforwards..................... $ 4,167 $ 5,551
Compensation and other employee benefits................................ 5,698 5,255
Inventory items......................................................... 4,446 4,563
Restructuring expenses.................................................. 550 1,124
Deferred income......................................................... 1,711 486
Book reserves and other items........................................... 2,501 1,339
------- -------
19,073 18,318
Valuation allowance..................................................... (4,700) (5,551)
------- -------
14,373 12,767
------- -------
DEFERRED TAX LIABILITIES:
Depreciation and amortization........................................... 11,485 12,441
Inventory items......................................................... 3,364 3,455
Other items............................................................. 5,613 5,667
------- -------
20,462 21,563
------- -------
NET DEFERRED TAX LIABILITY................................................ $(6,089) $(8,796)
======= =======
</TABLE>
The valuation allowance primarily represents foreign loss and foreign tax
credit carryforwards for which utilization is uncertain. The majority of the
foreign losses may be carried forward indefinitely; however, the foreign tax
credit carryforwards expire in 1996 and 1997.
Income taxes paid during 1995, 1994 and 1993 were $12,280, $9,191 and
$5,080, respectively.
31
<PAGE> 32
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 additional
income taxes have not been provided amounted to approximately $33,000 at August
31, 1995. If all such undistributed earnings were remitted, an additional
provision for income taxes of approximately $2,400 would have been necessary as
of August 31, 1995.
Earnings from continuing operations before income taxes from non-US
operations were $16,156, $12,041 and $2,293 for 1995, 1994 and 1993,
respectively.
NOTE M -- SEGMENT INFORMATION
The Company's operations are classified into three business segments:
Distributed Products, Engineered Solutions and Wright Line. Distributed
Products, 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. Engineered Solutions, 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.
Summarized financial information by business segment is as follows:
<TABLE>
<CAPTION>
NET SALES: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Distributed Products.......................................... $264,823 $222,076 $212,924
Engineered Solutions.......................................... 192,219 162,296 147,564
Wright Line................................................... 70,016 49,272 38,239
-------- -------- --------
Totals...................................................... $527,058 $433,644 $398,727
======== ======== ========
OPERATIONS BEFORE INCOME TAXES:
Distributed Products.......................................... $ 37,379 $ 32,023 $ 29,739
Engineered Solutions.......................................... 15,200 12,314 4,526
Wright Line................................................... 8,587 4,242 (2,372)
General corporate and other................................... (24,293) (23,281) (22,303)
-------- -------- --------
Totals...................................................... $ 36,873 $ 25,298 $ 9,590
======== ======== ========
DEPRECIATION:
Distributed Products.......................................... $ 4,826 $ 4,165 $ 3,855
Engineered Solutions.......................................... 7,800 7,346 7,631
Wright Line................................................... 2,406 2,761 3,329
General corporate and other................................... 55 42 38
-------- -------- --------
Totals...................................................... $ 15,087 $ 14,314 $ 14,853
======== ======== ========
CAPITAL EXPENDITURES:
Distributed Products.......................................... $ 6,440 $ 5,917 $ 4,884
Engineered Solutions.......................................... 6,321 5,957 6,159
Wright Line................................................... 2,955 769 753
General corporate and other................................... 270 64 421
-------- -------- --------
Totals...................................................... $ 15,986 $ 12,707 $ 12,217
======== ======== ========
</TABLE>
32
<PAGE> 33
<TABLE>
<CAPTION>
AUGUST 31,
--------------------------------
ASSETS: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Distributed Products.......................................... $163,053 $148,737 $131,868
Engineered Solutions.......................................... 129,682 128,190 127,481
Wright Line................................................... 25,969 23,838 18,618
Net assets held for sale...................................... -- -- 12,035
General corporate............................................. 14,242 16,637 16,315
-------- -------- --------
Totals...................................................... $332,946 $317,402 $306,317
======== ======== ========
</TABLE>
Summarized financial information by geographic region is as follows:
<TABLE>
<CAPTION>
NET SALES: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
North America................................................. $323,015 $279,613 $259,692
Latin America................................................. 12,022 11,300 10,154
Europe........................................................ 136,813 99,215 87,346
Japan and Asia Pacific........................................ 55,208 43,516 41,535
-------- -------- --------
Totals...................................................... $527,058 $433,644 $398,727
======== ======== ========
OPERATIONS BEFORE INCOME TAXES:
North America................................................. $ 37,777 $ 32,672 $ 23,855
Latin America................................................. 954 512 1,662
Europe........................................................ 15,208 8,352 (820)
Japan and Asia Pacific........................................ 7,227 7,043 7,196
General corporate and other................................... (24,293) (23,281) (22,303)
-------- -------- --------
Totals...................................................... $ 36,873 $ 25,298 $ 9,590
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AUGUST 31,
--------------------------------
ASSETS: 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
North America................................................. $192,032 $192,103 $183,412
Latin America................................................. 11,967 11,053 9,358
Europe........................................................ 77,505 64,919 57,927
Japan and Asia Pacific........................................ 37,200 32,690 27,270
Net assets held for sale...................................... -- -- 12,035
General corporate............................................. 14,242 16,637 16,315
-------- -------- --------
Totals...................................................... $332,946 $317,402 $306,317
======== ======== ========
</TABLE>
Operations before income taxes for each business and geographic segment do
not include general corporate expenses, amortization expense, interest expense
or currency exchange adjustments. Sales between business segments and geographic
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 1995, 1994 or 1993. 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 N -- CONTINGENCIES AND LITIGATION
The Company had outstanding letters of credit totaling $1,300 and $1,640 at
August 31, 1995 and 1994, 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
33
<PAGE> 34
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.
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 $573 and $567 were included in the Consolidated Balance Sheet at August 31,
1995 and 1994, respectively.
NOTE O -- SUBSEQUENT EVENT
On September 29, 1995, the Company completed the acquisition of
substantially all of the assets and certain liabilities of Vision Plastics
Manufacturing Company ("Vision"). Certain proprietary technology rights and
patents related to the business are to be acquired in a separate transaction
that is expected to close in January, 1996. Total consideration for the two
transactions is approximately $21,500, and will be funded by proceeds from
borrowings under existing credit facilities. Vision, based in San Diego,
California, manufactures plastic cable ties which are sold through electrical
wholesale, retail and OEM channels.
34
<PAGE> 35
APPLIED POWER INC. AND SUBSIDIARIES
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
DEDUCTIONS
ADDITIONS --------------------
------------------------------------ ACCOUNTS
BALANCE AT CHARGED TO WRITTEN OFF BALANCE AT
BEGINNING COSTS AND NET LESS END OF
DESCRIPTION OF PERIOD EXPENSES ACQUIRED RECOVERIES OTHER 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, 1995.................... $3,131 $1,255 -- $ 793 -- $3,593
====== ====== == ====== == ======
August 31, 1994.................... $3,053 $1,379 -- $ 1,301 -- $3,131
====== ====== == ====== == ======
August 31, 1993.................... $3,412 $ 739 -- $ 1,098 -- $3,053
====== ====== == ====== == ======
Allowance for losses -- inventory
August 31, 1995.................... $6,268 $5,413 -- $ 3,310 -- $8,371
====== ====== == ====== == ======
August 31, 1994.................... $4,854 $3,998 -- $ 2,584 -- $6,268
====== ====== == ====== == ======
August 31, 1993.................... $5,377 $2,030 -- $ 2,553 -- $4,854
====== ====== == ====== == ======
</TABLE>
35
<PAGE> 36
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)
By: /s/ ROBERT C. ARZBAECHER
------------------------------------
Robert C. Arzbaecher
Vice President and Chief Financial
Officer
Dated: November 16, 1995
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
- - ------------------------------------- ----------------------------------------------------
<C> <S>
/s/ RICHARD G. SIM Chairman of the Board, President and Chief Executive
- - ------------------------------------- Officer; Director
Richard G. Sim
/s/ ROBERT C. ARZBAECHER Vice President and Chief Financial Officer
- - ------------------------------------- (Principal Financial Officer)
Robert C. Arzbaecher
/s/ ANDREW G. LAMPEREUR Controller (Principal Accounting Officer)
- - -------------------------------------
Andrew G. Lampereur
/s/ H. RICHARD CROWTHER Director
- - -------------------------------------
H. Richard Crowther
/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/ RAYMOND S. TROUBH Director
- - -------------------------------------
Raymond S. Troubh
</TABLE>
- - -------------------------
* Each of the above signatures is affixed as of November 16, 1995
36
<PAGE> 37
APPLIED POWER INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED AUGUST 31, 1995
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
- - ------- ------------------------------------- ------------------------------------- --------
<S> <C> <C> <C>
3.1 (a) Amended and Restated Articles of Exhibit 19.1(a) to Form 10-Q for
Incorporation (as adopted January 8, quarter ended February 28, 1990
1987) ("2/28/90 10-Q")
(b) Articles of Amendment to Amended Exhibit 19.1(b) to 2/28/90 10-Q
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 (as last X
amended by amendment to Section 3.01
increasing the number of directors to
seven, adopted November 7, 1995)
4 +
4.1 Articles III, IV and V of Amended and See Exhibit 3.1 above
Restated Articles of Incorporation,
as amended
4.2 Agreement for Purchase and Sale, Exhibit 19.2(a)-(g) to Form 10-Q for
dated August 29, 1990, between quarter ended May 31, 1991
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
4.3 Multicurrency Credit Agreement, dated X
as of August 22, 1995 between Applied
Power Inc. and Applied Power Finance
S.A., as borrowers, various financial
institutions, as lenders, Bank of
America National Trust and Savings
Association, as agent, and BA
Securities, Inc., as arranger
</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.
37
<PAGE> 38
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
- - ------- ------------------------------------- ------------------------------------- --------
<S> <C> <C> <C>
4.4 Amended and Restated Receivables X
Purchase Agreement, dated as of
August 30, 1995, between Applied
Power Inc., Barry Wright Corporation,
Wright Line Inc., GB Electrical,
Inc., and certain other subsidiaries
from time to time parties thereto, as
sellers, and PNC Bank, National
Association, and other financial
institutions from time to time
parties thereto, as purchasers
101* Employment Agreement dated May 9, Exhibit 10.1 to Form 10-K for the
1994 between Applied Power Inc. and fiscal year ended August 31, 1994
Richard G. Sim (superseding ("1994 10-K")
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 adopted by Board of fiscal year ended August 31, 1989
Directors on August 1, 1985 and ("1989 10-K")
approved by shareholders on January
6, 1986, as amended
(b) Amendment adopted by Board of Exhibit 10.2(b) to 1989 10-K
Directors on November 8, 1989 and
approved by shareholders on January
13, 1990
(c) Amendment adopted by Board of Exhibit 10.2(c) to 1990 10-K for
Directors on August 9, 1990 fiscal year ended August 31, 1990
("1990 10-K")
10.3* (a) Applied Power Inc. 1987 Exhibit 10-8 to Form 10-K for fiscal
Nonqualified Stock Option Plan year ended August 31, 1987
adopted by Board of Directors on
November 3, 1987 and approved by
shareholders January 7, 1988
(b) Amendment adopted by Board of See Exhibit 10.2(b)
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 of Exhibit 10.5(b) to Form 10-K for
Directors on August 10, 1992, and fiscal year ended August 31, 1992
approved by shareholders on January
7, 1993
10.5* (a) Description of Fiscal 1995 Exhibit 10.6 to 1994 10-K
Management Bonus Arrangement
</TABLE>
- - ---------------
* Management contracts and executive compensation plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
38
<PAGE> 39
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
- - ------- ------------------------------------- ------------------------------------- --------
<S> <C> <C> <C>
10.6* Description of Fiscal 1996 Management X
Bonus Arrangement
10.7* (a) Applied Power Inc. 1989 Outside Exhibit 10.7 to 1989 10-K
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 of Exhibit 10.7(b) to 1990 10-K
Directors on November 9, 1990, and
approved by shareholders on January
7, 1991
108* Outside Directors' Deferred X
Compensation Plan
11 Statement regarding Computation of X
Earnings per Share
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>
- - ---------------
* Management contracts and executive compensation plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
39
<PAGE> 1
EXHIBIT 3.2
(1995 10-K)
AMENDED AND RESTATED BYLAWS
of
APPLIED POWER INC.
ADOPTED
NOVEMBER 7, 1991
and
AS LAST AMENDED ON NOVEMBER 7, 1995
<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) 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
-2-
<PAGE> 4
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 property. 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.
-3-
<PAGE> 5
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 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 share-
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holders. 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 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 cor-
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<PAGE> 7
poration 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 seven (7). 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, 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
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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 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.
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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 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.
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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 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.
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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 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 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,
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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 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 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
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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) 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 intan-
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gible 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 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
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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.
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
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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.
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:
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(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 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).
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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 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:
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(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.
(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
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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 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.
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(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, 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
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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 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 4.3
(1995 10-K)
EXECUTION COPY
MULTICURRENCY CREDIT AGREEMENT
dated as of August 22, 1995
among
APPLIED POWER INC.,
APPLIED POWER FINANCE S.A.,
VARIOUS FINANCIAL INSTITUTIONS,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
Arranged by
BA SECURITIES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I CERTAIN DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.4 Currency Equivalents Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.2 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Procedure for Committed Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.4 Conversion and Continuation Elections for Committed Borrowings . . . . . . . . . . . . . 22
2.5 Utilization of Revolving Commitments in Offshore Currencies. . . . . . . . . . . . . . . 24
2.6 Bid Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.7 Procedure for Bid Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.8 Voluntary Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . 30
2.9 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.10 Currency Exchange Fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.11 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.12 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.13 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.14 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.15 Payments by the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.16 Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.17 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.1 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.3 Increased Costs and Reduction of Return . . . . . . . . . . . . . . . . . . . . . . . . 37
3.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.5 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.6 Certificates of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.7 Substitution of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.8 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.1 Conditions of Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4.2 Conditions to All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1 Organization, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.2 Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.3 Validity and Binding Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
(i)
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<TABLE>
<S> <C> <C>
5.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.6 Litigation and Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . 43
5.7 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.8 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.9 Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.10 Regulated Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.11 Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.13 Environmental and Safety Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.14 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.15 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.16 Ownership of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.17 Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.18 Patents, Trademarks, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VI COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.1 Reports, Certificates and Other Information . . . . . . . . . . . . . . . . . . . . 47
6.2 Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.4 Compliance with Law; Payment of Taxes and Liabilities . . . . . . . . . . . . . . . 49
6.5 Maintenance of Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.6 Financial Ratios and Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.7 Mergers, Consolidations, Purchases and Sales . . . . . . . . . . . . . . . . . . . . 50
6.8 Commercial Paper Lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.9 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.11 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.13 Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.14 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.15 Unconditional Purchase Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.16 Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.17 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.18 The Company's and Subsidiaries' Stock . . . . . . . . . . . . . . . . . . . . . . . 54
6.19 Negative Pledges; Subsidiary Payments . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VII EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
7.2 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE VIII THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.1 Appointment and Authorization; Agent . . . . . . . . . . . . . . . . . . . . . . . . 57
8.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.3 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.6 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.7 Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.8 BAI in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
8.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.10 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE IX GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1 Guarantee from Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.4 No Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.5 Waiver of Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.6 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.7 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.8 Subrogation, Waivers, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.9 Delay, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.5 Borrower Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.6 Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.8 Assignments, Participations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.10 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.11 Notification of Addresses, Lending Offices, Etc. . . . . . . . . . . . . . . . . . . . 72
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.14 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.15 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.17 Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
(iii)
<PAGE> 5
SCHEDULES and EXHIBITS
<TABLE>
<S> <C>
Schedule 1.1 Disclosure Schedule
Item 5.6 Litigation
Item 5.8 Subsidiaries
Item 5.13 Environmental Matters
Item 5.18 Patents, Trademarks
Item 5.19 Insurance
Item 6.9 Liens
Schedule 1.2 Pricing Grid
Schedule 2.1 Commitments
Schedule 10.2 Lending Offices, Addresses for Notices
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinions of Borrowers' Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F-1 Form of Bid Note
Exhibit F-2 Form of Committed Note
Exhibit G Form of Legal Opinion of Agent's Counsel
Exhibit H Form of Invitation for Competitive Bids
Exhibit I Form of Competitive Bid Request
Exhibit J Form of Competitive Bid
</TABLE>
(iv)
<PAGE> 6
MULTICURRENCY CREDIT AGREEMENT
THIS MULTICURRENCY CREDIT AGREEMENT (this "Agreement") dated as of
August 22, 1995 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 "Bank" and
individually each a "Bank"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION as agent for the Banks.
ARTICLE I
CERTAIN DEFINITIONS AND INTERPRETATION
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" has the meaning specified in Section
2.7(c).
"Absolute Rate Bid Loan" means a Bid Loan that bears
interest at a rate determined with reference to the Absolute Rate.
"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" means BofA in its capacity as agent for the Banks
hereunder, and any successor agent arising under Section 8.9.
"Agent-Related Persons" means BofA and any successor
agent arising under Section 8.9, together with their respective
Affiliates (including, in the case of BofA, the Arranger), and the
officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
<PAGE> 7
"Agent's Payment Office" means (a) in respect of
payments in Dollars, the address for payments set forth on Schedule
10.02 or such other address as the Agent may from time to time
specify in accordance with Section 10.2, and, (b) in the case of
payments in any Offshore Currency, such address as the Agent may from
time to time specify in accordance with Section 10.2.
"Agreed Alternative Currency" has the meaning specified
in Section 2.5(e).
"Agreement" means this Multicurrency Credit Agreement.
"Applicable Currency" means, as to any particular
payment or Loan, Dollars or the Offshore Currency in which it is
denominated or is payable.
"Applicable Margin" means, with respect to Offshore
Rate Loans, the rate set forth opposite "Offshore Margin" on the
Pricing Grid for the applicable Pricing Level.
"Applicable Non-Use Fee Rate" means the rate set forth
opposite "Non-Use Fee" on the Pricing Grid for the applicable
Pricing Level.
"APSA" - see the Preamble.
"Arranger" means BA Securities, Inc., a Delaware
corporation.
"Assignee" - has the meaning specified in Section 10.8.
"Assignment and Acceptance Agreement" - see Section 10.8.
"Attorney Costs" means and includes all reasonable fees
and disbursements of any law firm or other external counsel, the
reasonable allocated cost of internal legal services and all
reasonable disbursements of internal counsel.
"Authorized Officer" means, relative to each Borrower,
those of its officers whose signatures and incumbency shall have
been certified to the Banks pursuant to Section 4.1(b).
"BAI" means Bank of America Illinois and, in the case
of Bid Loans, Bank of America Illinois or its designated Affiliate
making such Bid Loans.
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<PAGE> 8
"Banking Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in New York City,
Chicago or San Francisco are authorized or required by law to close
and (a) with respect to disbursements and payments in Dollars, a day
on which dealings are carried on in the applicable offshore Dollar
interbank market, and (b) with respect to any disbursements and
payments in and calculations pertaining to any Offshore Currency
Loan, a day on which commercial banks are open for foreign exchange
business in London, England, and on which dealings in the relevant
Offshore Currency are carried on in the applicable offshore foreign
exchange interbank market in which disbursement of or payment in such
Offshore Currency will be made or received hereunder.
"Base Rate" means, for any day, the higher of: (a)
0.50% per annum above the latest Federal Funds Rate; and (b) the
rate of interest in effect for such day as publicly announced from
time to time by BofA in San Francisco, California, as its "reference
rate." (The "reference rate" is a rate set by BofA based upon
various factors including BofA's costs and desired return, general
economic conditions and other factors, and is used as a reference
point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the reference rate
announced by BofA shall take effect at the opening of business on the
day specified in the public announcement of such change.
"Base Rate Loan" means a Committed Loan that bears
interest based on the Base Rate.
"Bid Borrowing" means a Borrowing hereunder consisting
of one or more Bid Loans made to the Company on the same day by one
or more Banks.
"Bid Loan" means a Loan by a Bank to the Company under
Section 2.6.
"Bid Loan Bank" means, in respect of any Bid Loan, the
Bank making such Bid Loan to the Company.
"Bid Note" means, a promissory note of the Company,
substantially in the form of Exhibit F-1, duly completed, evidencing
Bid Loans made to the Company, as such Note may be replaced, amended
or otherwise modified from time to time.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
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<PAGE> 9
"Borrower" means the Company and/or APSA, as applicable.
Borrowing means a borrowing hereunder consisting of
Loans of the same Type made to a Borrower on the same day by the
Banks or (in the case of Bid Borrowings) under Article II, and may be
a Committed Borrowing or a Bid Borrowing and, other than in the case
of Base Rate Loans, having the same Interest Period.
"Borrowing Date" means any date on which a Borrowing
occurs under Section 2.3.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in New York City,
Chicago or San Francisco are authorized or required by law to close
and, if the applicable Business Day relates to any Offshore Rate
Loan, means a Banking Day.
"Canadian Dollars" means lawful money of Canada.
"Capital Adequacy Regulation" means any guideline,
request or directive of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or not
having the force of law, in each case, regarding capital adequacy of
any bank or of any corporation controlling a bank.
"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.
"Closing Date" means the date on which all conditions
precedent set forth in Section 4.1 are satisfied or waived by all
Banks (or, in the case of Section 4.1(g), waived by the Person
entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986.
"Commitment", as to each Bank, has the meaning specified
in Section 2.1.
"Committed Borrowing" means a Borrowing hereunder
consisting of Committed Loans made on the same day by the Banks
ratably according to their
4
<PAGE> 10
respective Pro Rata Shares and, in the case of Offshore Rate Loans,
having the same Interest Periods.
"Committed Loan" means a Loan by a Bank to a Borrower
under Section 2.1, and may be an Offshore Rate Loan or a Base Rate
Loan (each, a "Type" of Committed Loan).
"Committed Note" means a promissory note of a
Borrower substantially in the form of Exhibit F-2, 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.
"Competitive Bid Request" has the meaning specified in
Section 2.7(a).
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C.
"Computation Period" means any period of four consecutive
Fiscal Quarters ending on the last day of a Fiscal Quarter.
"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.
"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
5
<PAGE> 11
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.
"Conversion/Continuation Date" means any date on which,
under Section 2.4, a Borrower (a) converts Committed Loans of one
Type to another Type, or (b) continues as Committed Loans of the
same Type, but with a new Interest Period, Committed Loans having
Interest Periods expiring on such date.
"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 Swap Contracts, (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 Swap
Contracts shall be deemed to be the unrealized net loss position of
such Person thereunder (determined for each counterparty individually,
but netted for all Swap Contracts maintained with such counterparty).
"Debt to Capital Ratio" means the ratio of (a) Funded
Debt to (b) Total Capital.
"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.
"Determination Date" has the meaning specified in Section
2.5(a).
6
<PAGE> 12
"Deutsche Mark" means lawful money of the Federal Republic of
Germany.
"Disclosure Schedule" means the Disclosure Schedule attached
hereto as Schedule 1.01.
"Dollar Equivalent" means, at any time, (a) as to any amount
denominated in Dollars, the amount thereof at such time, and (b) as
to any amount denominated in an Offshore Currency, the equivalent
amount in Dollars as determined by the Agent at such time on the
basis of the Spot Rate for the purchase of Dollars with such
Offshore Currency on the most recent Determination Date provided for
in Section 2.5(a).
"Dollar(s)" and the sign "$" mean lawful money of the United
States of America.
"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.
"Eligible Assignee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000; (b)
a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located
in the United States; and (c) a Person that is primarily engaged in
the business of commercial banking and that is (i) a Subsidiary of a
Bank, (ii) a Subsidiary of a Person of which a Bank is a Subsidiary,
or (iii) a Person of which a Bank is a Subsidiary.
"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.
"Eurodollar Reserve Percentage" has the meaning specified in
the definition of "Offshore Rate".
7
<PAGE> 13
"Event of Default" means any of the events described in
Section 7.1.
"Existing Credit Agreements" means the Credit Agreement dated
as of August 22, 1994, as amended, among the Borrowers, various
financial institutions and Bank of America Illinois (formerly
Continental Bank), as Agent.
"Federal Funds Rate" means, for any day, the rate set forth
in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or,
if for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by the
Agent.
"Fee Letter" has the meaning specified in Section 2.13(a).
"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,
plus
(iii) Consolidated Interest Expense for such period,
8
<PAGE> 14
plus
(iv) the aggregate amount deducted in respect
of leases that were not Capital Leases
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.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"French Francs" means lawful money of the Republic of France.
"FX Trading Office" means the Foreign Exchange Trading
Center #5193, San Francisco, California, of BofA, or such other of
BofA's offices as BofA may designate from time to time.
"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".
"Further Taxes" means any and all present or future
taxes, levies, assessments, imposts, duties, deductions, fees,
withholdings or similar charges (including, without limitation, net
income taxes and franchise taxes), and all liabilities with respect
thereto, imposed by any jurisdiction on account of Taxes or Other
Taxes payable or paid pursuant to Section 3.1.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar
functions of comparable stature and authority within the U.S.
accounting profession), which except as provided in Section 1.3 are
9
<PAGE> 15
applicable to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"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.
"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 Banks 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.
"Indemnified Liabilities" has the meaning specified in Section
10.5.
10
<PAGE> 16
"Indemnified Person" has the meaning specified in Section 10.5.
"Instrument" means any contract, agreement, letter of
credit, indenture, mortgage, document or writing (whether by 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.
"Interest Payment Date" means, as to any Loan other than a
Base Rate Loan, the last day of each Interest Period applicable to
such Loan and, as to any Base Rate Loan, the last Business Day of
each February, May, August and November and each date such Committed
Loan is converted into another Type of Committed Loan, provided,
however, that (a) if any Interest Period for an Offshore Rate Loan
exceeds three months, the date that falls three months after the
beginning of such Interest Period and after each Interest Payment
Date thereafter is also an Interest Payment Date, and (b) as to any
Bid Loan, such intervening dates prior to the maturity thereof as may
be specified by the Company and agreed to by the applicable Bid Loan
Bank in the applicable Competitive Bid shall also be Interest Payment
Dates.
"Interest Period" means, (a) as to any Offshore Rate Loan,
the period commencing on the Borrowing Date of such Loan, or (in the
case of any Offshore Rate Loan in Dollars) on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one,
two, three or, if available for the requested Applicable Currency,
six months thereafter as selected by the Borrower in its Notice of
Borrowing, Notice of Conversion/Continuation or Competitive Bid
Request, as the case may be and (b) as to any Absolute Rate Bid
Loan, a period of not less than 7 days and not more than 183 days as
selected by the Company in the applicable Competitive Bid Request;
provided that:
(i) if any Interest Period would otherwise end
on a day that is not a Business Day, that Interest Period
shall be extended to the following Business Day unless, in
the case of an Offshore Rate Loan, the result of such
extension would be to carry such Interest Period into
another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore
Rate Loan that begins on the last Business Day
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<PAGE> 17
of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business
Day of the calendar month at the end of such Interest Period;
and
(iii) no Interest Period for any Loan shall extend
beyond the Termination Date.
"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.
"Invitation for Competitive Bids" means a solicitation for
Competitive Bids, substantially in the form of Exhibit H.
"Italian Lira" means the lawful currency of the Republic of
Italy.
"Lending Office" means, as to any Bank, the office or
offices of such Bank specified as its "Lending Office" or "Domestic
Lending Office" or "Offshore Lending Office", as the case may be, on
Schedule 10.2, or such other office or offices as such Bank may from
time to time notify the Company and the Agent.
"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.
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"Loan" means an extension of credit by a Bank or to the
Company under Article II, and may be a Committed Loan or a Bid Loan.
"Loan Documents" means this Agreement, any Notes, the Fee
Letter and all other documents delivered to the Agent or any Bank in
connection herewith.
"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.
"Minimum Tranche" means, in respect of Committed Loans
comprising part of the same Borrowing, or to be converted or
continued under Section 2.4, (a) in the case of Base Rate Loans,
$4,000,000 or any multiple of $1,000,000 in excess thereof, and (b)
in the case of Offshore Rate Loans, the Dollar Equivalent amount of
$4,000,000 or any multiple of 1,000,000 units of the Applicable
Currency in excess thereof.
"Notes" means, collectively, the Bid Notes and the Committed
Notes; and Note means any individual Bid Note or Committed Note.
"Notice of Borrowing" means a notice in substantially the form
of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document,
owing by the Company to any Bank, the Agent, or any Indemnified
Person, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now
existing or hereafter arising.
"Offshore Currency" means Guilders, Sterling, Deutsche
Marks, Yen, French Francs, Italian Lira, and Swiss Francs and, with
respect to the Company only, Canadian Dollars.
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"Offshore Currency Loan" means any Offshore Rate Loan
denominated in an Offshore Currency.
"Offshore Rate" means, for any Interest Period, with respect
to Offshore Rate Loans comprising part of the same Borrowing, the
rate of interest per annum (rounded upward to the next 1/16th of 1%)
determined by the Agent as follows:
Offshore Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the maximum reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1%)
in effect on such day (whether or not applicable to any
Bank) under regulations issued from time to time by the FRB
for determining the maximum reserve requirement (including
any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency funding
(currently referred to as "Eurocurrency liabilities"); and
"IBOR" means the rate of interest per annum determined by
the Agent as the rate at which U.S. Dollar (or other
Applicable Currency as requested) deposits in the
approximate amount of BAI's Offshore Rate Loan for such
Interest Period would be offered by BofA's Grand Cayman
Branch, Grand Cayman B.W.I. (or such other office as may be
designated for such purpose by BofA), to major banks in the
offshore U.S. Dollar (or other Applicable Currency as
requested) interbank market at their request at
approximately 11:00 a.m. (New York City time) two Business
Days prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Committed Loan that bears
interest based on the Offshore Rate, and may be an Offshore Currency
Loan or a Loan denominated in Dollars.
"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.
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<PAGE> 20
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from
the execution, delivery, performance, enforcement or registration
of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"Overnight Rate" means, for any day, the rate of interest per
annum at which overnight deposits in the Applicable Currency, in an
amount approximately equal to the amount with respect to which such
rate is being determined, would be offered for such day by BofA's
London Branch to major banks in the London or other applicable
offshore interbank market.
"Participant" has the meaning specified in Section 10.8(d).
"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.
"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
$50,000,000.
"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.
"Pricing Grid" means the Pricing Grid set forth on Schedule
1.02.
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<PAGE> 21
"Pricing Level" means the Pricing Level on the Pricing Grid
which is applicable from time to time in accordance with Section
2.12.
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of such Bank's Commitment divided by the
combined Commitments of all Banks.
"Release" means a "release", as such term is defined in CERCLA.
"Required Banks" means Banks having an aggregate Pro Rata
Share of the Commitments of 55% or more; provided that after the
Commitments have been irrevocably terminated (through lapse of time,
pursuant to Section 7.2 or otherwise), " Required Banks" shall mean
one or more Banks having an aggregate of 55% or more of the sum of the
principal amount of all outstanding Loans.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"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.
"Same Day Funds" means (a) with respect to disbursements
and payments in Dollars, immediately available funds, and (b) with
respect to disbursements and payments in an Offshore Currency,
same day or other funds as may be determined by the Agent to be
customary in the place of disbursement or payment for the settlement
of international banking transactions in the relevant Offshore
Currency.
"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.
"Spot Rate" for a currency means the rate quoted by BofA as
the spot rate for the purchase by BofA of such currency with
another currency through its FX Trading Office at approximately 8:00
a.m. (San Francisco time) on the date
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<PAGE> 22
two Banking Days prior to the date as of which the foreign exchange
computation is made.
"Sterling" means lawful money of the United Kingdom.
"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.
"Swap Contract" means any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis
swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap or option, bond, note or bill option,
interest rate option, forward foreign exchange transaction, cap,
collar or floor transaction, currency swap, cross-currency rate swap,
swaption, currency option or any other, similar transaction
(including any option to enter into any of the foregoing) or any
combination of the foregoing, and, unless the context otherwise
clearly requires, any master agreement relating to or governing
any or all of the foregoing.
"Swiss Francs" means lawful money of Switzerland.
"Tangible Net Assets" means, as of any date, the
consolidated total assets of the Company and its Subsidiaries minus
all intangible assets of the Company and its Subsidiaries, as each
would be shown on a consolidated balance sheet of the Company and
its Subsidiaries prepared in accordance with GAAP as of that date.
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<PAGE> 23
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or
similar charges, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Agent, respectively,
taxes imposed on or measured by its net income by the jurisdiction
(or any political subdivision thereof) under the laws of which such
Bank or the Agent, as the case may be, is organized or maintains a
lending office.
"Termination Date" means the earlier to occur of (a) August
22, 2000, or (b) the date on which the Commitments terminate
pursuant to Section 7.2 or are reduced to zero pursuant to Section
2.8.
"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.
"United States" or "U.S." means the United States of
America, its 50 States, the District of Columbia and the Commonwealth
of Puerto Rico.
"Welfare Plan" means a "welfare plan", as such term is defined
in section 3(1) of ERISA.
"Yen" means lawful money of Japan.
1.2 Other Interpretive Provisions. (a) The meanings of defined
terms are equally applicable to the singular and plural forms of the defined
terms.
(b) The words "hereof", "herein", "hereunder" and
similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement; and Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
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<PAGE> 24
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding", and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms. Unless otherwise
expressly provided, any reference to any action of the Agent or the Banks
by way of consent, approval or waiver shall be deemed modified by the phrase
"in its/their sole discretion."
(g) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent,
the Borrowers and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agent
merely because of the Agent's or Banks' involvement in their preparation.
1.3 Accounting Principles. 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
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<PAGE> 25
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.
1.4 Currency Equivalents Generally. For all purposes of this
Agreement (but not for purposes of the preparation of any financial
statements delivered pursuant hereto), the equivalent in any Offshore Currency
or other currency of an amount in Dollars, and the equivalent in Dollars of an
amount in any Offshore Currency or other currency, shall be determined at the
Spot Rate.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. Each Bank severally agrees,
on the terms and conditions set forth herein, to make loans to the Borrowers
(each such loan, a "Committed Loan") from time to time on any Business Day
during the period from the Closing Date to the Termination Date, in an
aggregate principal Dollar Equivalent amount not to exceed at any time
outstanding the amount set forth opposite the Bank's name in Schedule 2.1
under the heading "Commitment" (such amount as the same may be reduced
pursuant to Section 2.8 or as a result of one or more assignments pursuant
to Section 10.8, the Bank's "Commitment"); provided, however, that, after
giving effect to any Borrowing of Committed Loans, the aggregate principal
Dollar Equivalent amount of all outstanding Loans shall not exceed the
combined Commitments; provided, further, that in no event shall the
aggregate principal Dollar Equivalent of all outstanding Committed Loans
of APSA exceed the lesser of (x) $40,000,000 and (y) the combined
Commitments. Within the limits of each Bank's Commitment, and subject to
the other terms and conditions hereof, the Borrowers may borrow under this
Section 2.1, prepay pursuant to Section 2.9 and reborrow pursuant to this
Section 2.1.
2.2 Loan Accounts.
The Committed Loans made by each Bank shall be evidenced by
a Committed Note from each Borrower payable to the order of such Bank. The
Bid Loans made by each Bank shall be evidenced by a Bid Note from the Company
payable to the order of such Bank. Each Bank shall record in its records, or
at its option on the Schedule attached to its Committed Note or Bid Note, as
the case may be, all such Committed Loans or Bid Loans, as the case may be,
and any repayment in whole or part thereof. The loan accounts or records or
schedules, as the case may be, maintained by the Agent and each Bank shall be
rebuttable presumptive evidence of the amount of the Loans made by the Banks
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<PAGE> 26
to each Borrower and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrowers hereunder to pay any amount owing with
respect to the Loans.
2.3 Procedure for Committed Borrowing.
(a) Each Committed Borrowing shall be made upon a
Borrower's irrevocable written notice delivered to the Agent in the form of a
Notice of Borrowing (which notice must be received by the Agent prior to 8:00
a.m. (San Francisco time) (i) two Business Days prior to the requested
Borrowing Date, in the case of Offshore Rate Loans denominated in Dollars;
and (ii) three Business Days prior to the requested Borrowing Date, in the
case of Offshore Currency Loans and (iii) on the requested Borrowing Date, in
the case of Base Rate Loans, specifying:
(A) the amount of the Committed Borrowing,
which shall be in an aggregate amount not less than the
Minimum Tranche;
(B) the requested Borrowing Date, which
shall be a Business Day;
(C) the Type of Loans comprising the
Committed Borrowing;
(D) the duration of the Interest Period
applicable to such Committed Loans included in such notice.
If the Notice of Borrowing fails to specify the duration of
the Interest Period for any Committed Borrowing comprised of
Offshore Rate Loans, such Interest Period shall be one month;
and
(E) in the case of a Borrowing comprised of
Offshore Currency Loans, the Applicable Currency;
provided, however, that with respect to the Borrowing to be made on the
Closing Date, the Notice of Borrowing for Offshore Rate Loans and an
appropriate indemnification letter shall be delivered to the Agent not later
than 8:00 a.m. (San Francisco time) three Business Days before the Closing
Date.
(b) The Dollar Equivalent amount of any Borrowing in
an Offshore Currency will be determined by the Agent for such Borrowing
on the Determination Date therefor in accordance with Section 2.5(a). Upon
receipt of the Notice of Borrowing, the Agent will promptly notify each
Bank thereof and of the amount of such Bank's Pro Rata Share of the
Borrowing. In the case of a Borrowing comprised of Offshore Currency Loans,
such notice will provide the approximate amount of each Bank's Pro Rata Share
of
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<PAGE> 27
the Borrowing, and the Agent will, upon the determination of Dollar Equivalent
amount of the Borrowing as specified in the Notice of Borrowing, promptly
notify each Bank of the exact amount of such Bank's Pro Rata Share of the
Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share
of each Borrowing available to the Agent for the account of the Company at
the Agent's Payment Office on the Borrowing Date requested by the Borrower
in Same Day Funds and in the requested currency (i) in the case of a
Borrowing comprised of Loans in Dollars, by 11:00 a.m. (San Francisco
time), (ii) in the case of a Borrowing comprised of Offshore Currency
Loans, by such time as the Agent may determine to be necessary for such funds
to be credited on such date in accordance with normal banking practices in the
place of payment. The proceeds of all such Loans will then be made available
to the Borrower by the Agent by wire transfer in accordance with written
instructions provided to the Agent by the Borrower of like funds as received
by the Agent; provided that the Agent shall disburse such funds as it has
received from the Banks to the Borrower (x) in the case of Loans denominated
in Dollars, no later then 1:00 p.m. (San Francisco time) and (y) in the case
of Offshore Currency Loans, no later than two hours after the funding
deadline specified by the Agent under clause (ii) above.
(d) After giving effect to any Committed Borrowing,
there may not be more than eight different Interest Periods
in effect in respect of all Committed Loans and Bid Loans
together then outstanding.
2.4 Conversion and Continuation Elections for Committed Borrowings.
(a) The Borrowers may, upon irrevocable written notice to
the Agent in accordance with Section 2.4(b):
(i) elect, as of any Business Day, in the case of
Base Rate Loans, or as of the last day of the applicable Interest
Period, in the case of any other Type of Committed Loans
denominated in Dollars, to convert any such Committed Loans (or any
part thereof in an amount not less than the Minimum Tranche) into
Committed Loans in Dollars of any other Type; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any Committed Loans having Interest
Periods expiring on such day (or any part thereof in an amount not
less than the Minimum Tranche);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Committed Borrowing is reduced, by
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<PAGE> 28
payment, prepayment, or conversion of part thereof to be less than
$4,000,000, such Offshore Rate Loans shall automatically convert into Base
Rate Loans, and on and after such date the right of the Borrowers to continue
such Committed Loans as, and convert such Committed Loans into, Offshore Rate
Loans shall terminate.
(b) The Borrowers shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than 8:00 a.m.
(San Francisco time) at least (i) two Business Days in advance of the
Conversion/Continuation Date, if the Committed Loans are to be converted into
or continued as Offshore Rate Loans denominated in Dollars; (ii) three
Business Days in advance of the Conversion/Continuation Date, if the
Committed Loans are to be converted into or continued as Offshore Currency
Loans; and (iii) on the Conversion/Continuation Date, if the Loans
denominated in Dollars are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation
Date;
(B) the aggregate amount of Committed
Loans to be converted or continued;
(C) the Type of Committed Loans
resulting from the proposed conversion or continuation;
(D) other than in the case of
conversions into Base Rate Loans, the duration of the
requested Interest Period; and
(E) if applicable, the Applicable
Currency.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans in Dollars, the Borrowers have failed to
select timely a new Interest Period to be applicable to such Offshore Rate
Loans, as the case may be, or if any Default or Event of Default then exists,
the Borrowers shall be deemed to have elected to convert such Offshore Rate
Loans into Base Rate Loans denominated in Dollars effective as of the
expiration date of such Interest Period. If the Borrowers have failed to
select a new Interest Period to be applicable to Offshore Currency Loans prior
to the third Business Day in advance of the expiration date of the current
Interest Period applicable thereto as provided in Section 2.4(b), or if any
Default or Event of Default shall then exist, subject to the provisions of
Section 2.5(d), the Borrowers shall be deemed to have elected to pay such
Offshore Currency Loans and borrow Base Rate Loans denominated in Dollars.
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<PAGE> 29
(d) The Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Agent will promptly notify each Bank of the
details of any automatic conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal
amounts of the Committed Loans with respect to which the notice was given held
by each Bank.
(e) Unless the Required Banks otherwise agree, during
the existence of a Default or Event of Default, the Borrowers may not elect
to have a Committed Loan in Dollars converted into or continued as an Offshore
Rate Loan or an Offshore Currency Loan.
(f) After giving effect to any conversion or
continuation of Committed Loans, there may not be more than eight different
Interest Periods in effect in respect of all Committed Loans and Bid Loans
together then outstanding.
2.5 Utilization of Revolving Commitments in Offshore Currencies.
(a) The Agent will determine the Dollar Equivalent amount
with respect to any (i) Borrowing comprised of Offshore Currency Loans as of
the requested Borrowing Date and as of any requested continuation date, (ii)
outstanding Offshore Currency Loans as of the last Banking Day of each
month, and, during the occurrence and continuation of an Event of Default,
such other dates as may be requested by the Required Banks (but in no event
more frequently than once a week) (each such date under clauses (i) and (ii) a
"Determination Date").
(b) In the case of a proposed Borrowing comprised of
Offshore Currency Loans, the Banks shall be under no obligation to make
Offshore Currency Loans in the requested Offshore Currency as part of such
Borrowing if the Agent has received notice from the Required Banks by 12:30
p.m. (San Francisco time) three Business Days prior to the day of such
Borrowing that deposits in the relevant Offshore Currency (in the applicable
amounts) are not being offered to such Banks in the interbank eurocurrency
market for such Interest Period in which event the Agent will give notice to
the Borrower no later than 1:30 p.m. (San Francisco time) on the third
Business Day prior to the requested date of such Borrowing that the Borrowing
in the requested Offshore Currency is not then available, and notice thereof
also will be given promptly by the Agent to the Banks. If the Agent shall
have so notified the Borrower that any such Borrowing in a requested Offshore
Currency is not then available, the Notice of Borrowing relating to such
requested Borrowing
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<PAGE> 30
shall be deemed to be withdrawn, the Borrowing requested therein shall not
occur and the Agent will promptly so notify each Bank.
(c) In the case of a proposed continuation of Offshore
Currency Loans for an additional Interest Period pursuant to Section 2.4, the
Banks shall be under no obligation to continue such Offshore Currency Loans if
the Agent has received notice from the Required Banks by 12:30 p.m. (San
Francisco time) three Business Days prior to the day of such continuation that
deposits in the relevant Offshore Currency (in the applicable amounts) are
not being offered to such Banks in the interbank eurocurrency market for such
Interest Period in which event the Agent will give notice to the Borrower not
later than 1:30 p.m. (San Francisco time) on the third Business Day prior to
the requested date of such continuation that the continuation of such
Offshore Currency Loans in the relevant Offshore Currency is not then
available, and notice thereof also will be given promptly by the Agent to the
Banks. If the Agent shall have so notified the Borrower that any such
continuation of Offshore Currency Loans is not then available, any Notice of
Continuation with respect thereto shall be deemed withdrawn and such
Offshore Currency Loans shall be repaid on the last day of the Interest Period
with respect to any such Offshore Currency Loans.
(d) Notwithstanding anything herein to the contrary,
during the existence of a Default or an Event of Default, unless the Required
Banks otherwise agree, all outstanding Offshore Currency Loans shall be
redenominated and converted into Base Rate Loans in Dollars on the last day of
the Interest Period applicable to any such Offshore Currency Loans.
(e) The Borrowers shall be entitled to request that
Committed Loans hereunder also be permitted to be made in any other lawful
currency constituting a eurocurrency (other than Dollars), in addition to the
eurocurrencies specified in the definition of "Offshore Currency" herein,
that in the opinion of the Agent and the Banks is at such time freely
traded in the offshore interbank foreign exchange markets and is freely
transferable and freely convertible into Dollars (an "Agreed Alternative
Currency"). The Borrower shall deliver to the Agent any request for
designation of an Agreed Alternative Currency in accordance with Section 10.2,
to be received by the Agent not later than 10:00 a.m. (San Francisco time) at
least ten Business Days in advance of the date of any Borrowing hereunder
proposed to be made in such Agreed Alternative Currency. Upon receipt of any
such request the Agent will promptly notify the Banks thereof, and each Bank
will respond to such request within two Business Days of receipt thereof.
Each Bank may grant or accept such request in its sole discretion. The
Agent will promptly notify the Borrowers of the acceptance or rejection of any
such
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request and, if accepted, the time requirements for requesting Borrowings in
such Agreed Alternative Currency.
2.6 Bid Borrowings. In addition to Committed Borrowings pursuant to
Section 2.3, each Bank severally agrees that the Company may, as set forth in
Section 2.7, from time to time request the Banks prior to the Termination
Date to submit offers to make Bid Loans in Dollars to the Company; provided,
however, that the Banks may, but shall have no obligation to, submit such
offers and the Company may, but shall have no obligation to, accept any such
offers and, if such offers are accepted by the Company, to make such Bid
Loans; and provided, further, that at no time shall (a) the outstanding
aggregate principal amount of all Bid Loans made by all Banks, plus the
outstanding aggregate principal amount of all Committed Loans made by all
Banks exceed the combined Commitments; or (b) the number of Interest Periods
for Bid Loans then outstanding plus the number of Interest Periods for
Committed Loans then outstanding exceed eight. APSA shall not be entitled to
request Bid Loans and the Company shall only be entitled to request Bid Loans
in Dollars.
2.7 Procedure for Bid Borrowings.
(a) When the Company wishes to request the Banks to submit
offers to make Bid Loans hereunder, it shall transmit to the Agent by
telephone call followed promptly by facsimile transmission a notice in
substantially the form of Exhibit I (a "Competitive Bid Request") so as to be
received no later than 8:00 a.m. (San Francisco time) one Business Day prior to
the date of a proposed Bid Borrowing, specifying:
(i) the date of such Bid Borrowing, which shall be a
Business Day;
(ii) the aggregate amount of such Bid Borrowing,
which shall be a minimum amount of $5,000,000 or in multiples of
$1,000,000 in excess thereof; and
(iii) the duration of the Interest Period
applicable thereto, subject to the provisions of the definition of
"Interest Period" herein.
Subject to Section 2.7(c), the Company may not request Competitive Bids for
more than three Interest Periods in a single Competitive Bid Request and
may not request Competitive Bids more than once in any period of five Business
Days.
(b) Upon receipt of a Competitive Bid Request, the Agent
will promptly send to the Banks by facsimile transmission an Invitation for
Competitive Bids, which shall constitute an
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invitation by the Company to each Bank to submit Competitive Bids offering to
make the Bid Loans to which such Competitive Bid Request relates in accordance
with this Section 2.7.
(c) (i) Each Bank may at its discretion submit a
Competitive Bid containing an offer or offers to make Bid Loans in
response to any Invitation for Competitive Bids. Each Competitive
Bid must comply with the requirements of this Section 2.7(c) and
must be submitted to the Agent by facsimile transmission at the
Agent's office for notices set forth on the signature pages hereto
not later than 6:30 a.m. (San Francisco time) on the proposed
date of Borrowing; provided that Competitive Bids submitted by BAI
(or any Affiliate of BAI) in the capacity of a Bank may be
submitted, and may only be submitted, if BAI or such Affiliate
notifies the Agent of the terms of the offer or offers contained
therein not later than 6:15 a.m. (San Francisco time) on the proposed
date of Borrowing.
(ii) Each Competitive Bid shall be in substantially
the form of Exhibit J, specifying therein:
(A) the proposed date of Borrowing;
(B) the principal amount of each Bid
Loan for which such Competitive Bid is being made, which
principal amount (x) may be equal to, greater than or less
than the Commitment of the quoting Bank, (y) must be
$5,000,000 or in multiples of $1,000,000 in excess thereof,
and (z) may not exceed the principal amount of Bid Loans for
which Competitive Bids were requested;
(C) the rate of interest per annum
expressed in multiples of 1/1000th of one basis point
(the "Absolute Rate") offered for each such Bid Loan; and
(D) the identity of the quoting Bank.
A Competitive Bid may contain up to three separate offers by the
quoting Bank with respect to each Interest Period specified in the
related Invitation for Competitive Bids.
(iii) Any Competitive Bid shall be disregarded if it:
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(A) is not substantially in conformity
with Exhibit H or does not specify all of the information
required by Section 2.7(c)(ii);
(B) contains qualifying, conditional or
similar language;
(C) proposes terms other than or in
addition to those set forth in the applicable Invitation
for Competitive Bids; or
(D) arrives after the time set forth in
Section 2.7(c)(i).
(d) Promptly on receipt and not later than 7:00 a.m. (San
Francisco time) on the proposed date of Borrowing of an Absolute Rate Bid
Loan, the Agent will notify the Company of the terms (i) of any Competitive
Bid submitted by a Bank that is in accordance with Section 2.7(c), and (ii) of
any Competitive Bid that amends, modifies or is otherwise inconsistent with a
previous Competitive Bid submitted by such Bank with respect to the same
Competitive Bid Request. Any such subsequent Competitive Bid shall be
disregarded by the Agent unless such subsequent Competitive Bid is submitted
solely to correct a manifest error in such former Competitive Bid and only if
received within the times set forth in Section 2.7(c). The Agent's notice to
the Company shall specify (1) the aggregate principal amount of Bid Loans for
which offers have been received for each Interest Period specified in the
related Competitive Bid Request; and (2) the respective principal amounts
and Absolute Rates so offered. Subject only to the provisions of Sections
3.2, 3.5 and 4.2 hereof and the provisions of this Section 2.7(d), any
Competitive Bid shall be irrevocable except with the written consent of the
Agent given on the written instructions of the Company.
(e) Not later than 7:30 a.m. (San Francisco time) on the
proposed date of Borrowing, the Company shall notify the Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
Section 2.7(d). The Company shall be under no obligation to accept any
offer and may choose to reject all offers. In the case of acceptance, such
notice shall specify the aggregate principal amount of offers for each
Interest Period that is accepted. The Company may accept any Competitive Bid
in whole or in part; provided that:
(i) the aggregate principal amount of each Bid
Borrowing may not exceed the applicable amount set forth in the
related Competitive Bid Request;
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(ii) the principal amount of each Bid Borrowing
must be $5,000,000 or in any multiple of $1,000,000 in excess
thereof;
(iii) acceptance of offers may only be made on
the basis of ascending Absolute Rates within each Interest Period;
and
(iv) the Company may not accept any offer that is
described in Section 2.7(c)(iii) or that otherwise fails to comply
with the requirements of this Agreement.
(f) If offers are made by two or more Banks with the same
Absolute Rates for a greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related Interest Period, the
principal amount of Bid Loans in respect of which such offers are accepted
shall be allocated by the Agent among such Banks as nearly as possible (in
such multiples, not less than $1,000,000, as the Agent may deem appropriate) in
proportion to the aggregate principal amounts of such offers. Determination
by the Agent of the amounts of Bid Loans shall be conclusive in the absence of
manifest error.
(g) (i) The Agent will promptly notify each Bank having
submitted a Competitive Bid if its offer has been accepted and, if
its offer has been accepted, of the amount of the Bid Loan or Bid
Loans to be made by it on the date of the Bid Borrowing.
(ii) Each Bank, which has received notice pursuant
to Section 2.7(g)(i) that its Competitive Bid has been accepted,
shall make the amounts of such Bid Loans available to the Agent
for the account of the Company at the Agent's Payment Office, by
11:00 a.m. (San Francisco time) on such date of Bid Borrowing, in
funds immediately available to the Agent for the account of the
Company at the Agent's Payment Office.
(iii) Promptly following each Bid Borrowing,
the Agent shall notify each Bank of the ranges of bids submitted
and the highest and lowest Bids accepted for each Interest Period
requested by the Company and the aggregate amount borrowed pursuant to
such Bid Borrowing.
(h) If, on or prior to the proposed date of Borrowing, the
Commitments have not been terminated and if, on such proposed date of Borrowing
all applicable conditions to funding referenced in Sections 3.2, 3.5 and 4.2
hereof are satisfied, the Banks whose offers the Company has accepted will
fund each Bid Loan so
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accepted. Nothing in this Section 2.7 shall be construed as a right of first
offer in favor of the Banks or to otherwise limit the ability of the Company
to request and accept credit facilities from any Person (including any of the
Banks), provided that no Default or Event of Default would otherwise arise or
exist as a result of the Company executing, delivering or performing under such
credit facilities.
2.8 Voluntary Termination or Reduction of Commitments. The Company
may, upon not less than five Business Days' prior notice to the Agent,
terminate the Commitments, or permanently reduce the Commitments by an
aggregate minimum Dollar Equivalent amount of $5,000,000 or any Dollar
Equivalent multiple of $1,000,000 in excess thereof; unless, after giving
effect thereto and to any prepayments of Loans made on the effective date
thereof, the then-outstanding principal Dollar Equivalent amount of the
Loans would exceed the amount of the combined Commitments then in effect.
Once reduced in accordance with this Section, the Commitments may not be
increased. Any reduction of the Commitments shall be applied to each Bank
according to its Pro Rata Share.
2.9 Optional Prepayments.
(a) Subject to Section 3.4, the Borrowers may, at any time
or from time to time, by giving the Agent irrevocable notice not later than
(1) 8:30 a.m. (San Francisco time) on the date of the proposed prepayment, in
the case of Base Rate Loans and (ii) 8:30 a.m. (San Francisco time) two
Business Days prior to the proposed payment date, in the case of Offshore
Rate Loans, ratably prepay Committed Loans in whole or in part, in minimum
Dollar Equivalent amounts of $4,000,000 or any multiple of $1,000,000 in
excess thereof. Such notice of prepayment shall specify the date and amount
of such prepayment and the Type(s) of Committed Loans to be prepaid and the
Applicable Currency. The Agent will promptly notify each Bank of its receipt
of any such notice, and of such Bank's Pro Rata Share of such prepayment.
If such notice is given by a Borrower, such Borrower shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to each
such date on the amount prepaid and any amounts required pursuant to Section
3.4.
(b) Bid Loans may not be voluntarily prepaid.
2.10 Currency Exchange Fluctuations. If on any Determination
Date the Agent shall have determined that the aggregate Dollar Equivalent
principal amount of all Loans then outstanding exceeds the combined
Commitments of the Banks by more than $500,000, due to a change in applicable
rates of exchange between Dollars and Offshore Currencies, then the Agent shall
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give notice to the Borrowers that a prepayment is required under this Section,
and the Borrowers agree thereupon to make prepayments of Loans such that,
after giving effect to such prepayment the aggregate Dollar Equivalent amount
of all Loans does not exceed the combined Commitments. Prepayments of Loans
under this Section 2.10 shall be applied (and, to the extent necessary, made
in the Applicable Currency) to repay first, Base Rate Loans and second,
Offshore Rate Loans. Any prepayment of an Offshore Rate Loan shall be subject
to the provisions of Section 3.4.
2.11 Repayment.
(a) The Borrowers shall repay to the Banks on the
Termination Date the aggregate principal amount of all Committed Loans
outstanding on such date.
(b) The Company shall repay each Bid Loan on the last day
of the relevant Interest Period.
2.12 Interest.
(a) Each Committed Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the Offshore Rate plus the Applicable Margin or the
Base Rate, as the case may be (and subject to the Borrower's right to convert
to other Types of Loans under Section 2.4). Each Bid Loan shall bear
interest on the outstanding principal amount thereof from the relevant
Borrowing Date at a rate per annum equal to the Absolute Rate.
(b) Interest on each Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the date of any
prepayment of Committed Loans under Section 2.8, 2.9 or 2.10 for the
portion of the Loans so prepaid and upon payment (including prepayment) in
full thereof and, during the existence of any Event of Default, interest shall
be paid on demand of the Agent at the request or with the consent of the
Required Banks.
(c) Any change in the Applicable Margin or Applicable
Non-Use Fee Rate resulting from a change in the Pricing Level in accordance
with the Pricing Grid shall be effective 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 6.1(a) or
6.1(b) on the 60th day (or, if applicable, the 90th day) after any Fiscal
Quarter, commencing on such 60th or 90th day, as applicable, until the
date such financial statements are delivered, the Pricing Level in effect
shall be in Pricing Level VI.
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(d) 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 (i) for any Base Rate Loan the sum of
two percent (2%) plus the Base Rate from time to time in effect; and (ii)
for any Offshore Rate 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 Base Rate from time to time in effect or, if such Loan is
denominated in another Applicable Currency, at a rate per annum equal to the
sum of the Applicable Margin for Offshore Rate 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
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 transferrable 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 Offshore Rate Loan or, if the Agent is not placing
deposits in such Applicable Currency in the interbank market, then the
Agent's cost of funds in such Applicable Currency for such period).
2.13 Fees.
(a) Arrangement, Agency Fees. The Company shall pay an
arrangement fee to the Arranger for the Arranger's own account, and shall pay
an agency fee to the Agent for the Agent's own account, as required by the
letter agreement ("Fee Letter") between the Company, the Arranger and the
Agent dated July 18, 1995.
(b) Non-Use Fees. The Company shall pay to the Agent for
the account of each Bank a non-use fee on the average daily unused portion of
such Bank's Commitment, computed on a quarterly basis in arrears on the last
Business Day of each February, May, August and November commencing November 30,
1995 based upon the daily utilization for that quarter as calculated by the
Agent, equal to the Applicable Non-Use Fee Rate. Such non-use fee shall
accrue from the Closing Date to the Termination Date and shall be due and
payable quarterly in arrears on the last Business Day of each February, May,
August and November commencing on August 30, 1995 through the Termination Date,
with the final payment to be made on the Termination Date. For purposes of
calculating the non-use fee, Bid Loans shall not be deemed usage of the
Commitments. The non-use fees provided in this Section 2.13(b)
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shall accrue at all times after the above-mentioned commencement date,
including at any time during which one or more conditions in Article IV are
not met.
2.14 Computation of Fees and Interest.
(a) All computations of fees and interest shall be
made on the basis of a 360-day year and actual days elapsed (which results
in more interest being paid than if computed on the basis of a 365-day year).
Interest and fees shall accrue during each period during which interest or
such fees are computed from the first day thereof to the last day thereof.
(b) For purposes of determining utilization of each Bank's
Commitment in order to calculate the non-use fee due under Section 2.13(b), the
amount of any outstanding Offshore Currency Loan on any date shall be
determined based upon the Dollar Equivalent amount as of the most recent
Determination Date with respect to such Offshore Currency Loan.
(c) Each determination of an interest rate or a Dollar
Equivalent amount by the Agent shall be conclusive and binding on the Company
and the Banks in the absence of manifest error.
2.15 Payments by the Borrower.
(a) All payments to be made by the Borrower shall be made
without set-off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Borrower shall be made to the Agent for
the account of the Banks at the Agent's Payment Office, and, with respect to
principal of, interest on, and any other amounts relating to, any Offshore
Currency Loan, shall be made in the Offshore Currency in which such Loan is
denominated or payable, and, with respect to all other amounts payable
hereunder, shall be made in Dollars. Such payments shall be made in Same
Day Funds, and (i) in the case of Offshore Currency payments, no later
than such time on the dates specified herein as may be determined by the
Agent to be necessary for such payment to be credited on such date in
accordance with normal banking procedures in the place of payment, and (ii)
in the case of any Dollar payments, no later than 11:00 a.m. (San Francisco
time) on the date specified herein. The Agent will promptly distribute to
each Bank its Pro Rata Share (or other applicable share as expressly
provided herein) of such principal, interest, fees or other amounts, in like
funds as received. Any payment which is received by the Agent later than
11:00 a.m. (San Francisco time), or later than the time specified by the
Agent as provided in clause (i) above (in the case of Offshore Currency
payments), shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue.
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(b) Subject to the provisions set forth in the
definition of "Interest Period" herein, whenever any payment is due on a day
other than a Business Day, such payment shall be made on the following
Business Day, and such extension of time shall in such case be included in
the computation of interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower
prior to the date on which any payment is due to the Banks that the Borrower
will not make such payment in full as and when required, the Agent may assume
that the Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Bank on such
due date an amount equal to the amount then due such Bank. If and to the
extent the Borrower has not made such payment in full to the Agent, each Bank
shall repay to the Agent on demand such amount distributed to such Bank,
together with interest thereon at the Federal Funds Rate for each day from the
date such amount is distributed to such Bank until the date repaid.
2.16 Payments by the Banks to the Agent.
(a) Unless the Agent receives notice from a Bank on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Committed
Borrowing, that such Bank will not make available as and when required
hereunder to the Agent for the account of the Borrower the amount of that
Bank's Pro Rata Share of the Committed Borrowing, the Agent may assume that
each Bank has made such amount available to the Agent in immediately
available funds on the Borrowing Date and the Agent may (but shall not be so
required), in reliance upon such assumption, make available to the Borrower on
such date a corresponding amount. If and to the extent any Bank shall not
have made its full amount available to the Agent in immediately available
funds and the Agent in such circumstances has made available to the
Borrower such amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent, together with
interest at the Federal Funds Rate for each day during such period. A
notice of the Agent submitted to any Bank with respect to amounts owing under
this Section 2.16(a) shall be conclusive, absent manifest error. If such
amount is so made available, such payment to the Agent shall constitute such
Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Agent on the Business Day following
the Borrowing Date, the Agent will notify the Borrower of such failure to
fund and, upon demand by the Agent, the Borrower shall pay such amount to the
Agent for the Agent's account, together with interest thereon for each day
elapsed since the date of such Committed Borrowing, at a rate per annum
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equal to the interest rate applicable at the time to the Committed Loans
comprising such Committed Borrowing.
(b) The failure of any Bank to make any Committed Loan
on any Borrowing Date shall not relieve any other Bank of any obligation
hereunder to make a Committed Loan on such Borrowing Date, but no Bank shall
be responsible for the failure of any other Bank to make the Committed Loan
to be made by such other Bank on any Borrowing Date.
2.17 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Bank shall obtain on account of the
Committed Loans made by it any payment (whether voluntary, involuntary,
through the exercise of any right of set-off, or otherwise) in excess of its
Pro Rata Share, such Bank shall immediately (a) notify the Agent of such fact,
and (b) purchase from the other Banks such participations in the Committed
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment pro rata with each of them; provided, however, that if all
or any portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded and each
other Bank shall repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable share (according
to the proportion of (i) the amount of such paying Bank's required repayment
to (ii) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. The Borrowers agree that any Bank so
purchasing a participation from another Bank may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 10.10) with respect to such participation as
fully as if such Bank were the direct creditor of such Borrower in the amount
of such participation. The Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes.
(a) Any and all payments by the Borrowers to each Bank or
the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for, any Taxes. In
addition, the Borrowers shall pay all Other Taxes and Further Taxes.
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(b) If the Company shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum
payable hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as
necessary so that, after making all required deductions and
withholdings (including deductions and withholdings applicable to
additional sums payable under this Section) such Bank or the Agent,
as the case may be, receives and retains an amount equal to the sum
it would have received and retained had no such deductions or
withholdings been made;
(ii) the Borrowers shall make such deductions and
withholdings;
(iii) the Borrowers shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) the Borrowers shall also pay to each Bank or
the Agent for the account of such Bank, at the time interest is
paid, Further Taxes in an amount that the respective Bank specifies
as necessary to preserve the after-tax yield the Bank would have
received if such Taxes, Other Taxes or Further Taxes had not been
imposed.
(c) Each Borrower agrees to indemnify and hold harmless each
Bank and the Agent for the full amount of (i) Taxes, (ii) Other Taxes, and
(iii) Further Taxes in the amount that the respective Bank reasonably
specifies as necessary to preserve the after-tax yield the Bank would have
received if such Taxes, Other Taxes or Further Taxes had not been imposed,
and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such
Taxes, Other Taxes or Further Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days after the
date the Bank or the Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the
Borrowers of Taxes, Other Taxes or Further Taxes, the Borrowers shall furnish
to each Bank or the Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment satisfactory to such
Bank or the Agent.
(e) If a Borrower is required to pay additional amounts to
any Bank or the Agent pursuant to Section 3.1(b) or (c) then such Bank shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of
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its Lending Office so as to eliminate any such additional payment by the
Borrowers which may thereafter accrue, if such change in the sole judgment
of such Bank is not otherwise disadvantageous to such Bank.
3.2 Illegality.
(a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Bank or its applicable Lending Office
to make Offshore Rate Loans (including Offshore Rate Loans in any Applicable
Currency), then, on notice thereof by the Bank to the Borrowers through the
Agent, any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Agent and the Borrowers that the
circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain
any Offshore Rate Loan, the Borrowers shall, upon its receipt of notice of
such fact and demand from such Bank (with a copy to the Agent), prepay
in full such Offshore Rate Loans of that Bank then outstanding, together
with interest accrued thereon and amounts required under Section 3.4,
either on the last day of the Interest Period thereof, if the Bank may
lawfully continue to maintain such Offshore Rate Loans to such day, or
immediately, if the Bank may not lawfully continue to maintain such Offshore
Rate Loan. If a Borrower is required to so prepay any Offshore Rate Loan,
then concurrently with such prepayment, such Borrower shall borrow from the
affected Bank, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain
Offshore Rate Loans has been so terminated or suspended, the Company may
elect, by giving notice to the Bank through the Agent that all Loans which
would otherwise be made by the Bank as Offshore Rate Loans shall be instead
Base Rate Loans.
(d) Before giving any notice to the Agent under this
Section, the affected Bank shall designate a different Lending Office with
respect to its Offshore Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Bank, be illegal or otherwise disadvantageous to the Bank.
3.3 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the
introduction of or any change in or in the interpretation of any
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law or regulation after the Closing Date or (ii) the compliance by that Bank
with any guideline or request from any central bank or other Governmental
Authority after the Closing Date (whether or not having the force of law),
there shall be any increase in the cost to such Bank of agreeing to make or
making, funding or maintaining any Offshore Rate Loans, then the Borrowers
shall be liable for, and shall from time to time, within 10 days after
demand (with a copy of such demand to be sent to the Agent), pay to the
Agent for the account of such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the
introduction after the Closing Date of any Capital Adequacy Regulation, (ii)
any change after the Closing Date in any Capital Adequacy Regulation, (iii)
any change after the Closing Date in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or
(iv) compliance by the Bank (or its Lending Office) or any corporation
controlling the Bank with any Capital Adequacy Regulation adopted after the
Closing Date, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of
its Commitment, loans, credits or obligations under this Agreement, then, upon
demand of such Bank to the Borrowers through the Agent, the Borrowers shall
pay to the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
3.4 Funding Losses. The Borrowers shall reimburse each Bank and
hold each Bank harmless from any loss or expense which the Bank may sustain
or incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis
any payment of principal of any Offshore Rate Loan;
(b) the failure of the Borrowers to borrow, continue or
convert a Committed Loan after the Borrowers have given (or is deemed to have
given) a Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Borrowers to make any prepayment of
any Committed Loan in accordance with any notice delivered under Section 2.8;
(d) the prepayment (including pursuant to Section 2.8, 2.9 or
2.10) or other payment (including after acceleration
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thereof) of any Offshore Rate Loan or Absolute Rate Bid Loan on a day that is
not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of
the relevant Interest Period;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans or
from fees payable to terminate the deposits from which such funds were
obtained.
3.5 Inability to Determine Rates. If the Required Banks determine
that for any reason adequate and reasonable means do not exist for determining
the Offshore Rate for any requested Interest Period with respect to a
proposed Offshore Rate Loan, or that the Offshore Rate for any requested
Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to such Banks of funding such Loan,
the Agent will promptly so notify the Company and each Bank. Thereafter, the
obligation of the Banks to make or maintain Offshore Rate Loans hereunder
shall be suspended until the Agent upon the instruction of the Required
Banks revokes such notice in writing. Upon receipt of such notice, the
Borrowers may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Borrowers do not revoke
such Notice, the Banks shall make, convert or continue the Committed Loans,
as proposed by the Borrowers, in the amount specified in the applicable
notice submitted by the Borrowers, but such Committed Loans shall be made,
converted or continued as Base Rate Loans instead of Offshore Rate Loans. In
the case of any Offshore Currency Loans, the Borrowing or continuation shall
be in an aggregate amount equal to the Dollar Equivalent amount of the
originally requested Borrowing or continuation in the Offshore Currency, and
to that end any outstanding Offshore Currency Loans which are the subject of
any continuation shall be redenominated and converted into Base Rate Loans in
Dollars with effect from the last day of the Interest Period with respect to
any such Offshore Currency Loans.
3.6 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the Borrowers (with a
copy to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Bank hereunder and such certificate shall be conclusive and
binding on the Borrowers in the absence of manifest error. In determining
the amount payable to the Bank pursuant to this Article III, each Bank shall
act reasonably and in good faith and will, to the extent the increased costs
or reductions in amounts received or receivable relate to such Bank's loans in
general (including the Loans) and are not specifically attributable to the
Loans and other amounts
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due hereunder, use averaging and attribution methods which are reasonable and
which cover all loans similar to the Loans made by such Bank.
3.7 Substitution of Banks. Upon the receipt by the either
Borrower from any Bank (an "Affected Bank") of a claim for compensation under
Section 3.1, 3.2 or 3.3, the Company may: (i) request the Affected Bank to
cooperate with the Company in its efforts to obtain a replacement bank or
financial institution satisfactory to the Company to acquire and assume all
or a ratable part of all of such Affected Bank's Loans and Commitment (a
"Replacement Bank"); (ii) request one more of the other Banks to acquire and
assume all or part of such Affected Bank's Loans and Commitment; or (iii)
designate a Replacement Bank. Any such designation of a Replacement Bank
under clause (i) or (iii) shall be subject to the prior written consent of the
Agent (which consent shall not be unreasonably withheld).
3.8 Survival. The agreements and obligations of the Borrowers in
this Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions of Initial Loans. The obligation of each Bank to make
its initial Committed Loan hereunder, and to receive through the Agent the
initial Competitive Bid Request, is subject to the condition that the Agent
have received on or before the Closing Date all of the following, in form and
substance satisfactory to the Agent, and in sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by each party
hereto.
(b) Notes. A Bid Note of the Company payable to the
order of each Bank and one Committed Note of each Borrower payable to the
order of each Bank.
(c) 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 and the other
documents provided for in this Agreement to be executed by such Borrower.
(d) 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
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to sign this Agreement 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
Bank may conclusively rely on such certificate until formally advised by a
like certificate of any changes therein).
(e) Opinion of Counsel for the Company. The opinion of
Quarles & Brady, counsel for the Company, and Salans Hertzfeld & Heilbronn,
counsel for APSA, in the form of Exhibit D.
(f) Opinion of Counsel for the Agent. The opinion of Mayer,
Brown & Platt, counsel for the Agent, in the form of Exhibit G.
(g) Termination of Existing Credit Agreement. 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.
(h) Other Documents. Such other approvals, opinions,
documents or materials as the Agent or any Bank may request.
4.2 Conditions to All Borrowings. The obligation of each Bank to
make any Committed Loan to be made by it and the obligation of any Bank to
make any Bid Loan as to which the Company has accepted the relevant
Competitive Bid (including its initial Loan) is subject to the satisfaction
of the following conditions precedent on the relevant Borrowing Date:
(a) Notice of Borrowing. As to any Committed Loan, the
Agent shall have received (with, in the case of the initial Loan only, a
copy for each Bank) a Notice of Borrowing.
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V (excluding, except in the case of
the initial Loan hereunder, Sections 5.6 and 5.8) shall be true and correct
on and as of such Borrowing Date with the same effect as if made on and as of
such Borrowing Date.
(c) No Existing Default. No Default or Event of Default
shall exist or shall result from such Borrowing.
Each Notice of Borrowing and Competitive Bid Request submitted by the Company
hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice or request and as of each
Borrowing Date that the conditions in Section 4.2 are satisfied.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce the Banks to enter into this Agreement and to make Loans
hereunder, each Borrower represents and warrants to the Agent and the Banks as
follows:
5.1 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 other Loan Documents and to engage in the transactions
contemplated by this Agreement.
5.2 Authorization; No Conflict. The execution and delivery of this
Agreement, the borrowings hereunder, the execution and delivery of the other
Loan Documents, and the performance by the Company of its obligations under
this Agreement and the other Loan Documents 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 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.
5.3 Validity and Binding Nature. This Agreement and each other Loan
Document constitute the 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.
5.4 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 Bank,
including (i) the audited consolidated
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balance sheet at August 31, 1994 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, 1995
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, 1994 and related
consolidated statements of earnings and shareholders equity of APSA and its
Subsidiaries and (iv) the unaudited consolidated balance sheet dated May 31,
1995 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 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 Banks 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.
5.5 No Material Adverse Change. Since August 31, 1994, no event
has occurred or condition has arisen that has had or is reasonably likely to
have a Material Adverse Effect.
5.6 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
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set forth in Item 5.6 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 5.4.
5.7 Liens. None of the assets of the Company or any Subsidiary is
subject to any Lien, except as permitted by Section 6.9.
5.8 Subsidiaries. Item 5.08 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.
5.9 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 penalty. Except as disclosed in footnote M of
the Company's 1994 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.
5.10 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.
5.11 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
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or ultimate, of purchasing or carrying any Margin Stock or maintaining or
extending credit to others for such purpose.
5.12 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.
5.13 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 5.13 of the Disclosure
Schedule, and, except as disclosed in items 2 and 3 of Item 5.13 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 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 5.13 of the Disclosure
Schedule, and, except as disclosed in items 2 and 3 of Item 5.13 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 5.13 of the Disclosure
Schedule, and, except as disclosed in items 2 and 3 of Item 5.13 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
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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 5.13 of the Disclosure Schedule, and, except as disclosed
in items 2 and 3 of Item 5.13 of the Disclosure Schedule, none of the matters
disclosed on such Schedule has had or is reasonably likely to have a Material
Adverse Effect.
5.14 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.
5.15 Information. All information heretofore or contemporaneously
herewith furnished by the Borrowers or any Subsidiary to any Bank 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 Bank 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.
5.16 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.
5.17 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 6.9 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
6.9.
5.18 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 Materi-
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ally Adverse Effect, except as may be disclosed in Item 5.18 of the Disclosure
Schedule.
5.19 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 5.19 of the
Disclosure Schedule.
ARTICLE VI
COVENANTS
Until the expiration or termination of the Commitments, and
thereafter until all obligations of the Borrowers hereunder are paid in
full, each Borrower agrees that, unless at any time the Required Banks shall
otherwise expressly consent in writing, it will:
6.1 Reports, Certificates and Other Information. Furnish to the
Agent and each Bank:
(a) Audit Report. Promptly when available and in any event
within 90 days after the close of each Fiscal Year,
(i) 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 Banks, (ii) 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 (iii) 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.
(b) 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),
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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).
(c) Compliance Certificate. Concurrently with each set of
financial statements delivered pursuant to Section 6.1(a) and 6.1(b), a
Compliance Certificate executed by the chief financial officer or the Treasurer
of the Company.
(d) 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.
(e) 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: (i) the occurrence of an Event of
Default or a Default; (ii) any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the Company to the
Banks 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; (iii) 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 (iv) any
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other event or occurrence which has had or is reasonably likely to have a
Material Adverse Effect.
(f) Other Information. From time to time such other
information concerning the Company and its Subsidiaries as any Bank or the
Agent may reasonably request.
6.2 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 Bank 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 Bank
or the Agent or any representative thereof), and to examine (and, at the
Company's or such Subsidiary's expense, make copies of) any of its books or
other corporate records.
6.3 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 5.19 of the
Disclosure Schedule.
6.4 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.
6.5 Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 6.7) 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).
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6.6 Financial Ratios and Restrictions.
(a) Minimum Shareholders Equity. Not permit at any time (i)
Shareholders Equity for the Company to be less than the sum of $91,000,000
plus 25% of Consolidated Net Income for each Fiscal Quarter ending on or
after February 28, 1995 (excluding any Fiscal Quarter in which there is a
loss) and (ii) Shareholders Equity for APSA to be less than $1.
(b) Fixed Charge Coverage Ratio. Not permit the Fixed Charge
Coverage Ratio to be less than 1.5:1.0.
(c) Debt to Capital Ratio. Not permit at any time the Debt
to Capital Ratio to exceed 58%.
6.7 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:
(a) 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;
(b) any such purchase or other acquisition by the Company or
APSA of the assets or stock of any wholly-owned Subsidiary;
(c) (i) the Permitted Receivables Securitization and (ii) any
sale, transfer, conveyance or lease of any asset provided that (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 (c)(ii) in any Fiscal Year
do not exceed 15% of Tangible Net Assets (measured as of the last day
of the most recently ended Fiscal Year) and (y) no Event of Default or
Default exists or would result therefrom; or
(d) any acquisition if (i) (A) such acquisition is an
acquisition of assets, or (B) such acquisition is by merger and the
Company or a wholly-owned Subsidiary is the surviving Corporation, or
(C) after such acquisition the Company (if it is the acquiring
entity) or a Subsidiary owns (x) at least a majority of the
securities of each class having ordinary voting power of, or a
majority of the
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ownership interest in, the acquired Person or (y) 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
(y), 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
Tangible Net Assets of the Company and its Subsidiaries, (ii) no
Event of Default or Default exists or would result therefrom and (iii)
prior to the consummation of such acquisition, the Company provides
to each Bank notice of such acquisition and, if the purchase price of
such acquisition is $5,000,000 or more, a certificate of the chief
financial officer or the treasurer of the Company (attaching
computations to demonstrate compliance with all financial covenants
hereunder) stating that such acquisition complies with this Section
6.7 and that any other conditions under this Agreement relating to
such acquisition have been satisfied.
6.8 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.
6.9 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 6.09 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 (whether real or
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personal property) 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 $3,000,000; (f) attachments, judgments and other similar
Liens, for sums not exceeding $2,000,000, 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 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 $6,000,000.
6.10 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.
6.11 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).
6.12 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in compliance in all
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material respects with all applicable Requirements of Law and regulations.
6.13 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.
6.14 Environmental Matters.
(a) Environmental Obligations. (i) 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; (ii) use and operate, and
cause each Subsidiary to use and operate, all of its facilities and
properties in material compliance with all Environmental Laws; (iii) 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; (iv) handle,
and cause each Subsidiary to handle, all Hazardous Materials in material
compliance with all applicable Environmental Laws; and (v) 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.
(b) 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.
6.15 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any
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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.
6.16 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.
6.17 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 6.18 shall prohibit any transaction expressly permitted
by Section 6.11.
6.18 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 6.7 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.
6.19 Negative Pledges; Subsidiary Payments. The Company will not, nor
will it permit any Subsidiary to, enter into any agreement (excluding this
Agreement) (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.
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ARTICLE VII
EVENTS OF DEFAULT AND THEIR EFFECT
7.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
(a) Non-Payment of Loans, etc. Default in the payment
when due of the principal of any Loan; or default, and continuance thereof
for five Business Days, in the payment when due of any interest on any Loan
or any fees or other amounts payable by the Borrowers hereunder.
(b) 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.
(c) 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 Bank is false or misleading in
any material respect on the date as of which the facts therein set forth are
stated or certified.
(d) Bankruptcy, Insolvency, etc. The Company or any
Subsidiary becomes insolvent (it being understood that a Subsidiary shall
not be deemed to be insolvent solely 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
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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.
(e) Non-Compliance with Certain Covenants. Failure by the
Borrowers to comply with or to perform any provision of Section 6.6 through
6.10, 6.16, 6.18 or 6.19.
(f) 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 7.1), and
continuance of such failure for 30 days after notice thereof to the Company
from the Agent or any Bank.
(g) 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.
(h) Judgments. Final judgments which exceed an aggregate
of $2,000,000 (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 stayed pending appeal within 30
days after entry or filing of such judgments.
(i) Change of Control. An Impermissible Change of Control
shall occur.
(j) Material Adverse Effect. Any event shall occur which,
in the opinion of the Required Banks, has had or is reasonably likely to have
a Material Adverse Effect.
(k) Guarantee. The obligations of either Borrower under
Article IX shall cease to be in full force and effect or either Borrower
shall contest in any manner the validity, binding nature or enforceability of
Article IX with respect to itself or the other Borrower.
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7.2 Effect of Event of Default. If any Event of Default
described in Section 7.1(d) 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 Banks, and
shall upon written request of the Required Banks, 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 Bank 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 7.1(a) or Section 7.1(d) may be
waived by the written concurrence of all of the Banks, and the effect as an
Event of Default of any other event described in Section 7.1 may be waived by
the written concurrence of the Required Banks.
ARTICLE VIII
THE AGENT
8.1 Appointment and Authorization; Agent. Each Bank hereby
irrevocably (subject to Section 8.9) appoints, designates and authorizes the
Agent to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the Agent shall
not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as
a matter of market custom,
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and is intended to create or reflect only an administrative relationship
between independent contracting parties.
8.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
8.3 Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or
in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the
Banks for any recital, statement, representation or warranty made by the
Company or any Subsidiary or Affiliate of the Company, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document,
or for any failure of the Borrowers or any other party to any Loan Document
to perform its obligations hereunder or thereunder. No Agent-Related Person
shall be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Company or any of the Company's Subsidiaries or
Affiliates.
8.4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall
first receive such advice or concurrence of the Required Banks as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any
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such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Banks and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all of the Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 4.1, each Bank that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to such
Bank for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to the Bank.
8.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the
Agent shall have received written notice from a Bank or the Company referring
to this Agreement, describing such Default or Event of Default and stating
that such notice is a "notice of default". The Agent will notify the Banks
of its receipt of any such notice. The Agent shall take such action with
respect to such Default or Event of Default as may be requested by the
Required Banks in accordance with Article VII; provided, however, that unless
and until the Agent has received any such request, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable
or in the best interest of the Banks.
8.6 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs
of the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank.
Each Bank represents to the Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company and its Subsidiaries,
and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement
and to extend credit to the Borrowers hereunder. Each Bank also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and
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information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the
Agent, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Borrowers which may come into the possession of any of the Agent-Related
Persons.
8.7 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of
the Borrowers and without limiting the obligation of the Borrowers to do so),
pro rata, from and against any and all Indemnified Liabilities; provided,
however, that no Bank shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Liabilities resulting solely from
such Person's gross negligence or willful misconduct. Without limitation of
the foregoing, each Bank shall reimburse the Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent
that the Agent is not reimbursed for such expenses by or on behalf of the
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the Agent.
8.8 BAI in Individual Capacity. BAI and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though BofA were not the Agent hereunder and
without notice to or consent of the Banks. The Banks acknowledge that,
pursuant to such activities, BAI or its Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
Subsidiary) and acknowledge that neither BAI nor the Agent shall be under
any obligation to provide such information to them. With respect to its
Loans, BAI shall have the same rights and powers under this
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Agreement as any other Bank and may exercise the same as though BAI were not
the Agent.
8.9 Successor Agent. The Agent may, and at the request of the
Required Banks shall, resign as Agent upon 30 days' notice to the Banks. If
the Agent resigns under this Agreement, the Required Banks shall appoint from
among the Banks a successor agent for the Banks. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the
Agent may appoint, after consulting with the Banks and the Company, a
successor agent from among the Banks. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed
to all the rights, powers and duties of the retiring Agent and the term
"Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this
Article VIII and Sections 8.4 and 8.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor agent has accepted appointment as Agent by the
date which is 30 days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become effective
and the Banks shall perform all of the duties of the Agent hereunder until
such time, if any, as the Required Banks appoint a successor agent as
provided for above.
8.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Bank agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or
a reduction of, withholding tax under a United States tax treaty, two
properly completed and executed copies of IRS Forms 1001 before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Bank, two properly completed and executed copies of
IRS Form 4224 before the payment of any interest is due in the first
taxable year of such Bank and in each succeeding taxable year of
such Bank during which interest may be paid under this Agreement; and
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(iii) such other form or forms as may be
required under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Bank agrees to promptly notify the Agent of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001
and such Bank sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of either Borrower to such Bank, such
Bank agrees to notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of either Borrower to such Bank.
To the extent of such percentage amount, the Agent will treat such Bank's IRS
Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants
a participation in, or otherwise transfers all or part of the Obligations of
either Borrower to such Bank, such Bank agrees to undertake sole responsibility
for complying with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after
taking into account such reduction. However, if the forms or other
documentation required by Section 8.10(a) are not delivered to the Agent, then
the Agent may withhold from any interest payment to such Bank not providing
such forms or other documentation an amount equivalent to the applicable
withholding tax imposed by Sections 1441 and 1442 of the Code, without
reduction.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered, was not properly executed,
or because such Bank failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Bank shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed
by any jurisdiction on the amounts payable to the Agent under this Section,
together with all costs and expenses (including Attorney Costs). The
obligation of the
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Banks under this Section 8.10(e) shall survive the payment of all Obligations
and the resignation or replacement of the Agent.
ARTICLE IX
GUARANTEE
9.1 Guarantee from Borrowers. In order to induce the Banks 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 Banks and the Agent the due
and punctual payment of all Obligations, including, without limitation, the
Bid Loans and the Committed Loans (the "Guaranteed Indebtedness").
9.2 Expenses. Each Borrower irrevocably and unconditionally agrees
to pay any and all expenses, including reasonable attorneys' fees and
disbursements, incurred by any of the Banks or the Agent in enforcing its or
their rights under or in connection with this Section 9.
9.3 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 its obligations under this Section 9.
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.
9.4 No Impairment. The obligations of each Borrower under this
Section 9 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 Banks 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
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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 Bank 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.
9.5 Waiver of Resort. Each Borrower agrees that this Section 9
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
Banks 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 Bank in favor of any Borrower or any of their
Subsidiaries.
9.6 Reinstatement. Each Borrower agrees that this Section 9 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, or interest on, the Guaranteed
Indebtedness is stayed, rescinded or must otherwise be returned by any Bank
or the Agents upon the bankruptcy or reorganization of any Borrower or any
other Person.
9.7 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 Bank or the Agent, pay or cause to be paid
to the Banks 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.
9.8 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 9
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
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under this Section 9, 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 9,
including any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy of the
Banks or the Agent, as the case may be, against such Borrower or any
collateral now or hereafter pledged to the Banks, the Agent or any other
Person acting on behalf of the Banks 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 Banks or the Agent, as applicable, and shall forthwith be
paid to the Banks 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 Section 9.8 is knowingly
granted in contemplation of such benefits.
9.9 Delay, etc. No delay on the part of any of the Banks or
either of the Agent in exercising any rights under this Section 9 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 Banks 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 9 be effective
unless such modification or waiver is in writing and signed by the Banks, the
Agent and each Borrower. Any such waiver shall apply only to the specific
instance for which it is given.
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure by either Borrower therefrom, shall be effective unless the same
shall be in writing and signed by the Required Banks (or by the Agent at the
written request of the Required Banks) and the Borrowers and acknowledged by the
Agent, and then any such waiver or consent shall be effective only in the
specific instance and for the specific
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purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Banks and the Borrowers
and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 7.2);
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or (subject to clause (ii) below) any fees or
other amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the
Banks or any of them to take any action hereunder;
(e) release either Guarantor; or
(f) amend this Section, or Section 2.17, Article IX or any
provision herein providing for consent or other action by all Banks;
and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Agent in addition to the Required Banks or all
the Banks, as the case may be, affect the rights or duties of the Agent under
this Agreement or any other Loan Document, and (ii) the Fee Letters may be
amended, or rights or privileges thereunder waived, in a writing executed by
the parties thereto.
10.2 Notices.
(a) All notices, requests, consents, approvals, waivers and
other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by a Borrower by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 10.2, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 10.2; or, as directed to the Company
or the Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at
such other
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address as shall be designated by such party in a written notice to the Company
and the Agent.
(b) All such notices, requests and communications shall,
when transmitted by overnight delivery, or faxed, be effective when delivered
for overnight (next-day) delivery, or transmitted in legible form by
facsimile machine, respectively, or if mailed, upon the third Business Day
after the date deposited into the U.S. mail, or if delivered, upon delivery;
except that notices pursuant to Article II or VIII shall not be effective
until actually received by the Agent.
(c) Any agreement of the Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Borrowers. The Agent and the Banks
shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by the Borrowers to give such notice and the Agent and the
Banks shall not have any liability to the Borrowers or other Person on
account of any action taken or not taken by the Agent or the Banks in
reliance upon such telephonic or facsimile notice. The obligation of the
Borrowers to repay the Loans shall not be affected in any way or to any
extent by any failure by the Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the receipt by the
Agent and the Banks of a confirmation which is at variance with the terms
understood by the Agent and the Banks to be contained in the telephonic or
facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
10.4 Costs and Expenses. Each Borrower shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA (including in its capacity as Agent) within
five Business Days after demand (subject to Section 4.1(g)) for all reasonable
costs and expenses incurred by BofA (including in its capacity as Agent) in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in
each case, whether or not consummated), this Agreement, any Loan Document and
any other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby,
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<PAGE> 73
including reasonable Attorney Costs incurred by BofA (including in its capacity
as Agent) with respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each Bank
within five Business Days after demand (subject to Section 4.1(f)) for all
reasonable costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during
the existence of an Event of Default or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding the
Loans, and including in any Insolvency Proceeding or appellate proceeding).
10.5 Borrower Indemnification. Whether or not the transactions
contemplated hereby are consummated, each Borrower shall indemnify, defend and
hold the Agent-Related Persons, and each Bank and each of its respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with
respect to any investigation, litigation or proceeding (including any
insolvency proceeding or appellate proceeding) related to or arising out of
this Agreement or the Loans or the use of the proceeds thereof, or related to
any Offshore Currency Transactions entered into in connection herewith,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, that the Company
shall have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
10.6 Payments Set Aside. To the extent that a Borrower makes a payment
to the Agent or the Banks, or the Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required (including pursuant to any settlement
entered into by the Agent or such Bank in its discretion) to be repaid to a
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<PAGE> 74
trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such set-off had not occurred, and (b) each Bank severally agrees to
pay to the Agent upon demand its pro rata share of any amount so recovered
from or repaid by the Agent.
10.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that neither Borrower may assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and each Bank.
10.8 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the Company at
all times other than during the existence of an Event of Default and the
Agent, which consents shall not be unreasonably withheld, at any time assign
and delegate to one or more Eligible Assignees (provided that no written
consent of the Company or the Agent shall be required in connection with any
assignment and delegation by a Bank to an Eligible Assignee that is an
Affiliate of such Bank) (each an "Assignee") all, or any ratable part of all,
of the Loans, the Commitments and the other rights and obligations of such
Bank hereunder, in a minimum amount of $5,000,000; provided, however, that
the Borrowers and the Agent may continue to deal solely and directly with
such Bank in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have
been given to the Borrowers and the Agent by such Bank and the Assignee;
(ii) such Bank and its Assignee shall have delivered to the Company and the
Agent an Assignment and Acceptance in the form of Exhibit E ("Assignment and
Acceptance") and (iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $3,000.
(b) From and after the date that the Agent notifies the
assignor Bank that it has received (and provided its consent with respect to)
an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Bank under the Loan Documents, and (ii) the assignor Bank
shall, to the extent that rights and obligations hereunder and under the other
Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its
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rights and be released from its obligations under the Loan Documents.
(c) Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to
reflect the addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank (the "Originating Bank") hereunder
and under the other Loan Documents; provided, however, that (i) the
Originating Bank's obligations under this Agreement shall remain unchanged,
(ii) the Originating Bank shall remain solely responsible for the performance
of such obligations, (iii) the Borrower and the Agent shall continue to deal
solely and directly with the Originating Bank in connection with the
Originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Banks as described in the first proviso to Section
10.1. In the case of any such participation, the Participant shall be
entitled to the benefit of Sections 3.1, 3.3 and 10.5 as though it were also
a Bank hereunder provided that all amounts payable by the Borrowers
hereunder shall be determined as if such Originating Bank had not sold such
participation. If amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be
deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Bank
under this Agreement.
(e) Notwithstanding any other provision in this Agreement,
any Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
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10.9 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential"
or "secret" by the Company and provided to it by the Company or any
Subsidiary, or by the Agent on such Company's or Subsidiary's behalf, under
this Agreement or any other Loan Document, and neither it nor any of its
Affiliates shall use any such information other than in connection with or in
enforcement of this Agreement and the other Loan Documents or in connection
with other business now or hereafter existing or contemplated with the Company
or any Subsidiary; except to the extent such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Bank, or (ii) was or becomes available on a non-confidential basis from a
source other than the Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the Bank; provided,
however, that any Bank may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which the Bank is
subject or in connection with an examination of such Bank by any such
authority; (B) pursuant to subpoena or other court process; (C) when required
to do so in accordance with the provisions of any applicable requirement of
law; (D) to the extent reasonably required in connection with any litigation
or proceeding to which the Agent, any Bank, or their respective Affiliates
may be party; (E) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any other Loan Document; (F) to
such Bank's independent auditors and other professional advisors; (G) to any
Participant or Assignee, actual or potential, provided that such Person agrees
in writing to keep such information confidential to the same extent required
of the Banks hereunder; (H) as to any Bank or its Affiliate, as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which the Company or any Subsidiary is party or is deemed
party with such Bank or such Affiliate; and (I) to its Affiliates.
10.10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time,
without prior notice to either Borrower, any such notice being waived by each
Borrower to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held by, and other indebtedness at any time owing by, such Bank to or for
the credit or the account of each Borrower against any and all Obligations
owing to such Bank, now or hereafter existing, irrespective of whether or not
the Agent or such Bank shall have made demand under this Agreement or any
Loan Document and although such Obligations may be contingent or unmatured.
Each Bank agrees promptly to notify the Company and
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the Agent after any such set-off and application made by such Bank;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application.
10.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.13 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.14 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Borrowers, the Banks, the
Agent and the Agent-Related Persons, and their permitted successors and
assigns, and no other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in connection
with, this Agreement or any of the other Loan Documents.
10.15 Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED THAT THE AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE
AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS, THE
AGENT, AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED
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HERETO. THE BORROWERS, THE AGENT, AND THE BANKS EACH WAIVE PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY ILLINOIS LAW.
10.16 Waiver of Jury Trial. THE BORROWERS, THE BANKS, AND THE AGENT
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE BORROWERS, THE BANKS, AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT
TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.17 Judgment. If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder or any other Loan
Document in one currency into another currency, the rate of exchange used
shall be that at which in accordance with normal banking procedures the Agent
could purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of the
Borrowers in respect of any such sum due from it to the Agent hereunder or under
the other Loan Documents shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day following
receipt by the Agent of any sum adjudged to be so due in the Judgment Currency,
the Agent may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency. If the amount of the Agreement
Currency so purchased is less than the sum originally due to the Agent in the
Agreement Currency, the Company agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Agent or the Person to whom
such obligation was owing against such loss. If the amount of the Agreement
currency so purchased is greater than the sum originally due to the Agent in
such currency, the Agent agrees to return the amount of any excess to the
Company (or to any other Person who may be entitled thereto under applicable
law).
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10.18 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Agent, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
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<PAGE> 80
Delivered at Chicago, Illinois as of the day and year first above
written.
APPLIED POWER INC.
By: /s/ Douglas R. Dorszynski
----------------------------
Title: Treasurer
---------
APPLIED POWER FINANCE S.A.
By: /s/ Douglas R. Dorszynski
-----------------------------
Title: Authorized Agent
--------------------------
S-1
<PAGE> 81
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Agent
By: /s/ Matthew A. Gabel
----------------------------
Title: Vice President
-------------------------
S-2
<PAGE> 82
BANK OF AMERICA ILLINOIS
By: /s/ M.H. Claggett
----------------------------
Title: Vice President
-------------------------
S-3
<PAGE> 83
ABN AMRO BANK N.V.
By: /s/ R. Michiel Schwartz
----------------------------
Title: Vice President
-------------------------
By: /s/ David C. Sagers
----------------------------
Title: Vice President
-------------------------
S-4
<PAGE> 84
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Richard T. Janders
----------------------------
Title: Assistant Vice President
-------------------------
S-5
<PAGE> 85
HARRIS TRUST AND SAVINGS BANK
By: /s/ Andrew A. Peterson
----------------------------
Title: Vice President
-------------------------
S-6
<PAGE> 86
SOCIETE GENERALE
By: /s/ Susan Hummel
------------------------------
Title: Assistant Vice President
---------------------------
By: /s/ Joseph Philbin
------------------------------
Title: Vice President Team Leader
--------------------------
S-7
<PAGE> 87
THE SANWA BANK, LIMITED, CHICAGO BRANCH
By: /s/ Kenneth C. Eichwald
---------------------------------
Title: Vice President and Manager
------------------------------
S-8
<PAGE> 88
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Tina S. Marshall
---------------------------------
Title: Managing Director
------------------------------
S-9
<PAGE> 89
BANK ONE, MILWAUKEE, N.A.
By: /s/ Ronald J. Carey
----------------------------
Title: Vice President
-------------------------
S-10
<PAGE> 1
EXHIBIT 4.4
(1995 10-K)
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF AUGUST 30, 1995
AMONG
APPLIED POWER INC.,
BARRY WRIGHT CORPORATION,
WRIGHT LINE INC.,
GB ELECTRICAL, INC.
AND
CERTAIN OTHER SUBSIDIARIES
FROM TIME TO TIME PARTIES HERETO
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
- - ------- ----
ARTICLE I
THE COMMITMENT
<S> <C> <C>
1.01. Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02. Commitment Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03. Purchase and Reinvestment Limits . . . . . . . . . . . . . . . . . . . . . . . 3
1.04. Making Purchases from Sellers . . . . . . . . . . . . . . . . . . . . . . . . 3
1.05. Voluntary Termination of Commitment or
Reduction of Purchase Limit . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.06. Investment Multiples; Number of Undivided Interests . . . . . . . . . . . . . 4
1.07. Limitation of Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . 4
1.08. Addition of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
<CAPTION>
ARTICLE II
UNDIVIDED INTEREST AND PURCHASERS' SHARE
<S> <C> <C>
2.01. Undivided Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.02. Frequency of Computation of Undivided Interest . . . . . . . . . . . . . . . . 6
2.03. Purchasers' Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.04. Loss Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.05. Earned Discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.06. Servicer's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.07. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.08. Purchasers' Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
<CAPTION>
ARTICLE III
SETTLEMENTS
<S> <C> <C>
3.01. Non-Liquidation Settlement Procedures for
Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.02. Liquidation Settlement Procedures for
Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.03. General Settlement Procedures;
Reduction of Purchaser's Investment . . . . . . . . . . . . . . . . . . . . . 13
3.04. Credit Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.05. Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.06. Payments and Computations, Etc . . . . . . . . . . . . . . . . . . . . . . . . 15
3.07. Dividing or Combining Undivided Interests . . . . . . . . . . . . . . . . . . 16
3.08. Treatment of Collections and Deemed Collections . . . . . . . . . . . . . . . 16
3.09. Repurchases for Administrative Convenience . . . . . . . . . . . . . . . . . . 17
3.10. Sale of a Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
<CAPTION>
ARTICLE IV
FEES AND YIELD PROTECTION
<S> <C> <C>
4.01. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.02. Yield Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- - ------- ----
ARTICLE V
CONDITIONS PRECEDENT
<S> <C> <C>
5.01. Conditions Precedent to Effectiveness . . . . . . . . . . . . . . . . . . . . 20
5.02. Conditions Precedent to All Purchases and
Reinvestments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
<CAPTION>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
6.01. Representations and Warranties of Sellers . . . . . . . . . . . . . . . . . . 22
<CAPTION>
ARTICLE VII
GENERAL COVENANTS OF SELLERS
<S> <C> <C>
7.01. Affirmative Covenants of Sellers . . . . . . . . . . . . . . . . . . . . . . . 26
7.02. Reporting Requirements of Sellers . . . . . . . . . . . . . . . . . . . . . . 28
7.03. Negative Covenants of Sellers . . . . . . . . . . . . . . . . . . . . . . . . 30
<CAPTION>
ARTICLE VIII
ADMINISTRATION AND COLLECTION
<S> <C> <C>
8.01. Designation of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.02. Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.03. Rights of the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.04. Responsibilities of each Seller . . . . . . . . . . . . . . . . . . . . . . . 35
8.05. Further Action Evidencing Purchases . . . . . . . . . . . . . . . . . . . . . 35
8.06. Application of Collections . . . . . . . . . . . . . . . . . . . . . . . . . . 36
<CAPTION>
ARTICLE IX
TERMINATION EVENTS
<S> <C> <C>
9.01. Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.02. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
<CAPTION>
ARTICLE X
THE AGENT
<S> <C> <C>
10.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.03. Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.04. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.05. Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.06. Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.07. Notices, etc. to Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- - ------- ----
ARTICLE XI
ASSIGNMENT OF UNDIVIDED INTERESTS
<S> <C> <C>
11.01. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.02. Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.03. Rights of Assignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.04. Assignment by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
<CAPTION>
ARTICLE XII
INDEMNIFICATION
<S> <C> <C>
12.01. Indemnities by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
<CAPTION>
ARTICLE XIII
MISCELLANEOUS
<S> <C> <C>
13.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
13.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
13.04. Binding Effect; Assignability . . . . . . . . . . . . . . . . . . . . . . . . . 46
13.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
13.06. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.07. Captions and Cross References . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.08. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.09. Allocation Among Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
-iii-
<PAGE> 5
DEFINITIONAL APPENDIX
SCHEDULE I - DEFINITIONS
SCHEDULE IA - FOREIGN OBLIGORS
SCHEDULE IB - DUE DATES
SCHEDULE IC - SPECIAL CONCENTRATION LIMITS
SCHEDULE ID - PRICING GRID
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 Form of Lock-Box Agreement
EXHIBIT IF Form of Periodic Report
EXHIBIT 1.08(b) Form of Joinder Agreement
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
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated as of August 30, 1995
THIS IS AN AMENDED AND RESTATED 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, GB, together with other Subsidiaries of API that may become
parties hereto from time to time pursuant to Section 1.08, 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. Sellers, Sellers' Representative, PNC Bank as Purchaser and
PNC Bank, as Agent entered into the Receivables Purchase Agreement, dated as of
August 31, 1994, as amended by the First Amendment to Receivables Purchase
Agreement, dated as of May 4, 1995 (the "Original Purchase Agreement"). The
parties hereto wish to amend and restate the Original Purchase Agreement in its
entirety as set forth herein.
2. 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 the Agent, on behalf of Purchasers, and the Agent 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.
<PAGE> 7
3. 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 the Agent, on behalf of 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.
4. 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 hereby amend and restate the
Original Purchase Agreement in its entirety and 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. The Agent, on behalf of Purchasers, 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, the Agent,
on behalf of Purchasers, shall make Reinvestments by permitting
Servicer to cause certain of the Collections in respect of the
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 fund 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, 1998 (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.
-2-
<PAGE> 8
SECTION 1.03. Purchase and Reinvestment Limits. Under no
circumstances shall any Purchaser fund 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 Aggregahasers' Investments under
this Agreement would exceed an amount (the "Purchase Limit")
equal to $50,000,000, 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 amount (the
"Participation Amounts Limit") equal to 100% of the Net Pool Balance;
or
(c) Percentage Limit. The Dollar Amount of any
Purchaser's Total Investment would exceed its Percentage of the
Purchase Limit; or
(d) Foreign Currency Limit. That portion of the
Aggregate Purchasers' Investments that is funded in Approved
Currencies other than U.S. Dollars would exceed $20,000,000 (the
"Foreign Currency Limit"); or
(e) Foreign Receivables Limit. The aggregate Unpaid Balance
of Receivables denominated in the Approved Currency in which such
Purchase or Reinvestment was made is less than the sum of the
Purchasers' Investments of each Undivided Interest funded in such
Approved Currency (the "Foreign Receivables Limit").
SECTION 1.04. Making Purchases from Sellers. (a) Notice of
Purchase. Each Purchase from Sellers by the Agent, on behalf of Purchasers,
shall be made on notice from Sellers' Representatives to the Agent received by
the Agent not later than 12:00 noon (Pittsburgh time) on the fourth Business
Day next preceding the date of such proposed Purchase. Each such notice of a
proposed Purchase shall specify the desired Dollar Amount thereof (which shall
not be less than $1,000,000 in the aggregate for all Sellers), the amount due
to each Seller, the date (which shall be a Business Day), the currency in which
such Purchase is to be made (which shall be an Approved Currency), the amount
of such Purchase in such Approved Currency and the 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 such account as the Agent may designate its Percentage of the amount
of such Purchase
-3-
<PAGE> 9
in immediately available funds, in the Approved Currency designated in the
notice delivered by Sellers' Representatives pursuant to paragraph (a) 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; Foreign Currency Limit. The Agent
shall, two Business Days prior to the date of each Purchase of an Undivided
Interest and two Business Days prior to the first day of each successive Yield
Period for such Undivided Interest, (i) calculate the Dollar Amount of the
Purchasers' Investments in each Undivided Interest that is denominated in an
Approved Currency other than U.S. Dollars and (ii) notify the Sellers'
Representative and each Purchaser of the Discount Rate for such Yield Period
and whether the Sellers have exceeded the Foreign Currency Limit.
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 initial Dollar Amount of the related Purchasers'
Investments of less than $1,000,000 and each Undivided Interest when created,
whether by purchase, division or combination, shall have a Dollar Amount of the
related Purchasers' Investments equal as near as practicable to an integral
multiple of $100,000. No Undivided Interest will have related Purchasers'
Investments funded in more than one currency. The number of Undivided
Interests hereunder at any one time, after giving effect to any Purchase,
division or combination, shall not exceed ten (10).
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.
SECTION 1.08. Addition of Sellers. Additional Subsidiaries of API
that are organized under the laws of a foreign country, or subdivision thereof,
may be added as Sellers hereunder, provided
-4-
<PAGE> 10
that the following conditions are satisfied on or before the date of such
addition:
(a) Sellers' Representative shall have given the Agent and each
Purchaser at least five (5) Business Days' prior written notice of such
proposed addition and the identity of the proposed additional Seller;
(b) such proposed additional Seller has executed and delivered to the
Agent an agreement substantially in the form attached hereto as Exhibit 1.08(b)
(each, a "Joinder Agreement") and a Certificate;
(c) such proposed additional Seller has delivered to the Agent a
certificate of its Secretary or Assistant Secretary or Authorized Agent
certifying the names and true signatures of the officers authorized on its
behalf to sign the Joinder Agreement and the other Agreement Documents to be
delivered by it (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 (c));
(d) such proposed additional Seller has delivered to the Agent a copy
of its organizational documents, duly certified by its Secretary or Assistant
Secretary;
(e) no event has occurred and is continuing, or would result from
such addition, which constitutes a Termination Event or Unmatured Termination
Event; and
(f) the Commitment Termination Date shall not have occurred.
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
-5-
<PAGE> 11
where:
PA = Participation Amount of such
Undivided Interest = PI + LR;
PI = the Dollar Amount of 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 Participation Amounts". Each Purchaser shall be entitled
to 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 Agent, on behalf of its 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
in the Approved Currency of such Undivided Interest, shall have recovered the
related Purchasers' Investments in the Approved Currency of such Undivided
Interest 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
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<PAGE> 12
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 each Undivided
Interest that is denominated in U.S. Dollars 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:
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 of Undivided Interests denominated in U.S. Dollars 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:
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<PAGE> 13
ED = PI x DR x 1/360 (or 1/365 (366) in the case of any
Undivided Interest denominated in British Pounds Sterling);
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 Certificate 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. Earned Discount shall
be calculated and paid in the Approved Currency of the related Undivided
Interest.
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 Dollar 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 Eurocurrency Rate (Reserve
Adjusted) for such Yield Period; provided, however, that if it shall become
unlawful for the Agent to obtain funds in the interbank market in the related
currency 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
-8-
<PAGE> 14
shall be equal to the Alternate Reference Rate for such Yield Period.
"Discount Rate" for any Yield Period for any related Undivided
Interest means:
(a) in the case of an Undivided Interest other than one
referred to in clause (b), the sum of (1) the Bank Rate for such
Undivided Interest for such Yield Period plus (2) the then applicable
Spread; and
(b) in the case of an Undivided Interest 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 higher of (A) the Bank Rate for such Undivided
Interest, plus 2% and (B) the Alternate Reference Rate in effect on
such day plus 2% per annum.
"Net Pool Balance" means at any time the Dollar Amount of 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 that are denominated in U.S. Dollars
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 that are denominated in U.S. Dollars at such time. "Special
Concentration Limit" for (1) the United States government, or any agency
thereof, means 10% of the aggregate Unpaid Balance of the Eligible Receivables
in the Receivables Pool that are denominated in U.S. Dollars at such time and
(2) for any other 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 Required Purchasers may
change the Special Concentration Limit for any Obligor, at their sole
discretion, at any time by written notice thereof to the Sellers'
Representative, the Agent and all of the Purchasers. 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
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calculated as if such Obligor and such Affiliated Obligor were one Obligor.
"Spread" means the percentage set forth under the then applicable Debt
to Capital Ratio on Schedule ID.
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 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
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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 payable in the Approved
Currency of such Undivided Interest 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 in the Approved Currency of such Undivided Interest.
(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 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.
(d) Currencies. Each Undivided Interest, and the Earned Discount
thereon, shall be payable in the Approved Currency in which such Undivided
Interest was originally funded by the Purchasers.
SECTION 3.02. Liquidation Settlement Procedures for Collections.
(a) Daily Procedure. On each Liquidation Day with
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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
in the Approved Currency of 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
denominated in the same Approved Currency.
(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 the Servicer's Fee payable with respect to such Undivided Interest.
SECTION 3.03. General Settlement Procedures; Reduction of Purchaser's
Investment.
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(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, the Purchase Limit, the Foreign
Receivables Limit or the Foreign Purchase Limit pursuant to Section 2.01 shall
be so reinvested as soon as practicable without violating such Participation
Amounts Limit, Purchase Limit, the Foreign Receivables Limit or Foreign
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 Receivables, in which
case it shall be applied to such specified Receivables.
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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 that
portion of the Aggregate Purchasers' Investments funded in U.S. Dollars 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 denominated in U.S. Dollars (other than
Receivables the Obligor of which is the United States government or a
subdivision or agency thereof) 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 such
Defaulted Receivable, plus the Unpaid Balances on such current Month End Date
of all Receivables denominated in U.S. Dollars 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 sum of (1) 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 clause (1), plus (2) the
aggregate amount of the Unpaid Balances of all Receivables denominated in a
currency other than U.S. Dollars that became Defaulted Receivables during such
month, plus (3) the aggregate amount of the Unpaid Balances of all Receivables
the Obligor of which is the United States government, or a subdivision or an
agency thereof, that became Defaulted Receivables during such month. 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, as of the close of business of
Servicer on the
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next preceding Month End Date, which Periodic Report shall include (i) the
aggregate Unpaid Balance of all Pool Receivables denominated in each Approved
Currency, (ii) a calculation of the Foreign Currency Limit as of the Settlement
Date immediately preceding such Month End Date, and (iii) an aging of each
Seller's Pool Receivables that are denominated in U.S. Dollars and are payable
by Obligors that are residents of the United States. 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,
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 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, or at
such other account or accounts as are designated by the Agent to the Sellers'
Representative (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 the
higher of (i) 2% above the Bank Rate then applicable to such overdue amount and
(ii) 2% per annum above the Alternate Reference Rate, in each case, 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
(or, in the case of Earned Discount for Undivided Interests denominated in
British Pounds Sterling, 365/366 days) for the actual number of days (including
the first but excluding the last day) elapsed.
SECTION 3.07. Dividing or Combining Undivided Interests.
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(a) Division of Undivided Interests. Sellers' Representative may,
on notice received by the Agent not later than 12:00 noon (Pittsburgh time)
four 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) four Business Days before the last day of any Yield Period for two or
more existing Undivided Interests denominated in the same Approved Currency, or
before the date of any proposed Purchase of an Undivided Interest denominated
in the same Approved Currency pursuant to Sections 1.01 and 1.04, on such 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 in the Approved Currency
of the related Receivable 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
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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
Aggregate 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 four Business Days' prior written notice of such
repurchase and upon payment of the repurchase price therefor, as hereinafter
provided, the Agent and 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 in
an amount equal to, for each Undivided Interest, the sum of (i) Earned Discount
for such Undivided Interest in the Approved Currency of such Undivided
Interest, (ii) the related Purchasers' Investments therefor in the Approved
Currency of such Undivided Interest, (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 Majority Purchasers 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 the Approved Currency in which such
Pool Receivables are denominated, 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
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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), and (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. In
any event, any Seller that has been sold shall no longer be entitled to sell or
reinvest in Undivided Interests in Receivables pursuant to this Agreement.
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees. (a) Agent's Fee. Sellers shall pay to the
Agent for its own account such fees as the Agent and API may agree to from time
to time.
(b) Commitment Fee. From the date of the initial Purchase until
the Commitment Termination Date, Sellers, jointly and severally, shall pay to
the Agent, for the account of each Purchaser, a commitment fee ("Commitment
Fee") for each day in such period equal to (x) the percentage set forth below
the then applicable Debt to Capital Ratio on Schedule ID times (y) such
Purchaser's Percentage of the excess, if any, of the Purchase Limit over the
Aggregate Purchasers' Investments on the Determination Date immediately
preceding the first day of the related Yield Period divided by (z) 360. Such
Commitment Fee shall be paid in arrears, on each Settlement Date and on the
Commitment Termination Date, in the amount of such Commitment Fee that shall
have accrued during the period from the immediately preceding Settlement Date
to such Settlement Date or other period then ending for which no such fee shall
have been paid.
SECTION 4.02. Yield Protection. (a) If any Regulatory Change
occurring after the date hereof
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(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, 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
(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, 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 the
Certificate, 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
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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 shall act reasonably and in good faith and will, to the
extent the increased costs or reductions in amounts received or receivable
relate to such Affected Party's purchases of similar assets in general and are
not specifically attributable to the Purchases or Reinvestments and other
amounts due hereunder, use any reasonable averaging and attribution methods and
which cover all similar purchases made by such Affected Party. 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 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 PRECEDENT
SECTION 5.01. Conditions Precedent to Effectiveness. The
effectiveness of this Amended and Restated Receivables Purchase Agreement 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 and the
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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 domestic 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 domestic 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 amendments to the Financing
Statements filed pursuant to the Original Purchase Agreement, which amendments
shall have been filed on or prior to the date hereof;
(g) A search report provided in writing to the Agent by CT
Corporation, listing all effective financing statements that name any domestic
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) A favorable opinion of Quarles & Brady, counsel to Sellers, in
substantially the form of Exhibit 5.01(h);
(i) Evidence of the payment of any applicable Agent's fee; and
(j) Duly executed copy of Part I of a Periodic Report together
with a completed Schedule I thereto calculated as of July 31, 1995.
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
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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,
(iii) After giving effect to each proposed Purchase or
Reinvestment, (1) Aggregate Purchasers' Investments will not exceed
the Purchase Limit, (2) Aggregate Participation Amounts will not
exceed the Participation Amounts Limit, (3) the Dollar Amount of that
portion of the Aggregate Purchasers' Investments that is not
denominated in U.S. Dollars will not exceed the Foreign Currency Limit
and (4) the aggregate Unpaid Balance of Receivables denominated in the
Approved Currency in which such Purchase or Reinvestment is made is
not less than the sum of the Purchasers' Investments of each Undivided
Interest funded in such Approved Currency, 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:
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(a) Organization and Good Standing. Such Seller is validly existing
as a corporation in good standing under the laws of the jurisdiction 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 and conditions
herein provided and (ii) duly authorized such sale and assignment to the Agent,
on behalf of the 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 the Agent,
on behalf of the 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
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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 Certificate 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 Certificate, any other Agreement Document, the
Receivables or the Contracts or (D) seeking to adversely affect the federal
income tax attributes of the Certificate.
(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 Certificate 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, 1994, 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, 1995, 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 and each
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Purchaser, 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, 1994 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 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
the Agent, on behalf of the Purchasers, makes a Purchase it shall have acquired
and shall continue to have maintained a valid and, in the case of Pool
Receivables denominated in U.S. Dollars, perfected first priority undivided
percentage ownership interest to the extent 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
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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)).
(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, including those with
respect to the Pool Receivables and related Contracts, except where the failure
to so comply would not materially adversely affect (i) the interests of the
Agent or any Purchaser hereunder, (ii) the ability of such Seller or Servicer
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to perform their respective obligations hereunder or (iii) the validity or
enforceability of any Pool Receivable.
(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
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 denominated in U.S. Dollars, all related Contracts and all
purchase orders and other
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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, in the case of a domestic Seller, 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 of Pool Receivables that are
denominated in U.S. Dollars that are located in the United States to cause all
Collections of Pool Receivables to be deposited directly with a Lock-Box Bank.
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 and each Purchaser:
(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 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
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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 or
any Purchaser'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 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
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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 or any Purchaser
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 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. If such Seller is a
domestic Seller, 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 a substantial portion of
the business of, or 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
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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) provided that 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 (1) (A) such acquisition is an
acquisition of assets, or (B) such acquisition is by merger and API or
a wholly-owned Subsidiary is the surviving corporation, or (C) after
such acquisition API (if it is the acquiring entity) or a Subsidiary
owns (x) 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 (y) 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 (y), 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, (2) no Termination Event or Unmatured Termination Event
exists or would result therefrom and (3) prior to the consummation of
any such acquisition the purchase price of which is in excess of
$5,000,000, API provides to the Agent and each Purchaser a certificate
of the chief financial officer or treasurer 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
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(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. (i) Minimum Shareholders' Equity. (x)
Permit at any time Shareholders' Equity for API to be less than the sum of
$91,000,000 plus 25% of Consolidated Net Income for each Fiscal Quarter ending
on or after February 28, 1995 (excluding any Fiscal Quarter in which there is a
loss) or (y) Permit at any time Shareholders' Equity of Applied Power S.A. to
be less than $1.00.
(ii) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio to be less than 1.5:1.
(iii) 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.
(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.
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(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)
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
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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. 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 the Agent, on behalf of the Purchasers.
(b) At any time after the occurrence of a Termination Event:
(i) The Agent may direct the Obligors of Pool Receivables
that are denominated in U.S. Dollars, 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 that are
denominated in U.S. Dollars by the Agent, on behalf of 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 that are denominated in U.S. Dollars, and the
related Contracts and Related Security, or which are otherwise
necessary or
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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 that are denominated in U.S. Dollars 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.
(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
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enforce any of their respective rights hereunder or under the Certificate.
Without limiting the generality of the foregoing, each domestic 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 domestic 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
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 Servicer (or any of their respective officers) under or in connection
with this Agreement or any
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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 average of the Delinquency Ratios for any three successive
Month End Dates exceeds 15%; 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, 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 that portion of the Aggregate Purchasers' Investments that is
funded in Approved Currencies other than U.S. Dollars exceeds the Foreign
Currency Limit, or the aggregate Unpaid Balance of Receivables denominated in
any Approved Currency is less than the sum of the Purchasers'
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Investments of each Undivided Interest funded in such Approved Currency; or
(i) The average of the Default Ratios for any three successive Month
End Dates exceeds 7.25%; 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 Majority 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 average of the Dilution Ratios for any three successive Month
End Dates exceeds 8%; or
(n) The average of the Net Charge-Off Ratios for any three
successive Month End Dates 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.
(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;
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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 one 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 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
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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 Certificate 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 Undivided
Interest held by PNC Bank, it shall have the same rights and powers under this
Agreement as would a Purchaser if it were holding such Undivided Interest 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 Certificate 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 Certificate or
under any other Agreement Document, or to prosecute or defend any suit in
respect of this Agreement, the Certificate 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
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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
Agreement 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 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
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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 six (6) 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.
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.
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
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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
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
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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 VIII;
(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), including withholding taxes,
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. 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
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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 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
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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 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
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or perfection of the interests of the Agent or the 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 Certificate, 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 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
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Sellers on the basis of the amount of the Purchases and Reinvestments received
by each such Seller from time to time hereunder. 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 Purchasers, 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,
50% as a Purchaser
By /s/ Richard T. Jander
--------------------------------
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
AMENDED AND RESTATED
RECEIVABLES PURCHASE
AGREEMENT
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Percentage THE SANWA BANK, LIMITED,
20% as a Purchaser
By /s/ Tomomi Omura
--------------------------------
Name Printed: Tomomi Omura
Title: Assistant General Manager
10 South Wacker Drive, Ste. 3115
Chicago, Illinois 60606
Attention: Tomomi Omura
Phone: (312) 368-3017
Facsimile: (312) 346-6677
AMENDED AND RESTATED
RECEIVABLES PURCHASE
AGREEMENT
S-2
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Percentage SOCIETE GENERALE,
30% as a Purchaser
By /s/ Joseph Philbin
--------------------------------
Name Printed: Joseph Philbin
Title: Vice President Team Leader
By /s/ Susan Hummel
--------------------------------
Name Printed: Susan Hummel
Title: Assistant Vice President
181 West Madison Street, Suite 3400
Chicago, Illinois 60602
Attention: Susan Hummel
Phone: (312) 578-5157
Facsimile: (312) 578-5099
AMENDED AND RESTATED
RECEIVABLES PURCHASE
AGREEMENT
S-3
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PNC BANK, NATIONAL ASSOCIATION,
as the Agent
By /s/ Richard T. Jander
--------------------------------
Name Printed: Richard T. Jander
Title: Assistant Vice President
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Eurocurrency 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
AMENDED AND RESTATED
RECEIVABLES PURCHASE
AGREEMENT
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APPLIED POWER INC.,
as a Seller and initial Servicer
By /s/ Douglas R. Dorszynski
-----------------------------------
Name Printed: Douglas R. Dorszynski
Title: Vice President, Tax and
Treasurer
Address: 13000 W. Silver Spring Drive
Butler, Wisconsin 53007
Phone: 414/781-6600
Facsimile No.: 414/783-9790
Attention: Treasurer
BARRY WRIGHT CORPORATION,
as a Seller
By /s/ Douglas R. Dorszynski
----------------------------------
Name Printed: Douglas R. Dorszynski
Title: Vice President, Tax and
Treasurer
Address: 40 Guest Street
Brighton, Massachusetts 02135
Facsimile No.: 617/254-7381
Attention: Treasurer
GB ELECTRICAL, INC., as a Seller
By /s/ Douglas R. Dorszynski
--------------------------------
Name Printed: Douglas R. Dorszynski
Title: Vice President, Tax and
Treasurer
Address: 6101 N. Baker Road
Glendale, Wisconsin 53209
Facsimile No.: 414/228-1616
Attention: Treasurer
AMENDED AND RESTATED
RECEIVABLES PURCHASE
AGREEMENT
S-5
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WRIGHT LINE INC., as a Seller
By /s/ Douglas R. Dorszynski
--------------------------------
Name Printed: Douglas R. Dorszynski
Title: Vice President, Tax and
Treasurer
Address: 160 Gold Star Boulevard
Worcester, MA 01606
Facsimile No.: 508/752-4909
Attention: Treasurer
AMENDED AND RESTATED
RECEIVABLES PURCHASE
AGREEMENT
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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 the Original Purchase Agreement for as long as it
was in effect, and thereafter this Amended and Restated Receivables Purchase
Agreement, as it may be further 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).
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"Alternate Reference Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of
(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.
"Approved Currency" means each of U.S. Dollars, French Francs, Dutch
Guilders, British Pounds Sterling, German Deutschemarks, Japanese Yen and
Canadian Dollars.
"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.
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"Authorized Agent" with respect to any foreign Seller means an officer
of such Seller or an Affiliate thereof that has been authorized by such Seller
through the granting of a power of attorney or otherwise, to execute and
deliver documents on behalf of such Seller.
"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 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 the
Agent, on behalf of the Purchasers, in the form of Exhibit IB, evidencing each
Undivided Interest owned by the Agent, on behalf of the Purchasers.
"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.
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"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 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,
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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).
"Debt to Capital Ratio" means the ratio of (a) Funded Debt to (b)
Total Capital.
"Default Ratio" means the percentage that (x) the aggregate Unpaid
Balance of all Defaulted Receivables denominated in U.S. Dollars directly
invoiced by a domestic Seller as of a Month End Date was of (y) the aggregate
Unpaid Balance of all Pool Receivables denominated in U.S. Dollars directly
invoiced by a domestic Seller as of such Month End Date.
"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: (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.
"Delinquency Ratio" means the percentage that (x) the aggregate Unpaid
Balances of all Delinquent Receivables denominated in U.S. Dollars directly
invoiced by a domestic Seller as of a Month End Date was of (y) the aggregate
Unpaid Balance of all Pool Receivables denominated in U.S. Dollars directly
invoiced by a domestic Seller 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, on behalf of the Majority
Purchasers, has, at least three Business Days prior to the date of
determination, given notice to Sellers'
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Representative that such Obligor shall not be considered a Designated Obligor.
"Determination Date" means with respect to any Purchase or
Reinvestment, or any other calculation of the Dollar Amount, the date that is
two Business Days prior to the date of such Purchase, Reinvestment or
calculation.
"Dilution Ratio" means the percentage that (x) the aggregate amount of
credits, offsets, reductions, discounts or adjustments to the Unpaid Balance of
Pool Receivables denominated in U.S. Dollars and directly invoiced by a
domestic Seller granted or allowed by the Sellers, or any of them, during a
month was of (y) the Unpaid Balance of all Pool Receivables denominated in U.S.
Dollars and directly invoiced by a domestic Seller as of the Month End Date for
such month.
"Discount Rate" has the meaning set forth in Section 2.07.
"Dollar Amount" means:
(a) with respect to U.S. Dollars or an amount denominated in
U.S. Dollars, such amount; and
(b) with respect to an amount of any other Approved Currency
or an amount denominated in such Approved Currency, the amount of U.S.
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 Approved 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., Pittsburgh time, on the
applicable Determination Date for the delivery of U.S. Dollars on the
applicable date contemplated in this Agreement.
"Dollars" or "U.S. 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, if the perfection of Purchasers' undivided
ownership interests therein is governed by the 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;
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(ii) the primary Obligor of which is not an Affiliate of any of the
parties hereto, and, if such Receivable is denominated in U.S. Dollars, is
either a United States resident or is listed on Schedule IA;
(iii) the Obligor of which is a Designated Obligor;
(iv) 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;
(v) which is not a Defaulted Receivable;
(vi) with regard to which the warranty in Section 6.01(l) is true and
correct;
(vii) if such Receivable is denominated in U.S. Dollars, 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 denominated
in U.S. Dollars that are the subject of extended terms, does not exceed 27% of
the aggregate Unpaid Balance of all Eligible Receivables denominated in U.S.
Dollars;
(viii) the sale of an Undivided Interest in which does not contravene
or conflict with any law or require the consent of the related Obligor;
(ix) which is denominated and payable only in U.S. Dollars drawn on
an account in the United States or in another Approved Currency;
(x) 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);
(xi) 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
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respect if such violation would impair the collectability of such Receivable;
(xii) 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;
(xiii) the face amount of which does not include any amounts
representing sales tax; and
(xiv) as to which the Agent has not notified Sellers' Representative
that the Required Purchasers have determined, in their 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.
"Eurocurrency 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:
Eurocurrency Rate = Eurocurrency Rate
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage
where: "Eurocurrency Rate" means, with respect to any Undivided Interest (or
portion thereof) for any Yield Period, the rate per annum at which deposits in
the currency of such Undivided Interest in immediately available funds are
offered to the Eurocurrency Office of the Agent two Eurocurrency Business Days
prior to the beginning of such Yield Period by major banks in the major
interbank eurodollar market as at or about 10:00 a.m., 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. "Eurocurrency 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. "Eurocurrency 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
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determines the Eurocurrency Rate. A Eurocurrency Office of the Agent may be,
at the option of the Agent, either a domestic or foreign office. "Eurocurrency
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 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.
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"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
(ii) the aggregate amount deducted in respect of
leases that were not Capital Leases in
determining such Consolidated Net Income.
"Foreign Currency Limit" has the meaning set forth in Section 1.03(d).
"Foreign Receivables Limit" has the meaning set forth in Section
1.03(e).
"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".
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"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.
"Joinder Agreement" has the meaning set forth in Section 1.08(b).
"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 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.
I-11
<PAGE> 71
"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, 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 that are denominated
in U.S. Dollars and payable by Obligors located in the United States.
"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 denominated in U.S. Dollars
and directly invoiced by a domestic Seller recognized during any month was of
(y) Liquidations of Pool Receivables denominated in U.S. Dollars and directly
invoiced by a domestic Seller 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.
"Original Purchase Agreement" has the meaning set forth in Paragraph 1
of the Background.
"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).
"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.
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<PAGE> 72
"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, limited liability company, government or any agency or political
subdivision thereof or any other entity.
"PNC Bank" has the meaning set forth in the preamble.
"Pool Receivable" means a Receivable in the Receivables Pool.
"Purchase" means a purchase by the Agent, on behalf of the 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.
"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.
I-13
<PAGE> 73
"Recourse Amount" has the meaning set forth in Section 3.04.
"Recourse Percentage" means the greater of (i) 16% and (ii) three
times the highest Default Ratio that has occurred during the preceding 12
successive months.
"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 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
I-14
<PAGE> 74
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.
"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
I-15
<PAGE> 75
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 Applied Power S.A. 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
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.
I-16
<PAGE> 76
"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 API 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 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) four 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
I-17
<PAGE> 77
Earned Discount at a rate determined by reference to the Eurocurrency 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".
I-18
<PAGE> 1
EXECUTIVE STAFF F'96 BONUS PLAN CRITERIA EXHIBIT 10.6
(1995 10-K)
Executive Staff Measurements:
The fiscal 1996 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 and/or project leadership activities for the current year.
Supporting Definitions:
Average Net Assets or Average Quarterly Net Assets = Total assets - current
liabilities (debt excluded from current liabilities).
Earnings Per Share = Net Income / Average Number of Common Shares Outstanding
during the period.
Return on Net Assets = After tax Income (excluding interest) / 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 = Key program and/or project leadership activities for the
current year. (Personal objectives serve as a guideline. However,
recommendations to the Committee by the CEO take into account evolving
priorities during the year).
<PAGE> 2
EXECUTIVE STAFF F'96 MEASUREMENTS AND BONUS PLAN
Bonus Measurement:*
<TABLE>
<CAPTION>
100%
50% (Target) 200%
----------- ---------- -----------
<S> <C> <C> <C>
40% Return on Net Assets 13.50% 15.00% 17.00%
40% Earnings Per Share $2.10 $2.50 $2.90
20% Personal Objectives -- -- --
</TABLE>
<TABLE>
<CAPTION>
Name Functional Area Proposed Bonus Payout @ 100%
- - ---------------------------------------------------------------------------------------
<S> <C> <C>
Sim* CEO - API $300,000
Arzbaecher CFO $ 80,000
Dorszynski Tax & Treasury $ 32,000
Font Human Resources $ 50,000
Knutson Technology $ 38,000
</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
EXECUTIVE OPERATING OFFICERS MULTI-BUSINESS UNITS F'96 BONUS PLAN MEASUREMENTS
Multi-Business Unit Leader Measurements:
The fiscal 1996 bonus plan for multi-business unit leaders will consist of the
following:
a) 20% Applied Power Financial Results (RONA and EPS)
b) 60% Business Unit Results(1)(2)
c) 20% Personal Objectives
The business unit financial targets for fiscal 1996 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.
(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: Personal objectives will take into account evolving priorities during the
year as determined by the CEO.
<PAGE> 4
MULTI-BUSINESS UNIT LEADER F'96 BONUS PLAN MEASUREMENTS
F'96 Bonus Measurements:
a) 20% Applied Power Financial Results (RONA and EPS)
b) 60% Business Unit Results(1)(2)
c) 20% Personal Objectives
<TABLE>
<CAPTION>
Total
Business CMM $MM Bonus Payout(1)
Name Unit 50% 100% 200% @ 100%
(Target) (Target)
- - --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Albrecht(2) Engineered Solutions $9.0 MM $12.5 MM $17.0 MM $100,000
Boel Enerpac(3) $11.0 MM $13.0 MM $17.0 MM $90,000
</TABLE>
CMM = Internal Operating Profit - (20% x Monthly Net Assets)
(1) 100% Total Bonus Payout Level for attaining API, Business Group CMM and
Personal Objectives.
(2) Engineered Solutions measurement does not include Apitech - Mobile business.
(3) Enerpac Americas, Europe and QMC (excludes Asia Pacific)
<PAGE> 5
EXECUTIVE OPERATING OFFICERS -
SINGLE BUSINESS UNIT F'96 BONUS PLAN MEASUREMENTS
Bonus Measurements for Wright Line and GB Electrical:
100% Operating Profit
1996 Target Objective - Wright Line $16.0 million Operating Profit (62%
improvement over F'95)(1)
GB Electrical $13.1 million Operating Profit (35%
improvement over F'95)(2)
Measures/Payout Scale
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Burkart Operating Profit($) 10.1MM 11MM 12MM 13MM 14MM 15MM 16MM 17MM MARKET
(WL)(1) Bonus($) 0 22,500 45,000 67,500 90,000 112,500 144,000 178,500 57,000
Lecher Operating Profit($) 12MM 12.5MM 13.1MM 13.5MM 14MM 14.5MM 15MM 15.5MM MARKET
(GB)(2) Bonus($) 0 28,835 57,669 86,500 131,812 164,764 189,600 214,500 86,500
</TABLE>
Plan description: Business must exceed prior year's operating profits to qualify
for any bonus. As profits increase, there is a step linear relationship to bonus
potential.
(1) Based on Wright Line's internal operating profit (excludes acquisition
write-up amortization).
(2) Based on GB consolidated external operating profit, including Vision
Plastics.
<PAGE> 1
EXHIBIT 10.8
(1995 10-K)
APPLIED POWER INC.
OUTSIDE DIRECTORS'
DEFERRED COMPENSATION PLAN
SECTION 1. DEFINITIONS
The following words and terms shall have the indicated meanings wherever they
appear in the Plan:
1.1. "Annual Deferral Amount" shall mean that portion of a Participant's
compensation that a Participant elects to have and is actually
deferred for any annual term of office.
1.2. "Board of Directors", "Directors" or "Director" shall mean,
respectively, the Board of Directors, the Directors or a Director
of the Company.
1.3. "Committee" shall mean the Compensation Committee of the Board of
Directors.
1.4. "Company" shall mean Applied Power Inc.
1.5. "Deferred Shares Account" or "Account" shall mean the separate
account established under the Plan for each Participant, as
described in Section 3.2.
1.6. "Market Price" shall mean the closing sale price for Shares on a
specified date or, if Shares were not then traded, on the most
recent prior date when Shares were traded, all as is quoted in The
Wall Street Journal reports of New York Stock Exchange Composite
Transactions.
1.7. "Notice Form" shall mean the form attached hereto and marked as
Exhibit A or any other document which incorporates information
substantially similar to Exhibit A.
1.8. "Participant" shall mean each Director of the Company who
participates in the Plan in accordance with its terms and
conditions.
1.9. "Phantom Shares" shall mean the units credited to Deferred Shares
Accounts. The Market Price of Phantom Shares shall be equal to the
Market Price of Shares.
<PAGE> 2
1.10. "Plan" shall mean the Applied Power Inc. Outside Directors'
Deferred Compensation Plan as set forth herein, or as it may be
amended from time to time by the Board of Directors.
1.11. "Shares" shall mean shares of Class A Common Stock of the Company.
1.12. "Short-Term Payout" shall mean the payout set forth in Section 4.
1.13. "Treasurer" shall mean the Treasurer of the Company who shall have
responsibility for those functions assigned under the Plan.
SECTION 2. PARTICIPATION
2.1. Each Director who receives compensation under Section 3.1 is
eligible to participate in the Plan.
2.2. (a) Each eligible Director on the date the Plan is adopted may
elect to participate in the Plan as of May 15, 1995 by providing a
Notice Form to the Treasurer prior to that date. Thereafter, a
Director, or a nominee for that office, may elect to participate in
the Plan by giving a properly completed Notice Form to the
Treasurer. The effective date for his participation in the Plan
shall be the time of his election to that office for the ensuing
term. Such election shall remain in effect until (x) the
termination of the Participant's services as a Director, or (y) he
provides a subsequent Notice Form to the Treasurer requesting the
termination or the modification of such election.
(b) Except as provided in Sections 2.2(c), an election to modify a
prior election to defer compensation shall operate only
prospectively and must be made by the Participant prior to the
commencement of the term of office to which such compensation
pertains. An election to terminate a prior election can be made at
any time. After such termination, a re-election to start deferrals
is treated like a modification and notice of such must be received
prior to the commencement of the term of office to which such
compensation pertains.
(c) A Participant may change his beneficiary at any time by
providing a Notice Form to the Treasurer. A Participant may change
the method or time of payment of compensation at any time by
providing a Notice Form to the Treasurer, however; such change
shall apply only to prospective deferrals.
-2-
<PAGE> 3
SECTION 3. COMPENSATION DEFERRED
3.1. A Participant may elect that the payment of all or a specified
portion of the compensation otherwise payable to him in cash for
services as a Director be deferred until such time as elected by
the Participant pursuant to the terms of this Plan. Such
compensation includes retainer fees and attendance fees but does
not include travel expense allowance or any other expense
reimbursement. At the time of making any such election, a
Participant shall elect that such compensation be deferred in the
form of a Deferred Shares Account.
3.2 (a) An unfunded Deferred Shares Account shall be established for
each Participant. On the tenth day of each calendar month, the
Account shall be credited with the number of full Phantom Shares
equal to the number of full Shares which could have been purchased
at the market price of Shares on such date with (i) the amount of
compensation which the Participant elected to defer during the
preceding calendar month, (ii) any dividends that would have been
payable to the Participant during the preceding calendar month if
the number of Phantom Shares in the Participant's Account had been
Shares, and (iii) any excess resulting from the prior month. If
the amount in (i), (ii) and (iii) is not evenly divisible by such
market price, the excess shall be carried over to the next month.
(b) The Company shall not acquire any Shares in connection with
Deferred Shares Accounts under this Plan, and no participant shall
have any right to receive shares in any distribution from this
Plan.
(c) In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger,
consolidation, rights offering or any other change in the corporate
structure or Shares of the Company, the Committee shall make such
adjustment, if any, as it may deem appropriate in the number and
kinds of Phantom Shares credited to the Deferred Shares Account.
3.3. Each Participant will receive a statement of the balance in his
Account not less frequently than annually.
SECTION 4. SHORT TERM PAYOUT
4.1 A participant may elect to receive a future Short-Term Payout from
the Plan with respect to the Annual Deferral Amount. The Short-
Term Payout shall be a lump sum payment in cash equal to the value
of the Phantom Shares in the Deferred Shares Account based on the
Market Price of such Phantom Shares on the last business day before
such
-3-
<PAGE> 4
payment plus the amount of any excess which it has not been
possible to convert into Phantom Shares in accordance with Section
3.2(a). Subject to the other terms and conditions of this Plan,
each Short-Term Payout elected shall be paid within 60 days of the
earlier of (i) the date selected by the Participant (which must be
at least 5 years after the date of the Participant's deferral
election), or (ii) the date the Participant ceases to be a
Director. A properly completed election form making an irrevocable
request for a Short-Term Payout is required to be submitted to the
Treasurer prior to the term of office for which the Annual Deferral
Amount relates.
SECTION 5. PAYMENT OF DEFERRED COMPENSATION
5.1. Upon the termination of a Participant's services as a Director, the
payment of the Phantom Shares remaining in his Deferred Shares
Account shall commence within 60 days following the date the
Participant ceases to be a Director and shall be paid in accordance
with the method elected by the Participant on the applicable Notice
Form or Forms, as provided in Section 5.2.
5.2. Subject to Section 2.2 and this Section 5, and except as provided
in Section 4.1 a Participant may elect any of the following methods
of payment of the balance or balances in his Account:
(a) a lump sum payment in cash equal to the sum of (i) the
value of the Phantom Shares in such account based on the
Market Price of such Phantom Shares on the last business
day before such payment, and (ii) the amount of any excess
which it has not been possible to convert into Phantom
Shares in accordance with Section 3.2(a); or
(b) payments in annual installments for a term of five or
ten years, in each case in cash equal to the value of the
Phantom Shares in such Account based on the Market Price of
such Phantom Shares on the last business day before such
payment. The installment shares will be calculated by
prorating the total number of Phantom Shares in the
Deferred Shares Account equally over the applicable payout
period. The last such payment will include the amount of
any excess which it has not been possible to convert into
Phantom Shares in accordance with Section 3.2(a) as well as
the dividends earned on the undistributed Phantom Shares
during the installment payout period; or
-4-
<PAGE> 5
(c) conversion of such Account, effective with the last
day of the month during which his services as a Director
terminate, into a Cash Account based on the market price of
Shares on the last day of such month. Thereafter payments
will be made in annual installments, including interest,
for a term of five or ten years. Interest on the unpaid
Cash Account balance shall be credited annually on January
1st and calculated at a rate of one percent (1%) plus the
rate shown for U.S. Treasury Notes with an original
maturity of five (5) years and with a remaining maturity
closest to five (5) years, in the "representative
mid-afternoon over-the-counter quotations supplied by the
Federal Reserve Bank of New York City, based on
transactions of $1 million or more," as reported in The
Wall Street Journal published on the last business day
preceding December 1 immediately preceding the calendar
period.
5.3. In the event of a Participant's death before the balance in his
Account is fully paid out:
(a) Payment of such balance shall be made to the beneficiary or
beneficiaries designated by the Participant or, if the Participant
has made no such designation or no beneficiary survives, to the
Participant's estate. In either case, such payment shall be made
in the same manner as provided with respect to payments to the
Participant.
(b) If the balance in any such Account is to be paid to the estate
of the Participant in installments, the Committee may, at its
discretion and upon receipt of an application therefor from the
duly appointed administrator or executor of such estate, direct
that the balance in the Account be paid to the estate in a lump sum
at such time as is specified by the Committee.
SECTION 6. GENERAL
6.1. The right of any Participant, beneficiary or estate to receive
payment of any unpaid balance in any Account of the Participant
shall be an unsecured claim against the general assets of the
Company.
6.2. During a Participant's lifetime, any payment under the Plan shall
be made only to him. No sum or other interest under the Plan shall
be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, and any
attempt by a Participant or any beneficiary under the Plan to do so
shall be void. No interest under the Plan shall in any manner be
liable for or subject to the debts, contracts,
-5-
<PAGE> 6
liabilities, engagements or torts of a Participant or beneficiary
entitled thereto.
6.3. Except as otherwise provided herein, the Plan shall be administered
by the Committee which shall have the authority, subject to the
express provisions of the Plan, to adopt, amend and rescind rules
and regulations relating to the Plan, and to interpret, construe
and implement the provisions of the Plan.
6.4. The Plan may at any time or from time to time be amended, modified,
or terminated by the Board of Directors, provided that no
amendment, modification or termination shall (a) adversely affect
the balance in a Participant's Deferred Shares Account without his
consent or (b) permit payment of such balance prior to the date
specified pursuant to Sections 4.1 and 5.2 (except for payments
provided in Section 5.3) without his consent.
-6-
<PAGE> 7
APPLIED POWER INC.
OUTSIDE DIRECTORS'
DEFERRED COMPENSATION PLAN
NOTICE FORM
I hereby elect to defer, under the terms and conditions of the
Applied Power Inc. Outside Directors' Deferred Compensation Plan, the payment
of eligible compensation otherwise due to me for my services as a Director as
set forth below:
1. Amount of Deferral into a Deferred Shares Account:
__________ None __________ All ___________%
COMPLETE SECTION 2 IF REQUESTING A SHORT-TERM PAYOUT OR SECTION 3 IF REQUESTING
PAYOUT AT TERMINATION.
2. Short-Term Payout Election:
____________ I elect to receive a lump sum payment of my Annual
Deferral Amount, payable within 60 days of the earlier of (i)
____________________ (the date must be at least five years after
the date of this election), or (ii) the date I cease to be a
Director.
3. Method of Payment from Deferred Shares Account at Termination
(choose a., b., or c.):
a. __________ a lump sum; OR
b. __________ annual installments over __________ years
(select 5 or 10), each such installment to equal the value
of the Phantom Shares in the account based on the market
price of Shares on the last business day before the
payment; OR
c. __________ annual installments over __________ years
(select 5 or 10), based on a conversion of the Deferred
Shares Account into a Cash Account based on the market
price of Shares on the last day of the month during which
my services as a Director terminate. Such unpaid Cash
Account balance shall earn interest at one percent (1%)
plus the rate for U.S. Treasury Notes with an original
maturity of five years.
<PAGE> 8
APPLIED POWER INC.
OUTSIDE DIRECTORS'
DEFERRED COMPENSATION PLAN
NOTICE FORM
4. Beneficiary or Beneficiaries to whom payment is to be made (as
above specified) in the event of my death before receiving payment
of the entire balance in my Account:
----------------------------- ----------------------------
Name Address
----------------------------- ----------------------------
Name Address
I understand that the use of this form will supersede any prior election
I have made with respect to such Items. With respect to Items 1, 2 and 3, I
understand that my election is applicable only to compensation deferred
prospectively after this date.
----------------------------- ----------------------------
Date Name
Received by the Treasurer of Applied Power Inc.:
By:
-----------------------------------
Date:
---------------------------------
-2-
<PAGE> 1
EXHIBIT 11
(1995 10-K)
APPLIED POWER INC.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31,
-----------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
PRIMARY
Average shares outstanding....................................... 13,280 13,057 12,977
Net effect of dilutive options based on the treasury stock method
using average market price..................................... 466 232 122
------- ------- -------
Total..................................................... 13,746 13,289 13,099
======= ======= =======
Net Earnings (Loss):
Earnings from continuing operations............................ $25,005 $16,896 $ 7,086
Discontinued operations........................................ -- (348) (3,782)
Extraordinary loss............................................. (4,920) -- --
Cumulative effect of accounting change......................... -- -- (4,355)
------- ------- -------
Net Earnings (Loss)....................................... $20,085 $16,548 $(1,051)
======= ======= =======
Primary Earnings (Loss) per share:
Earnings from continuing operations............................ $ 1.82 $ 1.27 $ 0.54
Discontinued operations........................................ -- (0.03) (0.29)
Extraordinary loss............................................. (0.36) -- --
Cumulative effect of accounting change......................... -- -- (0.33)
------- ------- -------
Net Earnings (Loss)....................................... $ 1.46 $ 1.25 $ (0.08)
======= ======= =======
FULLY DILUTED
Average shares outstanding....................................... 13,280 13,057 12,977
Net effect of dilutive options based on the treasury stock method
using the greater of average or year-end market price.......... 678 420 127
------- ------- -------
Total..................................................... 13,958 13,477 13,104
======= ======= =======
Net Earnings (Loss):
Earnings from continuing operations............................ $25,005 $16,896 $ 7,086
Discontinued operations........................................ -- (348) (3,782)
Extraordinary loss............................................. (4,920) -- --
Cumulative effect of accounting change......................... -- -- (4,355)
------- ------- -------
Net Earnings (Loss)....................................... $20,085 $16,548 $(1,051)
======= ======= =======
Primary Earnings (Loss) per share:
Earnings from continuing operations............................ $ 1.79 $ 1.25 $ 0.54
Discontinued operations........................................ -- (0.03) (0.29)
Extraordinary loss............................................. (0.35) -- --
Cumulative effect of accounting change......................... -- -- (0.33)
------- ------- -------
Net Earnings (Loss)....................................... $ 1.44 $ 1.23 $ (0.08)
======= ======= =======
(A) (A) (A)
</TABLE>
- - -------------------------
(A) Dilution of less than 3%, therefore not presented in Consolidated Statement
of Earnings.
<PAGE> 1
EXHIBIT 21
(1995 10-K)
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.
<TABLE>
<CAPTION>
JURISDICTION OF
NAME OF SUBSIDIARY INCORPORATION
- - -------------------------------------------------------------------------- ------------------
<S> <C>
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
New England Controls, Inc. Connecticut
Westfield Equipment Corporation Wisconsin
Wright Line Inc. Massachusetts
Wright Line Real Estate Corporation Nevada
OUTSIDE THE UNITED STATES:
- - --------------------------------------------------------------------------
AP International Corporation Barbados
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. US Virgin Islands
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 (67%) Germany
Enerpac Asia Pte. Ltd. Singapore
Enerpac Hydraulic Technology (India) Pte. Ltd. India
Shanghai Blackhawk Machinery Co. Ltd. China
Enerpac Ltd. United Kingdom
Enerpac Nederland B.V. Netherlands
Enerpac B.V. France
Power-Packer France S.A. France
Norelem S.A. France
Power-Packer do Brasil Ltd. Brazil
Power-Packer Espana, S.A. Spain
Power-Packer Europa B.V. Netherlands
Sanwa-Packer, Ltd. (34%) Japan
Applied Power Japan, Ltd. Japan
Applied Power Holding GmbH Germany
</TABLE>
All of the foregoing subsidiaries are included in the consolidated financial
statements filed herewith.
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT EXHIBIT 23
(1995 10-K)
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 report dated September 29, 1995,
which report expresses an unqualified opinion and includes 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, 1995.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
November 15, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-END> AUG-31-1995
<CASH> 911
<SECURITIES> 0
<RECEIVABLES> 71,000
<ALLOWANCES> 3,593
<INVENTORY> 103,358
<CURRENT-ASSETS> 190,464
<PP&E> 153,374
<DEPRECIATION> 84,939
<TOTAL-ASSETS> 332,946
<CURRENT-LIABILITIES> 97,447
<BONDS> 74,156
<COMMON> 2,681
0
0
<OTHER-SE> 129,005
<TOTAL-LIABILITY-AND-EQUITY> 332,946
<SALES> 527,058
<TOTAL-REVENUES> 527,058
<CGS> 325,621
<TOTAL-COSTS> 325,621
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,291
<INCOME-PRETAX> 36,873
<INCOME-TAX> 11,868
<INCOME-CONTINUING> 25,005
<DISCONTINUED> 0
<EXTRAORDINARY> (4,920)
<CHANGES> 0
<NET-INCOME> 20,085
<EPS-PRIMARY> 1.46
<EPS-DILUTED> 1.44
</TABLE>
