<PAGE>
UNITED STATES
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, 1997
---------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______.
Commission File No. 1 - 11288
APPLIED POWER INC.
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
WISCONSIN 39-0168610
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13000 WEST SILVER SPRING DRIVE
BUTLER, WISCONSIN 53007
MAILING ADDRESS: P.O. BOX 325, MILWAUKEE, WISCONSIN 53201
---------------------------------------------------------
(Address of principal executive offices)
(414) 781-6600
----------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
CLASS A COMMON STOCK, NEW YORK STOCK EXCHANGE
$.20 PAR VALUE PER SHARE -----------------------
------------------------ (Name of each exchange on
(Title of each class) which registered)
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
As of October 31, 1997, the aggregate market value of Common Stock held by
non-affiliates was approximately $825.7 million, and there were 13,862,778
shares of the Registrant's Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on January 9, 1998 are incorporated by reference into
Part III hereof.
<PAGE>
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 supply items to a variety of end-users and
original equipment manufacturers ("OEMs") in the manufacturing, computer,
semiconductor, telecommunication, datacom, construction, electrical,
transportation, recreational vehicle, natural resource, aerospace, defense and
other industries.
The Company's operations are divided into three business segments:
Tools & Supplies
- - ----------------
Industrial and electrical tools and supplies sold primarily through
distribution.
Engineered Solutions
- - --------------------
Motion and vibration control products and systems customized and primarily
sold to OEM customers.
Technical Environments and Enclosures
- - -------------------------------------
Technical environment solutions for computer rooms, offices, laboratories
and manufacturing and enclosures for electronic equipment.
During the fiscal year, the Company's Technical Environments and Enclosures
segment acquired several businesses. Certain assets of Everest Electronic
Equipment, Inc. ("Everest") were acquired on September 26, 1996. Everest
manufactures electronic enclosures and is headquartered in Anaheim,
California. On January 13, 1997, the Company acquired C Fab Group Limited ("C
Fab"), located in Dublin, Ireland, which also manufactures electronic
enclosures. The Company purchased certain assets of All-Round Systemen B.V.
("All-Round") on April 1, 1997. All-Round was one of TEE's distributors based
in the Netherlands. Another electronic equipment business, Hormann Security
Systems Limited ("Hormann"), was purchased on June 5, 1997. Hormann is
headquartered in Cork, Ireland.
Following the end of the fiscal year, the Company, through a wholly-owned
subsidiary, accepted for payment all shares of Versa Technologies, Inc.
(Versa/Tek ) common stock which were tendered pursuant to the Company's tender
offer to purchase all outstanding shares. Versa/Tek, based in Racine,
Wisconsin, is a value-added manufacturer of custom engineered components and
systems for diverse industrial markets. In addition, the Company acquired
certain assets of Nylo-Flex Manufacturing Company, Inc. ("Nylo-Flex")
subsequent to year end. Nylo-Flex, headquartered in Mobile, Alabama, does
business under the TAM name and is a manufacturer, packager and distributor of
high quality battery terminals, battery cables and battery maintenance
accessories to the automotive, marine, farm, fleet and industrial markets.
For further information regarding the Company's acquisitions, see Note B -
Acquisitions and Note O - Subsequent Events in Notes to Consolidated
Financial Statements.
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 dollar amounts are in US thousands unless otherwise indicated.
DESCRIPTION OF BUSINESS SEGMENTS
- - --------------------------------
TOOLS & SUPPLIES
Tools & Supplies, formally known as Distributed Products, is engaged in the
design, manufacture and distribution of tools and supplies to the
construction, electrical wholesale, retail Do-It-Yourself, datacom, retail
automotive, industrial and production automation markets. These products are
sold under a variety of brand names of which the two most well known are
Enerpac and GB Electrical.
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Tools & Supplies furnishes approximately 10,000 SKU's. The vast majority of
products are manufactured, while select low volume products are sourced.
Enerpac is a specialist in hydraulic high force tools for the construction and
industrial markets, and also supplies quick mold change systems for the
plastic injection molding industry, quick die change systems for the metal
stamping industry, industrial products for the professional automotive repair
market and workholding products for the machining industry. GB Electrical is a
large volume manufacturer of wire connectors, conduit benders, plastic cable
ties and fish tapes for the electrical wiring industry.
Tools & Supplies has engineering, manufacturing and warehousing operations in
various areas of the United States, including Wisconsin, Illinois, Minnesota,
North Carolina, California, Nevada and Connecticut. Globally, the segment has
operations throughout Europe, Asia and, to a lesser extent, South America.
The high force tools and other production automation components are primarily
distributed through a worldwide network of over 2,500 independent distributors
as well as directly to certain OEM customers. Wholesale distributors, home
centers, hardware co-ops, mass merchandisers and automotive parts and
accessory retailers combine to distribute the segment's electrical tools and
supply product lines. This network includes approximately 4,000 electrical
wholesale accounts as well as retailers including Home Depot, Lowes, Menards,
Sears, Ace, Wal-Mart, K- Mart, Tru-Serve, Western Auto, Northern Automotive
and other major chains, which in total represent over 15,000 consumer outlets.
ENGINEERED SOLUTIONS
Engineered Solutions focuses on developing and marketing value-added,
customized solutions for OEMs in the automotive, truck, off-highway equipment,
medical, aerospace, recreational vehicle, semiconductor, defense and
industrial markets. Engineered Solutions markets under a variety of well known
brand names such as APITECH/Power-Packer and Barry Controls. Engineered
Solutions expertise is primarily in the areas of motion and vibration control.
The business is particularly skilled in using electronics to create smart or
active systems to control motion.
Primary applications in the automotive industry include convertible top
actuation systems and electric hydraulic valves used to control hydraulic
systems on cars. In the truck industry, the business supplies cab-over-engine
hydraulic tilt systems, cab suspension systems, engine mount systems and other
vibration isolation components. Medical applications include self-contained
hydraulic actuators that are primarily used in conjunction with hospital beds
as well as vibration isolation products for medical instrumentation. In
aerospace, the segment is a leading supplier of engine vibration isolation
systems to aircraft manufacturers as well as directly to airlines to support
maintenance operations. In recreational vehicles, the Company supplies
leveling and slide-out systems. In addition to these major markets, the
segment's products are used in a wide variety of applications in other
industries.
The segment maintains engineering, manufacturing and sales organizations in
North America, Europe and Asia. The segment's products are primarily sold
through direct sales people, with sales representatives being used in certain
situations. The segment's success requires close cost control, high quality
and just-in-time delivery. The segment's manufacturing operations possess
certain quality certifications such as ISO-9001 and QS-9000.
TECHNICAL ENVIRONMENTS AND ENCLOSURES
Technical Environments and Enclosures ("TEE") designs, manufactures and sells
furnishings and enclosures utilized in technology intensive business
environments. The business is comprised of two product lines which are Wright
Line (Technical Environments) and APW Technical Enclosures. Wright Line
applications include local area networks, multimedia production, electrical
engineering and testing, electronic manufacturing, telecommunication centers
and R&D laboratories. In addition, Wright Line provides modular workstations
used in the computerized office. APW Technical Enclosures designs,
manufactures and sells metal and plastic enclosures to a wide variety of
electronic OEM's in the computer, semiconductor, telecommunication, medical
and electronic industries.
TEE sells customized systems primarily using direct sales personnel and
employs over 340 direct sales people worldwide. TEE's products are marketed in
Asia and Europe through direct salespeople and dealers, depending on the
country. Its products are primarily sold to commercial and governmental
end-users. Sales to the Federal Government, which now average approximately
12% of total TEE net sales, are made pursuant to a contract between TEE and
the US Government's General Services Administration ("GSA"). The government
sales are primarily for
3
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technical environments. As the technical enclosure product line grows within
TEE, it is expected that the percent of total TEE sales attributable to the
GSA contract will continue to decline. TEE products are primarily manufactured
in Massachusetts, New Hampshire and California in the United States and in
Ireland.
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 patent protection bolster its
competitive position.
The Company'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.
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 were $9,960, $9,852 and $8,725 in fiscal years 1997,
1996 and 1995, respectively, the majority of which was expended by the
Engineered Solutions segment. 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 Tools & Supplies and Engineered
Solutions businesses. Numerous other United States and foreign patents and
trademarks are owned by the Company, although no such individual patent or
trademark (or group thereof) is believed to be of sufficient importance that
its termination would have a material 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
parts and components are normally available from a number of local and
national suppliers.
ORDER BACKLOGS AND SEASONALITY
- - ------------------------------
At August 31, 1997, the Company had approximately $106,500 in backlog,
compared to approximately $83,500 at August 31, 1996. Substantially all orders
are expected to be completed prior to August 31, 1998. 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, 1997, the Company employed 4,235 people on a full-time basis.
In general, the Company enjoys good relationships with its employees.
ENVIRONMENTAL COMPLIANCE
- - ------------------------
The Company has facilities in 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 $448 and $611 were included
in the Consolidated Balance Sheet at
4
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August 31, 1997 and 1996, respectively. For further information, refer to Note
N - "Contingencies and Litigation" in Notes to Consolidated Financial
Statements.
ITEM 2. PROPERTIES
----------
The following table summarizes the principal manufacturing, warehouse and
office facilities owned or leased by the Company:
Location and Business Size (sq. feet) Owned/Leased
- - --------------------------------------------------------------------------
TOOLS & SUPPLIES
- - ----------------
Glendale, Wisconsin 313,000 Leased
Columbus, Wisconsin 130,000 Leased
Veenendaal, Netherlands 97,000 Owned
Pachuca, Mexico 78,000 Leased
San Diego, California 69,000 Leased
Troyes, France 58,000 Leased
Reno, Nevada 55,000 Owned
Tecate, Mexico 54,000 Leased
Tokyo, Japan 53,000 Leased
Matthews, North Carolina 33,000 Owned
Alexandria, Minnesota 25,000 Owned
Seoul, South Korea 23,000 Leased
Sydney, Australia 23,000 Leased
Singapore, Singapore 15,000 Leased
ENGINEERED SOLUTIONS
- - --------------------
Brighton, Massachusetts 146,000 Leased
Burbank, California 126,000 Leased
Oldenzaal, Netherlands 115,000 Owned
Westfield, Wisconsin 40,000 Owned
Hersham, England 39,000 Leased
TECHNICAL ENVIRONMENTS AND ENCLOSURES
- - -------------------------------------
Worcester, Massachusetts 240,000 Owned
Anaheim, California 148,000 Leased
Dublin, Ireland 75,000 Owned
Cork, Ireland 70,000 Leased
West Boylston, Massachusetts 60,000 Owned
Portsmouth, New Hampshire 55,000 Leased
Garden Grove, California 47,000 Leased
In addition to these properties, the Company utilizes a number of smaller
facilities in Spain, Italy, Canada, Brazil, France, Germany, Russia, Taiwan,
India, Hong Kong, Malaysia, the Peoples Republic of 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
the Tools & Supplies and Engineered Solutions segments.
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.
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, labor and patent claims. (For further
information related to environmental claims, refer to the section titled
"Environmental Compliance" in Item 1). The Company has
5
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recorded reserves for estimated losses based on the specific circumstances of
each case. Such reserves are recorded when the loss is probable and can be
reasonably estimated. In the opinion of management, the resolution of these
contingencies will not have a material 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.
Name Age Position
- - ---- --- --------
Richard G. Sim 53 Chairman, President and Chief Executive Officer;
Director
William J. Albrecht 46 Senior Vice President, Engineered Solutions
Gustav H.P. Boel 53 Vice President, President of Enerpac
Philip T. Burkart 40 Vice President, President of Technical
Environments and Enclosures
Theodore M. Lecher 46 Vice President, President of GB Electrical, Inc.
Robert C. Arzbaecher 37 Vice President, Chief Financial Officer
Douglas R. Dorszynski 45 Vice President, Tax and Treasurer
Richard D. Carroll 34 Corporate Controller
Anthony W. Asmuth III 55 Secretary
Richard G. Sim was elected President and Chief Operating Officer in 1985,
Chief Executive Officer in 1986 and Chairman of the Board in 1988. From 1982
through 1985, Mr. Sim was a General Manager in the General Electric Medical
Systems Business Group. He is also a director of IPSCO Inc. and Oshkosh Truck
Corporation.
William J. Albrecht was named Senior Vice President of Engineered Solutions in
1994. Prior to that, he served as Vice President and President of Power-Packer
and APITECH since 1991. He joined the Company in 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.
Gustav H.P. Boel was elected Vice President of the Company and named President
of the Company's Enerpac business in 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 1995 and named
the President of TEE in 1994. From 1990 to 1994, Mr. Burkart held various
positions within TEE 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 1988) since 1986, and
as a Company Vice President since 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.
6
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Robert C. Arzbaecher was named Vice President and Chief Financial Officer in
1994. He had served as Vice President, Finance of Tools & Supplies from 1993
to 1994. He joined the Company in 1992 as Controller. From 1988 through 1991,
Mr. Arzbaecher was employed by Grabill Aerospace Industries LTD, where he last
held the position of Chief Financial Officer. Prior to 1988, Mr. Arzbaecher
held various financial positions at Farley Industries Inc. and at Grant
Thornton and Company, a public accounting firm.
Douglas R. Dorszynski was appointed Vice President, Tax and Treasurer in 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.
Richard D. Carroll joined the Company as Corporate Controller in 1996. Mr.
Carroll was previously employed with the Northwest Indiana Water Company as
its Vice President/Controller during 1995. Prior to that, he was Controller
for Nypro Chicago from 1993 to 1995. From 1990 through 1993, Mr. Carroll was
Controller at Roquette America, Inc. Prior to that, he was employed at Grabill
Aerospace Industries LTD and at Grant Thornton and Company, a public
accounting firm.
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 shareholder of the law firm of Whyte
Hirschboeck Dudek S.C. Mr. Asmuth had previously served as Secretary of the
Company from 1986 to 1993. He was re-elected Secretary in 1994.
Each officer is appointed by the Board of Directors and holds office until he
resigns, dies, is removed or a different person is appointed to the office.
The Board of Directors generally appoints officers at its meeting following
the Annual Meeting of Shareholders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
---------------------------------------------------------------------
The Company's common stock is traded on the New York Stock Exchange under the
symbol APW. At October 31, 1997, the approximate number of record shareholders
of common stock was 455. The high and low sales prices of the common stock by
quarter for each of the past two years are as follows:
FISCAL YEAR PERIOD HIGH LOW
----------- -------------------------- --------- ----------
1997 June 1 to August 31 $ 63 1/2 $ 43 3/4
March 1 to May 31 45 1/8 39 1/8
December 1 to February 28 42 7/8 36 3/8
September 1 to November 30 37 1/2 29 3/8
1996 June 1 to August 31 $ 30 3/8 $ 27 1/8
March 1 to May 31 33 28 7/8
December 1 to February 29 32 3/8 26 3/4
September 1 to November 30 35 1/8 28 3/4
Quarterly dividends of $0.03 per share were declared and paid for each of the
quarters above.
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ITEM 6. SELECTED FINANCIAL DATA
-----------------------
(In Millions, except per share amounts)
<TABLE>
<CAPTION>
For the years ended August 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Sales $ 672.3 $ 571.2 $ 527.1 $ 433.6 $ 398.7
Gross Profit 252.9 219.9 201.4 163.5 151.0
Earnings(Loss)
Continuing Operations 42.0 33.7 25.0 16.9 7.1 (1)
Discontinued Operations - - - (0.4) (3.8)
Extraordinary Loss - - (4.9) - -
Cumulative Effect of Accounting Change - - - - (4.4)
------- ------- ------- ------- -------
Net Earnings(Loss) $ 42.0 $ 33.7 $ 20.1 $ 16.5 $ (1.1)
Earnings(Loss) Per Share
Continuing Operations $ 2.92 $ 2.41 $ 1.82 $ 1.27 $ 0.54 (1)
Discontinued Operations - - - (0.03) (0.29)
Extraordinary Loss - - (0.36) - -
Cumulative Effect of Accounting Change - - - - (0.33)
------- ------- ------- ------- -------
Net Earnings(Loss) Per Share $ 2.92 $ 2.41 $ 1.46 $ 1.25 $ (0.08)
Dividends Per Common Share $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12
August 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
Total Assets $ 463.6 $ 381.2 $ 332.9 $ 317.4 $ 306.3
Long-term Obligations $ 101.7 $ 76.5 $ 74.3 $ 88.7 $ 97.5
Shareholders' Equity $ 204.1 $ 168.5 $ 131.7 $ 107.3 $ 88.0
Actual Shares Outstanding 13.8 13.7 13.4 13.2 13.0
</TABLE>
(1) Earnings from Continuing Operations for 1993 reflect after-tax
restructuring charges of $5.0 ($0.38 per share).
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Dollars in Millions, except per share amounts)
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------
RESULTS OF CONTINUING OPERATIONS Years Ended August 31, Percentage of Net Sales
- - ----------------------------------------------------------------------------------------------------------
1997 1996 1995 1997 1996 1995
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 672.3 $ 571.2 $ 527.1 100.0% 100.0% 100.0%
Gross Profit 252.9 219.9 201.4 37.6 38.5 38.2
Operating Expenses 180.0 162.6 152.6 26.8 28.5 29.0
Operating Earnings 72.9 57.3 48.8 10.8 10.0 9.3
Other Expenses 10.2 8.2 11.9 1.5 1.4 2.3
Earnings Before Income Taxes 62.7 49.1 36.9 9.3 8.6 7.0
Income Tax Expense 20.7 15.4 11.9 3.1 2.7 2.3
Earnings Before Accounting Change and
Extraordinary Loss 42.0 33.7 25.0 6.2 5.9 4.7
Extraordinary Loss - - (4.9) - - (0.9)
Net Earnings $ 42.0 $ 33.7 $ 20.1 6.2% 5.9% 3.8%
==========================================================================================================
</TABLE>
The preceding table sets forth the results of continuing operations of the
Company for the years ended August 31, 1997, 1996 and 1995.
8
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RECLASSIFICATIONS
- - -----------------
Certain prior year amounts have been reclassified to conform to fiscal 1997
presentation, including but not limited to the reclassification of financial
data previously reported in Tools & Supplies into Engineered Solutions and
TEE.
OVERVIEW
- - --------
In fiscal 1997, earnings per share improved 21% to $2.92 compared to $2.41 in
1996. Net earnings have more than doubled over the last two years as a result
of higher sales volume, improved operating margins and lower financing costs.
NET SALES
- - ---------
Net sales increased 18% during fiscal 1997 to $672.3 from $571.2 in fiscal
1996. The increase in sales was primarily the result of increased volume and
the effect of acquisitions. The incremental effect of acquisitions was
approximately $79.7 in fiscal 1997. Price changes have not had a significant
impact on the comparability of net sales during the last three years.
Excluding the unfavorable impact on translated sales from the stronger US
Dollar, sales increased 21% over 1996.
- - ---------------------------------------------------------------------------
Sales Percentage Change
from Prior Year
- - ---------------------------------------------------------------------------
SEGMENT SALES 1997 1996 1995 1997 1996 1995
- - ---------------------------------------------------------------------------
Tools & Supplies $ 292.5 $ 281.2 $ 264.9 4% 6% 19%
Engineered Solutions 189.5 193.8 192.2 (2) 1 18
Technical
Environments and
Enclosures 190.3 96.2 70.0 98 37 42
- - ---------------------------------------------------------------------------
Totals $ 672.3 $ 571.2 $ 527.1 18% 8% 22%
===========================================================================
Sales in the Tools & Supplies segment increased 4% in 1997 to $292.5 from
$281.2 in 1996. The increase was primarily the result of $11.7 of increased
sales from acquisitions net of product line dispositions. The impact of the
stronger US Dollar negatively impacted reported sales by 5% for the year. The
growth rate slowed in 1997 compared to 1996 due to economic softening in some
of the economies that the Tools & Supplies segment operates in, specifically
Europe and Asia. In 1996, sales for Tools & Supplies increased 6% over 1995.
The increase for 1996 was attributed to expansion into developing markets in
Southeast Asia, Latin America and South America and approximately $16.7 from
acquisitions net of product line dispositions. The impact of the stronger US
Dollar in 1996 over 1995 negatively impacted sales by approximately 1%.
Sales for the Engineered Solutions segment fell 2% compared to 1996. The
decrease was primarily the result of the sale of the mobile equipment valve
line and the completion of the Cadillac valve contract, both in 1996.
Excluding the impact of these two items, sales increased 4% for the year. The
strengthening US Dollar negatively impacted sales by 3% in 1997. Sales
increased 1% in 1996 over 1995 primarily the result of the improving aerospace
market in the US.
Technical Environments & Enclosures (TEE) nearly doubled its sales in 1997
with an increase of 98% over 1996. The increase was the result of the
acquisitions of Everest, C Fab and Hormann Electronics, as well as the
continued expansion of its direct sales force in the US, Europe and Asia.
Excluding acquisitions and the negative impact of the stronger US Dollar,
TEE's sales grew 34%. In 1996, sales grew 37% due to the continued demand for
its products, the expansion of its direct sales force and geographic expansion
in Europe and Asia.
- - ---------------------------------------------------------------------------
Sales Percentage Change
from Prior Year
- - ---------------------------------------------------------------------------
GEOGRAPHIC SALES 1997 1996 1995 1997 1996 1995
- - ---------------------------------------------------------------------------
North America $ 448.2 $ 360.8 $ 323.0 24% 12% 16%
Europe 160.7 143.7 136.8 12 5 38
Japan and Asia 52.0 56.8 55.3 (8) 3 27
Pacific
Latin America 11.4 9.9 12.0 15 (18) 6
- - ---------------------------------------------------------------------------
Totals $ 672.3 $ 571.2 $ 527.1 18% 8% 22%
===========================================================================
9
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The Company does business in many different geographic regions and is subject
to various economic conditions. The improved economic environment in North
America and the effect of acquisitions made in the third quarter of 1996 and
first quarter of 1997 combined to increase sales 24% in this region over 1996.
Sales increased 12% in 1996 over 1995 primarily due to improving US economy
and the acquisition made in the third quarter of 1996.
Sales in Europe grew 12% in 1997 compared to 5% in 1996. The primary reason
for the growth in 1997 was two acquisitions made during 1997. The slowing
economies in Europe were the main reason sales grew 5% in 1996 compared to 38%
in 1995. Sales in Japan and Asia Pacific fell 8% in 1997. Excluding the
negative effect of the strengthening US Dollar, sales fell only 2%. The
slowing economies in these regions were the causes for this decline. In 1996,
sales grew 3% in Japan and Asia Pacific and 9% excluding the foreign currency
fluctuations. This growth rate was in line with the overall economic growth
for these regions. The sales growth generated in Latin America during 1997 was
the result of geographic expansion in this region. In 1996, Latin American
sales were significantly impacted by the devaluation of the Mexican Peso.
Excluding the effect of this devaluation, sales growth was 1% in 1996.
GROSS PROFIT
- - ------------
Gross profit increased 15% in 1997 to $252.9 compared to $219.9 in 1996 and
$201.4 in 1995. The increase in gross profit resulted primarily from increased
sales in 1997 and 1996.
- - -------------------------------------------------------------------------
GROSS PROFIT PERCENTAGES BY SEGMENT 1997 1996 1995
- - -------------------------------------------------------------------------
Tools & Supplies 37.6% 40.5% 42.1%
Engineered Solutions 32.8 30.0 28.8
Technical Environments and Enclosures 42.5 49.9 48.8
- - -------------------------------------------------------------------------
Totals 37.6% 38.5% 38.2%
=========================================================================
The overall gross profit percentage is primarily influenced by the relative
sales mix between Tools & Supplies, Engineered Solutions and TEE. Engineered
Solutions gross profit percentages are lower than either TEE or Tools &
Supplies because a much higher proportion of its sales are made to OEM
customers, which typically generate lower margins than non-OEM customers. The
gross profit margin in Engineered Solutions has increased in each of the last
two years as a result of continued efforts to reduce costs associated with
manufacturing. Tools & Supplies gross profit margin declined in 1997 compared
to 1996 primarily due to $2.1 of non-recurring charges and competitive pricing
pressures. Gross profit margin in Tools & Supplies declined in 1996 relative
to 1995 as a result of inefficiencies during the implementation of automated
warehousing, competitive pricing pressures, higher discounts to distributors
and increased shipments to OEM customers. Gross profit in TEE fell during 1997
compared to 1996. This is the result of the effect of the enclosure related
acquisitions that took place during 1997. The enclosure businesses sell to OEM
customers and carry a lower gross profit margin than the technical environment
business. As the enclosure business becomes a larger percentage of TEE's
overall business, the gross profit within TEE is expected to continue to
decline. However, the enclosure businesses operate with lower selling,
administrative and engineering expenses compared to the environment business.
TEE gross profit margin increased in 1996 compared to 1995 due to higher
production levels. The overall gross profit margin of the Company will vary
depending on the levels of OEM sales within Engineered Solutions and the
enclosure business within TEE.
OPERATING EXPENSES
- - ------------------
Operating expenses increased 11% and 7% in 1997 and 1996, respectively. During
the corresponding periods, sales increased 18% and 8%, respectively. The
majority of the increase since 1995 relates to variable selling expenses,
primarily commissions and increased amortization of goodwill associated with
recent acquisitions. The Wright Line business within TEE has a direct sales
force whose compensation is commission based. As a result of the sales growth
in the Wright Line business over the last few years, its operating expenses
have increased accordingly.
In addition to variable selling expenses, total operating costs have increased
as a result of acquisitions, product development programs and expenditures for
geographic expansion into emerging markets. Approximately $8.4 of the increase
in fiscal 1997 was attributable to businesses acquired since the second
quarter of 1996. Approximately $3.2 of the increase in fiscal 1996 was the
result of acquisitions that took place since the third quarter of 1995. During
the
10
<PAGE>
last few years, the company has also opened sales offices in Russia, China and
India, and has increased its presence in Latin America and Southeast Asia.
Overall, lower corporate expenses as a percent of sales, the effects of the
lower operating cost enclosure businesses and the Company's goal to
continually identify ways to be more cost efficient have allowed the Company
to reduce operating costs as a percent of sales to 27% and 28% in 1997 and
1996, respectively, from 29% in 1995.
OTHER EXPENSE(INCOME)
- - ---------------------
- - ---------------------------------------------------------------------
OTHER EXPENSE(INCOME) 1997 1996 1995
- - ---------------------------------------------------------------------
Net financing costs $ 12.0 $ 8.5 $ 10.3
Other - net (1.9) (0.2) 1.7
=====================================================================
The increase in net financing costs noted in 1997 is attributable to increased
debt levels following significant acquisitions completed during 1996 and 1997.
Previously, net financing costs had been decreasing, reflecting lower 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.
"Other - net" includes foreign exchange (gains)losses and miscellaneous other
(income)expense. In 1997, the US Dollar strengthened against most of the major
currencies and the Company realized foreign exchange gains due to transactions
denominated in currencies outside of the functional currencies of certain of
its foreign units. In 1996, net foreign exchange losses were slightly more
than offset by miscellaneous income realized.
INCOME TAX EXPENSE
- - ------------------
The Company's effective income tax rate was 33.0% and 31.4% in 1997 and 1996,
respectively. The 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 and the utilization of foreign tax
credits had a favorable impact on the effective tax rate in 1997 and 1996.
EXTRAORDINARY LOSS
- - ------------------
The Company recorded an extraordinary loss of $4.9, or $0.36 per share, in
1995 in connection with the March 30, 1995 extinguishment of its $64.4, 9.92%
Senior Unsecured Notes. The pre-tax extraordinary loss of $7.3 was comprised
of an estimated "make whole" provision of $4.1, costs associated with the
cancellation of underlying interest rate swap agreements of $3.0 and the
write-off of $0.2 of deferred financing costs. For further information, see
Note G - "Long-term Debt" in Notes to Consolidated Financial Statements.
NEW ACCOUNTING PRONOUNCEMENTS
- - -----------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 128, "Earnings Per Share." The
Company intends to adopt this statement, as required, in its interim financial
statements issued for the second quarter of fiscal 1998. Under the new
requirements for calculating primary earnings per share, to be called basic
earnings per share, the dilutive effect of the Company's stock plans will be
excluded. Adoption of this statement will increase basic earnings per share
previously reported as primary earnings per share by $0.13, $0.09 and $0.06
for each of the three years ended August 31, 1997, 1996 and 1995,
respectively. SFAS No. 128 is not expected to have a material impact on fully
diluted earnings per share.
In June 1997, the Financial Accounting Standards Board issued two additional
statements. SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131,
"Disclosure About Segments of an Enterprise and Related Information," are both
effective for years beginning after December 15, 1997. The Company is
assessing the required disclosures and expects to adopt these statements in
fiscal 1998.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
Outstanding debt at August 31, 1997 totaled $123.1, an increase of $30.5 since
the beginning of the year. The increase in debt is a direct result of the
business acquisitions that were made during 1997. End-of-year debt to total
capital was 36% in 1997 compared to 33% in 1996. Approximately $64.8 of cash
was generated from operating activities in 1997, a 98% increase over 1996. The
Company used $75.0 of cash to fund acquisitions and $22.6 was used to fund
capital expenditures. In 1996, $32.8 of cash was generated from operations of
which $33.9 was used to fund acquisitions and $22.7 was used to fund capital
expenditures. The balance of cash generated in 1996 originated from the
additional sale of receivables. Dividends of $1.7 and $1.6 were paid during
1997 and 1996, respectively.
The Company extinguished all $64.4 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 were obtained from new borrowings, including
those under a temporary expansion of the Company's then existing $40.0
multi-currency revolving credit agreement. The Company replaced the original
$40.0 multi- currency credit agreement and the temporary $40.0 expansion with
the proceeds from a $120.0 multi-currency credit agreement in August 1995.
In August 1996, the multi-currency credit agreement was amended to provide
unsecured credit availability of $170.0 and extend the expiration date to
August 2001. During 1997, the Company incurred interest at a rate of .375 to
..45 of 1% above the 30-day IBOR, determined by the underlying currency of the
debt which the Company is borrowing. At August 31, 1997, the Company had
borrowings denominated in the US Dollar, the Japanese Yen and the German Mark.
For additional information, see Note G - "Long-term Debt" in Notes to
Consolidated Financial Statements.
To reduce interest rate risk, the Company has entered into interest rate swap
agreements which effectively convert $85.0 of the Company's variable rate debt
to a weighted average fixed rate of 6.0% at August 31, 1997. The swap
agreements expire on varying dates through 2003.
In 1995, the Company replaced its former $25.0 accounts receivable financing
facility with a new facility that expires in August 1998 and provides up to
$50.0 of multi-currency accounts receivable financing. During 1996, the
agreement was amended to extend the terms through August 1999. An incremental
$0.6 of receivables was financed in 1997, bringing the total balance financed
to $50.0 at August 31, 1997. Proceeds were used to reduce debt. For additional
information, see Note D - "Accounts Receivable Financing" in Notes to
Consolidated Financial Statements.
On August 29, 1997, the Company entered into a letter agreement that provided
for a committed credit line of an additional $140.0 for a term of 364 days.
The purpose of the agreement was to secure funding for the tender offer for
the common stock of Versa Technologies, Inc. Subsequent to year end, on
October 3, 1997, the $140.0 credit agreement was executed.
On October 22, 1997, the Company replaced its $170.0 multi-currency credit
agreement and the $140.0 credit agreement with a new multi-currency credit
agreement which provides up to $350.0 in borrowings and expires in 2002.
Additionally, the Company entered into interest rate swap agreements which
effectively convert an additional $30.0 of variable rate debt to fixed rates
at a weighted average interest rate of 6.23%. These swap agreements expire
between 2002 and 2004.
The Company does not purchase or hold any derivative financial instruments for
trading purposes.
The following table summarizes the Company's total capitalization over the
last three years.
- - ----------------------------------------------------------------------------
Dollars Percentage of Total
Capitalization
- - ----------------------------------------------------------------------------
TOTAL CAPITALIZATION 1997 1996 1995 1997 1996 1995
- - ----------------------------------------------------------------------------
Total Debt $ 123.1 $ 92.6 $ 87.0 36% 33% 37%
Shareholders' Equity 204.1 168.5 131.7 60 61 56
Deferred Taxes 14.6 15.4 16.4 4 6 7
- - ----------------------------------------------------------------------------
Totals $ 341.8 $ 276.5 $ 235.1 100% 100% 100%
============================================================================
12
<PAGE>
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 $170.0
multi-currency credit agreement totaled $50.0 and $68.3, respectively, as of
August 31, 1997. The Company believes that such availability, as subsequently
expanded by the $350.0 multi-currency credit agreement, plus funds generated
from operations will be adequate to fund operating activities, including
capital expenditures and working capital, for the next fiscal year.
YEAR 2000 CONSIDERATIONS
- - ------------------------
The Company is taking actions to assure that its computer systems are capable
of processing periods for the year 2000 and beyond. The costs associated with
this are not expected to have a material impact on the results of the Company.
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.
OUTLOOK
- - -------
The Company expects its trend of increasing sales and earnings per share to
continue into 1998, assuming no significant downturn in the economy in North
America or Western Europe. Net sales are expected to be approximately $900.0
with improved operating profit margins offset by increased interest expense
and a higher effective tax rate generating record earnings per share. The
strength of its core business segments, integration of recent acquisitions and
additional strategic acquisitions will be the driving forces of the growth.
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS
- - -------------------------------------------
Certain statements in the above section entitled "Outlook," as well as
statements in other Company communications, which are not historical facts,
are forward looking statements that involve risks and uncertainties. There are
several risk factors which are beyond the Company's control which could cause
the Company's actual results to differ from those expressed in such forward
looking statements. Those risk factors include, without limitation, general
economic conditions and market conditions in the industrial production,
trucking, construction, aerospace, automotive, recreational vehicle, computer,
semiconductor, telecommunication, electronic and defense industries in North
America, Europe and Asia, market acceptance of existing and new products,
successful integration of acquisitions, competitive pricing, foreign currency
risk, interest rate risk and other factors.
SUBSEQUENT EVENTS
- - -----------------
On October 3, 1997, the Company, through a wholly-owned subsidiary, accepted
for payment all shares of Versa Technologies, Inc. ("Versa/Tek") common stock
which were tendered pursuant to the Company's tender offer to purchase all
outstanding shares at a cash price of $24.625 net per share. Consideration for
the transaction totaled approximately $140.0. The transaction was funded with
proceeds from a $140.0, 364-day revolving credit facility from existing
lenders. Versa/Tek, based in Racine, Wisconsin, is a value-added manufacturer
of custom engineered components and systems for diverse industrial markets.
On October 15, 1997, the Company acquired certain assets of Nylo-Flex
Manufacturing Company, Inc. ("Nylo-Flex") for approximately $3.0 in cash. The
transaction was funded by proceeds from borrowings under existing credit
facilities. Nylo-Flex, headquartered in Mobile, Alabama, does business under
the TAM name and is a manufacturer, packager and distributor of high quality
battery terminals, battery cables and battery maintenance accessories to the
automotive, marine, farm, fleet and industrial markets.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-----------------------------------------------------------
Not Applicable.
13
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
Quarterly financial data for 1997 and 1996 is as follows:
(In Millions, except per share amounts)
<TABLE>
<CAPTION>
1997
----------------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- --------
<S> <C> <C> <C> <C>
Net Sales $ 153.1 $ 157.2 $ 173.8 $ 188.2
Gross Profit 60.6 60.4 64.6 67.2
Net Earnings $ 9.5 $ 9.5 $ 11.1 $ 11.9
======= ======= ======= ========
Net Earnings Per Share $ 0.67 $ 0.66 $ 0.77 $ 0.82
======= ======= ======= ========
1996
----------------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- --------
Net Sales $ 139.3 $ 137.1 $ 147.5 $ 147.3
Gross Profit 54.1 51.7 55.4 58.7
Net Earnings $ 7.7 $ 7.7 $ 9.1 $ 9.2
======= ======= ======= ========
Net Earnings Per Share $ 0.55 $ 0.55 $ 0.65 $ 0.66
======= ======= ======= ========
</TABLE>
The Consolidated Financial Statements are included on pages 18 to 35 and are
incorporated by reference herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
---------------------------------------------------------------
Not Applicable. The change in the Company's independent public accountants was
previously reported on a current report on Form 8-K dated November 10, 1997.
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 -- Section 16(a) Beneficial
Ownership Reporting Compliance" sections of the Company's Proxy Statement for
its Annual Meeting of Shareholders to be held on January 9, 1998 (the "1998
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" section and the
"Executive Compensation" section (other than the subsections thereof entitled
"Report of the Compensation Committee of the Board of Directors on Executive
Compensation" and Performance Graphs") of the 1998 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 1998
Annual Meeting Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
None.
14
<PAGE>
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 16, the Independent Auditors'
Report on page 17 and the Consolidated Financial Statements on
pages 18 to 35, all of which are incorporated herein by
reference.
2. Financial Statement Schedules
-----------------------------
See "Index to Consolidated Financial Statements and Financial
Statement Schedules" on page 16 and the Financial Statement
Schedule on page 36, all of which are incorporated herein by
reference.
3. Exhibits
--------
See "Index to Exhibits" on pages 38 to 43, which is
incorporated herein by reference.
(b) Reports on Form 8-K:
--------------------
No reports on Form 8-K were filed in the fourth quarter.
15
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page
- - ------------------------------------------ ----
Independent Auditors' Report 17
Consolidated Statement of Earnings
For the years ended August 31, 1997, 1996 and 1995 18
Consolidated Balance Sheet
As of August 31, 1997 and 1996 19
Consolidated Statement of Shareholders' Equity
For the years ended August 31, 1997, 1996 and 1995 20
Consolidated Statement of Cash Flows
For the years ended August 31, 1997, 1996 and 1995 21
Notes to Consolidated Financial Statements 22 - 35
INDEX TO FINANCIAL STATEMENT SCHEDULES
- - --------------------------------------
Schedule II - Valuation and Qualifying Accounts 36
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.
16
<PAGE>
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, 1997 and 1996, and the related
consolidated statements of earnings, shareholders' equity, and cash flows for
each of the three years in the period ended August 31, 1997. 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, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended August
31, 1997 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.
DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
September 25, 1997
17
<PAGE>
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Years ended August 31,
------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net sales $672,316 $571,215 $527,058
Cost of products sold 419,420 351,283 325,621
-------- -------- --------
Gross Profit 252,896 219,932 201,437
Engineering, selling and
administrative expenses 173,200 158,485 149,210
Amortization of intangible assets 6,813 4,054 3,369
-------- -------- --------
Operating Earnings 72,883 57,393 48,858
Other Expense(Income):
Net financing costs 12,003 8,456 10,291
Other - net (1,863) (230) 1,694
-------- -------- --------
Earnings Before Income Tax Expense and
Extraordinary Loss 62,743 49,167 36,873
Income Tax Expense 20,705 15,438 11,868
-------- -------- --------
Earnings Before Extraordinary Loss 42,038 33,729 25,005
Extraordinary Loss from Early
Extinguishment of Debt, net of $2,423 tax
benefit - - (4,920)
-------- -------- --------
Net Earnings $42,038 $33,729 $20,085
======== ======== ========
Primary Earnings(Loss)
Per Share:
Earnings Before Extraordinary
Loss $2.92 $2.41 $1.82
Extraordinary Loss - - (0.36)
-------- -------- --------
Net Earnings Per Share $2.92 $2.41 $1.46
======== ======== ========
Weighted Average Common and Equivalent
Shares (000's) 14,377 13,983 13,746
======== ======== ========
Fully Diluted Earnings(Loss) Per Share:
Earnings Before Extraordinary Loss $2.88 $2.41 $1.79
Extraordinary Loss - - (0.35)
-------- -------- --------
Net Earnings Per Share $2.88 $2.41 $1.44
======== ======== ========
Weighted Average Common and Equivalent
Shares (000's) 14,613 13,983 13,958
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
18
<PAGE>
APPLIED POWER INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
August 31,
-------------------
1997 1996
ASSETS -------- --------
<S> <C> <C>
Current Assets
Cash and cash
equivalents $ 5,846 $ 1,001
Accounts receivable, less allowances of $4,329 and
$4,179, respectively 84,697 68,747
Inventories 115,761 120,648
Prepaid income tax 11,209 10,734
Prepaid expenses 8,393 5,775
-------- --------
Total Current Assets 225,906 206,905
Other Assets 7,305 6,370
Goodwill, net of accumulated amortization of $17,870 and
$13,937, respectively 109,078 58,266
Other Intangibles, net of accumulated amortization of
$14,691 and $11,917, respectively 30,723 33,464
Property, Plant and
Equipment
Property 2,197 1,923
Plant 46,501 40,252
Machinery and equipment 142,638 125,950
-------- --------
191,336 168,125
Less: Accumulated depreciation (100,756) (91,889)
-------- --------
Net Property, Plant and Equipment 90,580 76,236
-------- --------
Total Assets $463,592 $381,241
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Liabilities
Short-term borrowings $ 21,428 $ 16,068
Trade accounts payable 54,555 41,397
Accrued compensation and benefits 24,736 20,805
Income taxes payable 7,093 7,081
Other current liabilities 20,462 22,378
-------- --------
Total Current Liabilities 128,274 107,729
Long-term Debt 101,663 76,548
Deferred Income Tax 14,596 15,395
Other Deferred Liabilities 14,950 13,114
Shareholders' Equity
Class A common stock, $0.20 par value per share,
authorized 40,000,000 shares, issued and outstanding
13,816,678 and 13,652,349 shares, respectively 2,763 2,730
Additional paid-in capital 38,388 34,383
Retained earnings 166,776 126,392
Cumulative translation adjustments (3,818) 4,950
-------- --------
Total Shareholders' Equity 204,109 168,455
-------- --------
Total Liabilities and Shareholders' Equity $463,592 $381,241
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements
19
<PAGE>
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Years Ended August 31, 1997, 1996, and 1995
-------------------------------------------
Class A Additional Cumulative
Common Paid-in Retained Translation
Stock Capital Earnings Adjustments
------- ---------- -------- -----------
<S> <C> <C> <C> <C>
Balances at September 1, 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 - -
Tax benefit of option exercises - 512 - -
Currency translation adjustments - - - 1,161
------- ------- ------- -------
Balances at August 31, 1995 2,681 28,328 94,285 6,392
Net earnings for the year - - 33,729 -
Cash dividends declared -
$0.12 per share - - (1,622) -
Exercise of stock options 24 1,582 - -
Issuance of stock in acquisition 25 3,905 - -
Tax benefit of option exercises - 568 - -
Currency translation adjustments - - - (1,442)
------- ------- ------- -------
Balances at August 31, 1996 2,730 34,383 126,392 4,950
Net earnings for the year - - 42,038 -
Cash dividends declared -
$0.12 per share - - (1,654) -
Exercise of stock options 33 2,883 - -
Tax benefit of option exercises - 1,052 - -
Other - 70 - -
Currency translation adjustments - - - (8,768)
------- ------- ------- -------
Balances at August 31, 1997 $ 2,763 $ 38,388 $166,776 $ (3,818)
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements
20
<PAGE>
APPLIED POWER INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Years ended August 31,
---------------------------------
1997 1996 1995
---------------------------------
<S> <C> <C> <C>
Net Earnings $42,038 $33,729 $20,085
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 23,663 21,078 18,456
Non-cash charge - extraordinary loss - - 4,920
Provision for deferred taxes (1,274) (1,588) (2,707)
Changes in operating assets and liabilities,
excluding the effects of business
acquisitions and disposals:
Accounts receivable (9,147) (5,703) (15,413)
Inventories 6,121 (14,219) (8,170)
Prepaid expenses and other assets (5,013) (2,505) (2,077)
Trade accounts payable 5,898 2,262 1,231
Other liabilities 2,544 (240) 7,499
------- -------- -------
Net Cash Provided by Operating Activities 64,830 32,814 23,824
Investing Activities
Proceeds on the sale of property, plant
and equipment 3,517 821 614
Additions to property, plant and equipment (22,641) (22,734) (15,986)
Business acquisitions (75,015) (33,949) (2,758)
Product line dispositions - 5,181 -
Other 79 65 162
------- -------- -------
Net Cash Used in Investing Activities (94,060) (50,616) (17,968)
Financing Activities
Proceeds from issuance of long-term debt 77,000 42,433 116,055
Principal payments on long-term debt (49,932) (37,877) (123,997)
Refinancing expenditures - - (4,370)
Net borrowings(repayments) on short-term
credit facilities 6,691 3,484 (2,092)
Net commercial paper repayments - (3,276) (6,671)
Additional receivables financed 525 13,275 11,200
Dividends paid on common stock (1,654) (1,622) (1,602)
Stock option exercises and other 2,867 1,551 4,219
------- -------- -------
Net Cash Provided by(Used in) Financing Activities 35,497 17,968 (7,258)
Effect of Exchange Rate Changes on Cash (1,422) (76) 406
------- -------- -------
Net Increase(Decrease) in Cash and Cash Equivalents 4,845 90 (996)
Cash and Cash Equivalents - Beginning of Year 1,001 911 1,907
------- -------- -------
Cash and Cash Equivalents - End of Year $ 5,846 $ 1,001 $ 911
======= ======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements
21
<PAGE>
APPLIED POWER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include the
accounts of Applied Power Inc. and its 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, ranging from two to thirty years, 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 forty years. The Company periodically evaluates the
carrying value of intangible assets in accordance with Statement of Financial
Accounting Standard ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Impairment of
goodwill, if any, is measured on the basis of whether anticipated undiscounted
operating cash flows generated by the acquired businesses will recover the
recorded goodwill balances over the remaining amortization period. At August
31, 1997 and 1996, no impairment of goodwill was indicated.
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 expensed as
incurred. Such costs incurred in the development of new products or
significant improvements to existing products totaled approximately $9,960,
$9,852 and $8,725 in 1997, 1996 and 1995, 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 SFAS
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.
Derivative Financial Instruments: Derivative financial instruments are
primarily utilized by the Company to manage risks associated with interest
rate market volatility and foreign exchange exposures. The Company does not
hold or
22
<PAGE>
issue derivative financial instruments for trading purposes. The Company
currently holds both interest rate and foreign currency swap agreements. For
both interest rate and foreign currency swap agreements, the differential to
be paid or received is accrued monthly as an adjustment to interest expense.
The Company also utilizes foreign currency forward contracts to hedge existing
foreign exchange exposures. Gains and losses resulting from these instruments
are recognized in the same period as the underlying transaction. For further
information, see Note G - "Long-term Debt."
Use of Estimates: The financial statements have been prepared in accordance
with generally accepted accounting principles and necessarily include amounts
based on estimates and assumptions by management. Actual results could differ
from those amounts.
New Accounting Standards: In February 1997, the Financial Accounting Standards
Board issued SFAS No. 128, "Earnings Per Share," which is required to be
adopted in the Company's interim financial statements issued for the second
quarter of fiscal 1998. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating primary earnings per
share, to be called basic earnings per share, the dilutive effect of stock
options will be excluded. Adoption of this statement will increase basic
earnings per share previously reported as primary earnings per share by $0.13,
$0.09 and $0.06 for each of the three years ended August 31, 1997, 1996 and
1995, respectively. SFAS No. 128 is not expected to have a material impact on
fully diluted earnings per share.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosure About Segments
of an Enterprise and Related Information." Both statements are effective for
fiscal years beginning after December 15, 1997. The Company is currently
assessing the impact these statements will have on its required disclosures.
Reclassifications: Certain prior year amounts shown have been reclassified to
conform to fiscal 1997 presentation, including but not limited to the
reclassification of financial data previously reported in Tools & Supplies
into Engineered Solutions and TEE.
NOTE B - ACQUISITIONS
The Company, through its C Fab subsidiary, acquired all of the outstanding
stock of Hormann Security Systems Limited ("Hormann") on June 6, 1997 for
approximately $10,000 in cash. The transaction was funded through borrowings
under existing credit facilities. Approximately $4,200 of the purchase price
was assigned to goodwill. Hormann, based in Cork, Ireland, assembles
electronic equipment for a variety of customers. The operating results of
Hormann subsequent to June 6, 1997 are included in the Consolidated Statement
of Earnings.
On April 1, 1997, the Company's Wright Line subsidiary purchased certain
assets of All-Round Systemen B.V. ("All-Round"), one of its distributors based
in the Netherlands. Of the approximately $1,500 cash paid for the assets,
$1,400 was assigned to goodwill. The results of All-Round subsequent to April
1, 1997 are included in the Consolidated Statement of Earnings.
On January 13, 1997, the Company, through its Wright Line subsidiary, acquired
C Fab Group Limited ("C Fab") for approximately $11,300 in net cash plus
future consideration. The amount of future consideration ranges between $0 and
$12,000 based on targeted sales and earnings. At August 31, 1997, no amounts
had been paid related to the earn-out. The transaction generated goodwill of
approximately $5,600, and was funded through borrowings under existing credit
facilities. C Fab, headquartered in Dublin, Ireland, manufactures electronic
enclosures used by the computer, telecom, datacom and other industries. The
results of operations for C Fab subsequent to the acquisition date are
included in the Consolidated Statement of Earnings.
The Company, through its Wright Line subsidiary, purchased the net assets of
Everest Electronic Equipment, Inc. ("Everest") on September 26, 1996 for cash
consideration of $52,000, which was funded through borrowings under existing
credit facilities. Approximately $43,000 of the purchase price was assigned to
goodwill. Everest is a
23
<PAGE>
manufacturer of custom and standard electronic enclosures used by the
computer, telecom, datacom and other industries and is headquartered in
Anaheim, California. The results of Everest subsequent to September 26, 1996
are included in the Consolidated Statement of Earnings. The following
unaudited pro forma data summarizes the results of operations for the periods
indicated as if the acquisition of Everest had been completed on September 1,
1995, the beginning of the 1996 fiscal year. The pro forma data give effect to
actual operating results prior to the acquisition and adjustments to interest
expense, depreciation, goodwill amortization and income taxes. These pro forma
amounts do not purport to be indicative of the results that would have
actually been obtained if the acquisition had occurred on September 1, 1995 or
that may be obtained in the future. The pro forma data do not give effect to
the acquisitions completed subsequent to August 31, 1997. See Note O -
"Subsequent Events."
- - ----------------------------------------------------------------
Years Ended August 31,
- - ----------------------------------------------------------------
1997 1996
- - ----------------------------------------------------------------
Net Sales $675,812 $613,760
Net Earnings $ 42,128 $ 35,059
Net Earnings Per Share $ 2.93 $ 2.51
================================================================
On May 15, 1996, CalTerm, Inc. ("CalTerm") was merged with a wholly-owned
subsidiary of the Company. Consideration included 122,810 shares of Applied
Power Inc. Class A common stock (valued at approximately $3,930) and
approximately $1,038 in cash. In addition, the Company assumed approximately
$6,000 of outstanding debt which was extinguished by the Company shortly after
the merger. In conjunction with the acquisition, a warehouse operated by
CalTerm in Reno, Nevada was purchased for approximately $2,300 and there were
payments of $1,000 for non-compete agreements. Three individuals received
employment agreements and related stock options. Cash payments required were
funded through borrowings under existing credit facilities. Goodwill of
approximately $2,000 was recorded as a result of this transaction.
Headquartered in San Diego, California, CalTerm is a supplier of electrical
consumables and tools primarily to the retail automotive aftermarket. The
results of operations of CalTerm subsequent to the acquisition date are
included in the Consolidated Statement of Earnings.
On February 23, 1996, the Company's TEE division acquired the European
distribution rights for its products for cash of $1,250 plus forgiveness of
accounts receivable outstanding of $723 from its European distributor.
Goodwill of approximately $1,900 was generated in conjunction with the
transaction.
On December 8, 1995, the Company acquired the remaining 10% minority interest
in Applied Power Korea. Cash of $388 was used in the acquisition, which
generated goodwill of approximately $340. The results of operations of this
subsidiary have historically been included in the Consolidated Statement of
Earnings.
On October 26, 1995, the Company's Enerpac division acquired the assets of
Designed Fluid-Air Systems, Inc. ("DFAS"). Consideration consisted of $298 in
cash plus future royalties over the next five years not to exceed $500 in the
aggregate. As of August 31, 1997, approximately $50 in royalties were earned.
Approximately $100 of the purchase price was assigned to goodwill. DFAS,
located in Oswego, Illinois, designs, fabricates and assembles customized
quick die change systems utilizing hydraulic, pneumatic and electrical
components. The operating results of DFAS subsequent to the acquisition date
are included in the Consolidated Statement of Earnings.
On September 29, 1995, the Company completed the acquisition of substantially
all of the assets and certain liabilities of Vision Plastics Manufacturing
Company ("Vision") for $3,557 in cash. Included in the liabilities assumed was
$1,357 of outstanding mortgage debt, which was subsequently extinguished by
the Company during the first quarter of fiscal 1996. On January 10, 1996, in a
separate transaction, the Company acquired certain proprietary technology
rights and patents related to Vision. Total consideration for the two
transactions of approximately $21,500 was funded by proceeds from borrowings
under existing credit facilities. Intangible assets of $19,942 were recorded
which included approximately $950 of goodwill. Vision, based in San Diego,
California, manufactures plastic cable ties which are sold through electrical
wholesale, retail and OEM channels. The operating results of Vision subsequent
to September 29, 1995 are included in the Consolidated Statement of Earnings.
24
<PAGE>
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.
All acquisitions were accounted for using the purchase method. The
transactions, except for Everest, were not material to the results of
operations or the financial position of the Company.
NOTE C - SALES OF PRODUCT LINES
On January 24, 1996, the Company sold substantially all of the assets and
liabilities of its APITECH mobile equipment product line. Total consideration
from the transaction, which included future collection of retained accounts
receivable, was approximately $5,200, which approximated the book value of the
product line.
On December 13, 1995, the Company's GB Electrical subsidiary sold its HIT
spring steel product line for approximately $2,400 in cash. Proceeds from the
sale approximated the book value of the product line.
NOTE D - ACCOUNTS RECEIVABLE FINANCING
In August 1995, the Company entered into a multi-currency accounts receivable
financing agreement that allows up to the equivalent of $50,000 of sold
receivables at any one time. The agreement, as amended August 30, 1996 and
again on February 28, 1997, expires in August 1999.
Under the terms of such agreement, the Company and certain subsidiaries
(collectively, "Originators") sell trade accounts receivable to Applied Power
Credit Corporation ("APCC"), a wholly-owned limited purpose subsidiary of the
Company. APCC is a separate corporate entity that sells participating
interests in its pool of accounts receivable to financial institutions
("Purchasers"). The Purchasers, in turn, receive an ownership and security
interest in the pool of receivables. Participation interests in new
receivables generated by the Originators are purchased by APCC and resold to
the Purchasers as collections reduce previously sold participation interests.
The sold accounts receivable are reflected as a reduction of receivables in
the Consolidated Balance Sheet. APCC has the risk of credit loss on such
receivables up to a maximum recourse amount and, accordingly, the full amount
of the allowance for doubtful accounts has been retained on the Company's
Consolidated Balance Sheet. The Company retains collection and administrative
responsibilities on the participation interests sold as servicer for APCC and
the Purchasers.
At August 31, 1997 and 1996, accounts receivable were reduced by $50,000 and
$49,475, respectively, representing receivable interests sold under this
program. The proceeds from the sales were used to reduce debt.
Accounts receivable financing costs totaling $2,978, $2,324 and $1,892 for the
years ended August 31, 1997, 1996 and 1995, respectively, are included with
financing costs 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 US owned inventory (approximately 69% of total inventories
in both 1997 and 1996). 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 $7,920 and $9,222 at August 31, 1997 and 1996, 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.
25
<PAGE>
NOTE F - SHORT-TERM BORROWINGS
The Company had borrowings under unsecured non-committed lines of credit with
banks aggregating approximately $21,428 and $16,068 at August 31, 1997 and
1996, respectively. Interest rates vary depending on the currency being
borrowed. The weighted average interest rates on the US and non- US short-term
borrowings were 6.22% and 9.37% at August 31, 1997 and 1996, respectively. The
amount of unused available borrowings under such lines of credit was
approximately $50,000 at August 31, 1997.
NOTE G - LONG-TERM DEBT
- - ----------------------------------------------------------------------
August 31,
- - ----------------------------------------------------------------------
1997 1996
- - ----------------------------------------------------------------------
Borrowings under:
Multi-currency revolving credit agreement $101,663 $ 76,298
Other notes - 250
- - ----------------------------------------------------------------------
Total Long-term Debt $101,663 $ 76,548
======================================================================
During 1995, the Company recorded an extraordinary loss of $4,920 ($0.36 per
share) relating to the March 30, 1995 extinguishment of the outstanding
$64,350, 9.92% 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 borrowings under a then 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 $120,000 multi-currency revolving credit
agreement.
The $120,000 multi-currency revolving credit agreement was amended August 29,
1996 to increase the credit line to $170,000 and extend the term to August
2001. The Company can borrow at a floating rate of IBOR plus .30 to .70 of 1%
annually, depending on the debt-to-capital ratio. Currently, the Company
incurs interest at .450 of 1% above 30-day IBOR, determined by the underlying
currency of the debt which the Company is borrowing. At August 31, 1997, the
Company had borrowings denominated in the US Dollar, the Japanese Yen and the
German Mark. 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, 1997 was $68,337.
The 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, 1997, the Company was in compliance with all debt covenants. Under
the most restrictive covenant, approximately $89,277 of retained earnings was
available for the payment of future dividends on common stock as of August 31,
1997.
On August 29, 1997, the Company entered into a letter agreement that provided
for a committed credit line of an additional $140,000 for a term of 364 days.
The purpose of the agreement was to secure funding for the tender offer for
the common stock of Versa Technologies, Inc. Subsequent to year end, the
$140,000 credit agreement was executed. In addition, the Company subsequently
replaced its $170,000 multi-currency credit agreement and the additional
$140,000 credit agreement with a new multi-currency credit agreement which
provides up to $350,000 in borrowings and expires in 2002.
Derivative Financial Instruments: As part of its interest rate management
program, the Company periodically enters into interest rate swap agreements
with respect to portions of its outstanding debt. The interest rate swap
agreements in place at August 31, 1997 effectively convert $85,000 of the
Company's variable rate debt to a weighted average
26
<PAGE>
fixed rate of 6.03%. The swap agreements expire on varying dates through 2003.
The accompanying Consolidated Balance Sheet at August 31, 1997 does not
reflect a value for these swap agreements. The purpose of the Company's
foreign currency hedging activities is to protect the Company from the risk
that the eventual dollar cash flows resulting from the sale and purchase of
products in foreign currencies will be adversely affected by changes in
exchange rates. In addition, the Company seeks to manage the impact of foreign
currency fluctuations related to the repayment of intercompany borrowings.
Fluctuations in the value of hedging instruments are offset by fluctuations in
the value of the underlying exposures being hedged.
The Company uses forward exchange contracts to hedge certain firm purchases
and sales commitments and the related receivables and payables including other
third party or intercompany foreign currency transactions. Cross-currency
swaps are used to hedge foreign currency denominated payments related to
intercompany loan agreements. Hedged transactions are denominated primarily in
European currencies. The net realized and unrealized gains or losses on
forward contracts deferred at August 31, 1997 were negligible.
The counterparties to these financial instruments consist of major financial
institutions with investment grade or better credit ratings. The Company does
not expect any losses from nonperformance by these counterparties.
Fair Values: The fair value of the Company's short-term borrowings and
long-term debt approximated book value as of August 31, 1997 and 1996. The
fair value of debt instruments is calculated by discounting the cash flow of
such obligations using the market interest rates for similar instruments. If
the Company decided to terminate the interest rate swap agreements, the
Company would have had to pay $553 as of August 31, 1997. The swap agreements
in place at August 31, 1996 had a fair value of approximately $886. The
estimated fair values of the foreign currency contracts in place at August 31,
1997 were negligible.
Aggregate Maturities: Long-term debt outstanding at August 31, 1997 is payable
in its entirety in 2001.
The Company paid $11,705, $8,084 and $10,363 for financing costs in 1997, 1996
and 1995, 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.
Future obligations on non-cancelable operating leases in effect at August 31,
1997 were: $12,775 in 1998; $11,423 in 1999; $9,770 in 2000; $7,371 in 2001;
$7,058 in 2002 and $24,794 thereafter.
Total rental expense under operating leases was $12,295, $10,739 and $11,076
in 1997, 1996 and 1995, respectively.
NOTE I - STOCK OPTION PLANS
A total of 4,092,901 shares of Class A common stock are authorized under the
Company's stock option plans, of which a total of 1,269,443 have been issued
through exercises of option grants. At August 31, 1997, 2,823,458 shares were
reserved for issuance under the plans.
Employee Plans: On January 8, 1997, shareholders of the Company approved the
adoption of the Applied Power Inc. 1996 Stock Plan (the "1996 Plan").
Previously, the Company had three nonqualified stock option plans for
employees - the 1985, 1987 and 1990 plans. No further options may be granted
under the 1985, 1987 or 1990 plans, although options previously issued and
outstanding under these plans remain exercisable pursuant to the provisions of
the plans. Under the terms of the 1996 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 generally vest 50% after
2 years and 100% after 5 years.
27
<PAGE>
A summary of option activity under the four plans is as follows:
- - --------------------------------------------------------------------------
Number of Weighted Average
Shares Exercise Price
- - --------------------------------------------------------------------------
Outstanding at September 1, 1994 1,585,535 $ 16.82
Granted 227,740 28.46
Exercised (250,136) 16.43
Canceled (119,450) 17.55
- - --------------------------------------------------------------------------
Outstanding at August 31, 1995 1,443,689 $ 18.93
Granted 80,854 31.21
Exercised (121,949) 12.87
Canceled (154,699) 21.82
- - --------------------------------------------------------------------------
Outstanding at August 31, 1996 1,247,895 $ 20.13
Granted 229,250 36.58
Exercised (164,329) 17.73
Canceled (31,358) 26.44
- - --------------------------------------------------------------------------
Outstanding at August 31, 1997 1,281,458 $ 23.13
- - --------------------------------------------------------------------------
Exercisable at August 31, 1997 892,045 $ 20.45
==========================================================================
The following table summarizes information concerning currently outstanding
and exercisable options:
- - -----------------------------------------------------------------------------
Options Outstanding Options Exercisable
--------------------------------- -----------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Price Outstanding Life Price Exercisable Price
- - -----------------------------------------------------------------------------
$8.50 8,500 0.4 years $ 8.50 8,500 $ 8.50
$13.50 - $20.19 686,045 3.5 years $17.07 631,758 $17.19
$20.56 - $30.38 301,963 7.2 years $25.55 151,287 $25.21
$31.75 - $44.75 278,950 9.1 years $35.25 100,500 $34.75
$52.25 6,000 9.9 years $52.25
- - -----------------------------------------------------------------------------
1,281,458 $23.13 892,045 $20.45
=============================================================================
The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
its employee stock option plans. Accordingly, no compensation expense has been
recognized for its stock-based compensation plans other than for the outside
director plan. If the Company had accounted for these stock options issued to
employees in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net earnings and earnings per share would have
been changed to the pro forma amounts indicated below:
- - ---------------------------------------------------------------
Years Ended August 31,
- - ---------------------------------------------------------------
1997 1996
- - ---------------------------------------------------------------
Net earnings - as reported $42,038 $33,729
Net earnings - pro forma 41,197 33,643
Earnings per share - as reported $ 2.92 $ 2.41
Earnings per share - pro forma 2.87 2.41
===============================================================
The pro forma effects of applying SFAS No. 123 may not be representative of
the effects on reported net income and earnings per share for future years
since options vest over several years and additional awards are made each
year.
28
<PAGE>
The fair value of Applied Power stock options used to compute pro forma net
earnings and pro forma earnings per share disclosures is the estimated present
value at grant date using the Black-Scholes option-pricing model. The weighted
average fair values per share of options granted in 1997 and 1996 are $11.03
and $8.80, respectively. The following weighted average assumptions were used
in completing the model:
- - ----------------------------------------------------------------------
Years Ended August 31,
- - ----------------------------------------------------------------------
1997 1996
- - ----------------------------------------------------------------------
Dividend yield 0.33% 0.40%
Expected volatility 19.0% 18.3%
Risk-free rate of return 6.3% 6.3%
Forfeitures 2% ANNUALLY 2% annually
Expected life 5 YEARS 5 years
======================================================================
Outside Director Plan: Annually, each outside director is granted stock
options to purchase 1,500 shares of common stock at a price equal to the
market price of the underlying stock on the date of grant. The amount of
shares granted was increased in 1997, from 1,000 shares, by an amendment to
the plan adopted on October 31, 1996. These options are recorded as
compensation expense as required by SFAS No. 123. A maximum of 60,000 shares
may be issued under this plan. Options vest 100% after 11 months.
A summary of option activity under this plan is as follows:
- - --------------------------------------------------------------------------
Number of Weighted Average
Shares Exercise Price
- - --------------------------------------------------------------------------
Outstanding at September 1, 1994 19,000 $17.43
Granted 5,000 25.00
Exercised (4,000) 17.81
- - --------------------------------------------------------------------------
Outstanding at August 31, 1995 20,000 $19.25
Granted 6,000 27.63
Exercised (1,000) 17.00
- - --------------------------------------------------------------------------
Outstanding at August 31, 1996 25,000 $21.53
Granted 7,500 38.88
Canceled (2,000) 16.84
- - --------------------------------------------------------------------------
Outstanding at August 31, 1997 30,500 $26.05
- - --------------------------------------------------------------------------
Exercisable at August 31, 1997 23,000 $21.93
==========================================================================
NOTE J - EMPLOYEE STOCK OWNERSHIP AND RETIREMENT PLANS
US Employees: Primarily 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, subject to IRS
limitations. During the years ended August 31, 1997, 1996 and 1995, pre-tax
expense related to the ESOP Plan was $2,614, $1,735 and $1,720, 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. Primarily 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, 1996, the Company's annual match equals
approximately 25% of each participant's first 6% of earnings. Expense
attributable to the Savings Plan was approximately $1,035, $672 and $643 for
1997, 1996 and 1995, respectively.
Non-US Employees: The Company contributes to a number of retirement programs
for employees outside the US. Pension expense amounted to approximately
$1,000, $948 and $821 in 1997, 1996 and 1995, respectively. These
29
<PAGE>
plans are not required to report to US governmental agencies under the
Employee Retirement Income Security Act of 1974 and the Company does not,
therefore, determine the actuarial value of accumulated plan benefits or net
assets available for benefits.
NOTE K - POSTRETIREMENT BENEFITS
The Company does not offer postretirement health care and life insurance
benefits to employees. However, certain employees of businesses previously
acquired by the Company were entitled to such benefits upon retirement. The
individuals receiving health care benefits under these programs are required
to make monthly contributions to defray a portion of the cost. Retiree
contributions are adjusted annually. Retirees currently do not contribute
toward the cost of life insurance. The accounting for retiree health care
benefits assumes retirees will continue to contribute toward the cost of such
benefits.
Net periodic postretirement benefit expense for 1997, 1996 and 1995 included
the following components:
- - ------------------------------------------------------------------------
1997 1996 1995
- - ------------------------------------------------------------------------
Service cost of benefits earned $ 5 $ 8 $ 9
Interest cost on accumulated postretirement 353 400 482
benefit obligation
Amortization of unrecognized gain (305) (251) (180)
- - ------------------------------------------------------------------------
Total Postretirement Benefit Expense $ 53 $ 157 $ 311
========================================================================
The Company's accumulated postretirement benefit obligation for such benefits
is as follows:
- - --------------------------------------------------------------------
August 31,
- - --------------------------------------------------------------------
1997 1996
- - --------------------------------------------------------------------
Retirees $3,843 $4,174
Vested former employees 748 1,029
Active employees 174 225
- - --------------------------------------------------------------------
Subtotal 4,765 5,428
Unrecognized gain 4,312 4,131
- - --------------------------------------------------------------------
Accumulated Postretirement Benefit Obligation $9,077 $9,559
====================================================================
The Company's postretirement benefit obligation is not funded. Benefits paid
in 1997 and 1996 were $128 and $22 higher than that expensed during those
years, respectively. Payments in 1995 were $24 lower than that expensed during
that year.
The health care cost trend rate used in the actuarial calculations was 10.2%,
trending downward to 6.5% by the year 2009, and remaining level thereafter.
The discount rate used in determining the accumulated postretirement benefit
obligation was 7.75% in each of the years 1997, 1996 and 1995. The effect of a
one percentage-point increase in health care cost trend rates would change the
accumulated postretirement benefit obligation by approximately 8%.
30
<PAGE>
NOTE L - INCOME TAXES
Income tax expense for continuing operations consists of the following:
- - --------------------------------------------------------------------------
1997 1996 1995
- - --------------------------------------------------------------------------
Currently Payable:
Federal $14,736 $ 9,361 $ 7,007
Foreign 5,415 6,059 6,313
State 1,828 1,606 1,255
- - --------------------------------------------------------------------------
Subtotals 21,979 17,026 14,575
- - --------------------------------------------------------------------------
Deferred:
Federal (1,196) (711) (2,582)
Foreign 87 (780) 230
State (165) (97) (355)
- - --------------------------------------------------------------------------
Subtotals (1,274) (1,588) (2,707)
- - --------------------------------------------------------------------------
Totals $20,705 $15,438 $11,868
==========================================================================
Components of deferred income tax benefits include the following:
- - --------------------------------------------------------------------------
1997 1996 1995
- - --------------------------------------------------------------------------
Compensation and other employee benefits $ (677) $ 371 $ (443)
Inventory items (873) (694) 26
Depreciation and amortization 258 (1,917) (956)
Restructuring expenses (65) 373 574
Deferred income 526 574 (1,225)
Book reserves and other items (443) (295) (683)
- - --------------------------------------------------------------------------
Totals $ (1,274) $(1,588) $(2,707)
==========================================================================
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:
- - ------------------------------------------------------------------------------
Percent of Pre-tax Earnings
- - ------------------------------------------------------------------------------
1997 1996 1995
- - ------------------------------------------------------------------------------
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of Federal effect 1.7 2.0 1.6
Non-deductible amortization 0.8 0.9 1.2
Net effects of foreign tax rates and credits (4.2) (5.0) (5.6)
Other items (0.3) (1.5) -
- - ------------------------------------------------------------------------------
Effective Tax Rate 33.0% 31.4% 32.2%
==============================================================================
31
<PAGE>
Temporary differences and carryforwards which gave rise to the deferred tax
assets and liabilities included the following items:
- - ----------------------------------------------------------------------
August 31,
- - ----------------------------------------------------------------------
1997 1996
- - ----------------------------------------------------------------------
Deferred tax assets:
Operating loss and foreign tax credit $ 3,487 $ 2,064
carryforwards
Compensation and other employee benefits 6,004 5,327
Inventory items 6,531 5,821
Restructuring expenses 242 177
Deferred income 611 1,137
Book reserves and other items 3,321 3,092
- - ----------------------------------------------------------------------
20,196 17,618
Valuation allowance (4,206) (2,441)
- - ----------------------------------------------------------------------
15,990 15,177
- - ----------------------------------------------------------------------
Deferred tax liabilities:
Depreciation and amortization 10,571 10,313
Inventory items 3,882 4,045
Other items 4,924 5,480
- - ----------------------------------------------------------------------
19,377 19,838
- - ----------------------------------------------------------------------
Net Deferred Tax Liability $(3,387) $(4,661)
======================================================================
The valuation allowance primarily represents foreign and state loss
carryforwards for which utilization is uncertain. The increase in the
valuation allowance represents the current year increase in such losses. The
majority of the foreign losses may be carried forward indefinitely. The state
loss carryforwards expire in various years through 2012.
Income taxes paid during 1997, 1996 and 1995 were $20,666, $17,039 and
$12,280, respectively.
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
$59,000 at August 31, 1997. If all such undistributed earnings were remitted,
an additional provision for income taxes of approximately $3,000 would have
been necessary as of August 31, 1997.
Earnings from continuing operations before income taxes from non-US operations
were $11,612, $10,639 and $16,156 for 1997, 1996 and 1995, respectively.
NOTE M - SEGMENT INFORMATION
The Company's operations are classified into three business segments: Tools &
Supplies, Engineered Solutions and Technical Environments and Enclosures.
Tools & Supplies is involved in the design, manufacture and distribution of
tools and supplies to the construction, electrical wholesale, retail DIY,
datacom, retail automotive, industrial and production automation markets.
Engineered Solutions focuses on developing and marketing value-added,
customized solutions for OEMs in the automotive, truck, off-highway equipment,
medical, aerospace, semiconductor, defense and industrial markets. Technical
Environments and Enclosures designs, manufactures and sells furnishings and
enclosures utilized in technology intensive business environments.
32
<PAGE>
Summarized financial information by business segment is as follows:
- - -----------------------------------------------------------------------
1997 1996 1995
- - -----------------------------------------------------------------------
NET SALES:
Tools & Supplies $292,492 $281,225 $264,823
Engineered Solutions 189,481 193,812 192,219
Technical Environments and Enclosures 190,343 96,178 70,016
- - -----------------------------------------------------------------------
Totals $672,316 $571,215 $527,058
=======================================================================
OPERATIONS BEFORE INCOME TAXES:
Tools & Supplies $ 28,890 $ 35,044 $ 35,628
Engineered Solutions 20,590 14,978 13,880
Technical Environments and Enclosures 30,636 13,678 8,289
General corporate and other (17,373) (14,533) (20,924)
- - -----------------------------------------------------------------------
Totals $ 62,743 $ 49,167 $ 36,873
=======================================================================
DEPRECIATION AND AMORTIZATION:
Tools & Supplies $ 9,521 $ 8,631 $ 6,578
Engineered Solutions 8,218 9,410 9,119
Technical Environments and Enclosures 5,849 2,971 2,704
General corporate and other 75 66 55
- - -----------------------------------------------------------------------
Totals $ 23,663 $ 21,078 $ 18,456
=======================================================================
CAPITAL EXPENDITURES:
Tools & Supplies $ 8,125 $ 9,515 $ 6,440
Engineered Solutions 6,133 6,497 6,321
Technical Environments and Enclosures 8,312 6,715 2,955
General corporate and other 71 7 270
- - -----------------------------------------------------------------------
Totals $ 22,641 $ 22,734 $ 15,986
=======================================================================
- - -----------------------------------------------------------------------
August 31,
- - -----------------------------------------------------------------------
1997 1996 1995
- - -----------------------------------------------------------------------
ASSETS:
Tools & Supplies $196,666 $209,270 $163,053
Engineered Solutions 120,372 122,669 129,682
Technical Environments and Enclosures 135,449 37,077 25,969
General corporate 11,105 12,225 14,242
- - -----------------------------------------------------------------------
Totals $463,592 $381,241 $332,946
=======================================================================
33
<PAGE>
Summarized financial information by geographic region is as follows:
- - --------------------------------------------------------------------------
1997 1996 1995
- - --------------------------------------------------------------------------
NET SALES:
North America $448,231 $360,844 $323,015
Europe 160,656 143,683 136,813
Japan and Asia Pacific 51,961 56,750 55,208
Latin America 11,468 9,938 12,022
- - --------------------------------------------------------------------------
Totals $672,316 $571,215 $527,058
==========================================================================
OPERATIONS BEFORE INCOME TAXES:
North America $ 66,281 $ 45,070 $ 34,885
Europe 16,458 16,043 14,850
Japan and Asia Pacific (1,120) 3,772 7,207
Latin America (1,503) (1,185) 855
General corporate and other (17,373) (14,533) (20,924)
- - --------------------------------------------------------------------------
Totals $ 62,743 $ 49,167 $ 36,873
==========================================================================
- - --------------------------------------------------------------------------
August 31,
- - --------------------------------------------------------------------------
1997 1996 1995
- - --------------------------------------------------------------------------
ASSETS:
North America $299,572 $240,420 $192,032
Europe 109,220 78,445 77,505
Japan and Asia Pacific 33,668 38,834 37,200
Latin America 10,027 11,317 11,967
General corporate 11,105 12,225 14,242
- - --------------------------------------------------------------------------
Totals $463,592 $381,241 $332,946
==========================================================================
Operations before income taxes for each business and geographic segment do not
include general corporate expenses, 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 1997, 1996 or 1995. Export sales from domestic
operations were less than 10% in each of the periods presented.
Corporate assets, which are not allocated, represent principally cash and
prepaid taxes.
NOTE N - CONTINGENCIES AND LITIGATION
The Company had outstanding letters of credit totaling $773 and $830 at August
31, 1997 and 1996, 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, environmental, labor and patent claims. The Company has
recorded reserves for loss contingencies based on the specific circumstances
of each case. Such reserves are recorded when the occurrence of loss is
probable and can be reasonably estimated. In the opinion of management, the
resolution of these contingencies will not have a material 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
34
<PAGE>
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 $448 and $611 were included in
the Consolidated Balance Sheet at August 31, 1997 and 1996, respectively.
NOTE O - SUBSEQUENT EVENTS
Subsequent to year end, the Company, through a wholly-owned subsidiary,
accepted for payment all shares of Versa Technologies, Inc. ("Versa/Tek")
common stock which were tendered pursuant to the Company's tender offer to
purchase all outstanding shares at a cash price of $24.625 net per share.
Consideration for the transaction was expected to total approximately
$140,000. The transaction will be funded with proceeds from a $140,000,
364-day revolving credit facility from existing lenders. Versa/Tek, based in
Racine, Wisconsin, is a value-added manufacturer of custom engineered
components and systems for diverse industrial markets.
Subsequent to year end, the Company agreed to terms for the acquisition of
certain assets of Nylo-Flex Manufacturing Company, Inc. ("Nylo-Flex") for
approximately $3,000 in cash. The transaction is expected to be funded by
proceeds from borrowings under existing credit facilities. Nylo-Flex,
headquartered in Mobile, Alabama, does business under the TAM name and is a
manufacturer, packager and distributor of high quality battery terminals,
battery cables and battery maintenance accessories to the automotive, marine,
farm, fleet and industrial markets.
35
<PAGE>
APPLIED POWER INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Additions Deductions
----------------------- -----------------------
Accounts
Balance at Charged to Written Off Balance
Beginning Costs and Net Less at End
Description of Period Expenses Acquired Recoveries Other of Period
- - ----------------------------- ---------- ----------- -------- ----------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Deducted from assets to
which they apply:
Allowance for losses -
trade accounts receivable
August 31, 1997 $ 4,179 $1,696 $133 $1,370 $309 $ 4,329
======= ====== ==== ====== ==== =======
August 31, 1996 $ 3,593 $1,203 $100 $ 662 $ 55 $ 4,179
======= ====== ==== ====== ==== =======
August 31, 1995 $ 3,131 $1,255 - $ 840 $(47) $ 3,593
======= ====== ==== ====== ==== =======
Allowance for losses -
inventory
August 31, 1997 $12,045 $7,488 $456 $5,674 $452 $13,872
======= ====== ==== ====== ==== =======
August 31, 1996 $ 8,371 $7,529 $ 30 $3,794 $ 91 $12,045
======= ====== ==== ====== ==== =======
August 31, 1995 $ 6,268 $5,413 - $3,429 $(119) $ 8,371
======= ====== ==== ====== ==== =======
</TABLE>
36
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
APPLIED POWER INC.
(Registrant)
Dated: November 14, 1997 By: /s/ Robert C. Arzbaecher
-------------------------
Robert C. Arzbaecher
Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard G. Sim and Robert C.
Arzbaecher, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments to this report, and to file the same, with all and any other
regulatory authority, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.*
SIGNATURE TITLE
--------- -----
/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/ Richard D. Carroll Controller
- - --------------------------------- (Principal Accounting Officer)
Richard D. Carroll
/s/ H. Richard Crowther Director
- - ---------------------------------
H. Richard Crowther
/s/ Jack L. Heckel Director
- - ---------------------------------
Jack L. Heckel
/s/ Richard A. Kashnow Director
- - ---------------------------------
Richard A. Kashnow
/s/ L. Dennis Kozlowski Director
- - ---------------------------------
L. Dennis Kozlowski
/s/ John J. McDonough Director
- - ---------------------------------
John J. McDonough
- - ------------
* Each of the above signatures is affixed as of November 14, 1997.
37
<PAGE>
APPLIED POWER INC.
(COMMISSION FILE NO. 1-11288)
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED AUGUST 31, 1997
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
--------- ------------------------------ -------------------- --------
<S> <C> <C> <C>
3.1 (a) Amended and Restated Exhibit 19.1(a) to the
Articles of Incorporation (as Registrant's Form 10-Q for
adopted January 8, 1987) quarter ended February 28, 1990
("2/28/90 10-Q")
(b) Articles of Amendment to Exhibit 19.1(b) to 2/28/90 10-Q
Amended and Restated Articles
of Incorporation, amending
Sections 3.1 and 3.2 of Article
III and Article IV (as adopted
January 13, 1990)
3.2 Amended and Restated By-Laws X
(as last amended by amendment to
Section 3.01 decreasing the number
of directors to six, adopted August
8, 1996 and effective as of
January 8, 1997)
4+
4.1 Articles III, IV and V of Amended See Exhibit 3.1 above
and Restated Articles of
Incorporation, as amended
4.2 Agreement for Purchase and Sale, Exhibit 19.2(a)-(g) to the
dated August 29, 1990, between Registrant's Form 10-Q for
Minnesota Mining and quarter ended May 31, 1991
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
</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.
38
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
--------- ------------------------------ -------------------- --------
<S> <C> <C> <C>
4.3 (a) Multi-currency Credit Agreement, Exhibit 4.3 to the Registrant's
dated as of August 22, 1995 Form 10-K for fiscal year ended
between Applied Power Inc. and August 31, 1995
Applied Power Finance S.A., as ("1995 10-K")
borrowers, various financial
institutions, as lenders, Bank of
America National Trust and Savings
Association, as agent, and BA
Securities, Inc., as arranger
(b) First Amendment Agreement Exhibit 4.3(b) to 1996 10-K
dated as of August 29, 1996
4.4 (a) Amended and Restated Receivables Exhibit 4.4 to 1995 10-K
Purchase Agreement, dated as of
August 30, 1995, between Applied
Power Inc., Barry Wright
Corporation, Technical Environments
and Enclosures, 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
(b) First Amendment to Amended Exhibit 4.4(b) to 1996 10-K
and Restated Receivables Purchase
Agreement dated as of August 30,
1996
(c) Second Amended and Restated X
Receivables Purchase Agreement
dated as of February 28, 1997
4.5 Credit Agreement, dated as of Exhibit (b)(2) filed with Amendment
October 3, 1997 among Applied No. 3 to the Registrant's Tender
Power Inc., Bank of America Offer Statement on Schedule 14D-1
National Trust and Savings dated October 6, 1997
Association, as agent, and the other (File No. 5-13342)
financial institutions party hereto
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
--------- ------------------------------ -------------------- --------
<S> <C> <C> <C>
4.6 Multi-currency Credit Agreement, X
dated as of October 22, 1997
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
Robertson Stephens, as arranger
10.1* Employment Agreement dated Exhibit 10.1 to the Registrant's
May 9, 1994 between Applied form 10-K for fiscal year ended
Power Inc. and Richard G. Sim August 31, 1994
(superseding Employment Agreement
dated July 5, 1985, as amended)
10.2* (a) Applied Power Inc. 1985 Stock Exhibit 10.2(a) to the Registrant's
Option Plan adopted by Board of Form 10-K for fiscal year ended
Directors on August 1, 1985 and August 31, 1989 ("1989 10-K")
approved by shareholders on
January 6, 1986, as amended
("1985 Plan")
(b) Amendment to 1985 Plan adopted Exhibit 10.2(b) to 1989 10-K
by Board of Directors on November
8, 1989 and approved by shareholders
on January 13, 1990
(c) Amendment to 1985 Plan adopted Exhibit 10.2(c) to the
by Board of Directors on August 9, Registrant's Form 10-K for fiscal year
1990 ended August 31, 1990 ("1990 10-K")
(d) Amendment to 1985 Plan adopted X
by Board of Directors on May 8, 1997
10.3* (a) Applied Power Inc. 1987 Exhibit 10.8 to the Registrant's
Nonqualified Stock Option Plan Form 10-K for fiscal year ended
adopted by Board of Directors on August 31,1987
November 3, 1987 and approved by
shareholders on January 7, 1988
("1987 Plan")
</TABLE>
* Management contracts and executive compensation plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
40
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
--------- ------------------------------ -------------------- --------
<S> <C> <C> <C>
(b) Amendment to 1987 Plan adopted See Exhibit 10.2(b)
by Board of Directors on November
8, 1989 and approved by shareholders
on January 13, 1990
(c) Amendment to 1987 Plan adopted X
by Board of Directors on May 8, 1997
10.4* (a) Applied Power Inc. 1990 Stock Exhibit A to the Registrant's Proxy
Option Plan adopted by Board of Statement dated December 5, 1990
Directors on August 9, 1990 and for 1991 Annual Meeting of
approved by shareholders on Shareholders
January 7, 1991 ("1990 Plan")
(b) Amendment to 1990 Plan adopted Exhibit 10.5(b) to the Registrant's
by Board of Directors on August 10, Form 10-K for fiscal year ended
1992 and approved by shareholders August 31, 1992
on January 7, 1993
(c) Amendment to 1990 Plan adopted X
by Board of Directors on May 8, 1997
10.5* Description of Fiscal 1997 Exhibit 10.6 to 1996 10-K
Management Bonus Arrangements
10.6* Description of Fiscal 1998 X
Management Bonus Arrangements
10.7* (a) Applied Power Inc. 1989 Exhibit 10.7 to 1989 10-K
Outside Directors' Stock Option
Plan adopted by Board of Directors
on November 8, 1989 and
approved by shareholders on
January 13, 1990 ("1989 Plan")
(b) Amendment to 1989 Plan Exhibit 10.7(b) to 1990 10-K
adopted by Board of Directors on
November 9, 1990 and approved
by shareholders on January 7, 1991
</TABLE>
* Management contracts and executive compensation plans and arrangements
required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
41
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
--------- ------------------------------ -------------------- --------
<S> <C> <C> <C>
(c) Amendment to 1989 Plan Exhibit 10.7(c) to 1996 10-K
adopted by Board of Directors on
October 31, 1996
10.8* Outside Directors' Deferred Exhibit 10.8 to 1995 10-K
Compensation Plan adopted by Board
of Directors on May 4, 1995
10.9 Asset Purchase Agreement Exhibit 2.1 to the Registrant's
between Applied Power Inc. and Form 8-K dated October 11, 1996
Wright Line Inc., on the one hand
and Everest Electronic Equipment,
Inc., Wallace H. Twedt, Terry D.
Wells and Robert L. Wells, on the
other hand dated August 27, 1996
10.10* (a) 1996 Stock Plan adopted by Board Annex A to the Registrant's Proxy
of Directors on August 8, 1996 and Statement dated November 19, 1996
proposed for shareholder approval for 1997 Annual Meeting of
on January 8, 1997 Shareholders
(b) Amendment to 1996 Stock Plan X
adopted by Board of Directors on
May 8, 1997
10.11* Deferred Compensation Plan Exhibit 10.11 to 1996 10-K
adopted by Board of Directors on
October 31, 1996
10.12 Agreement and Plan of Merger, Exhibit (c)(1) to Registrant's
dated as of September 2, 1997, Tender Offer Statement on
among Applied Power Inc., TVPA Schedule 14D-1 filed on September
Corp. and Versa Technologies, Inc. 5, 1997 (File No. 5-13342)
11 Statement regarding Computation of X
Earnings Per Share
21 Subsidiaries of the Registrant X
23 Consent of Deloitte & Touche LLP 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.
42
<PAGE>
<TABLE>
<CAPTION>
INCORPORATED HEREIN FILED
EXHIBIT DESCRIPTION BY REFERENCE TO HEREWITH
--------- ------------------------------ -------------------- --------
<S> <C> <C> <C>
24 Power of Attorney See Signature Page of this report
27 Financial Data Schedule X
</TABLE>
43
<PAGE>
Exhibit 3.2
(1997 10-K)
AMENDED AND RESTATED BYLAWS
of
APPLIED POWER INC.
ADOPTED
NOVEMBER 7, 1991
and
AS LAST AMENDED EFFECTIVE JANUARY 8, 1997
<PAGE>
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.
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
<PAGE>
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 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
-2-
<PAGE>
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.
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
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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 shareholders.
Refusal or failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting.
2.07. Quorum and Voting Requirements. Except as otherwise provided
in the Articles of Incorporation or in the Wisconsin Business Corporation Law,
a majority of the votes entitled to be cast by shares entitled to vote as a
separate voting class on a matter, represented in person or by proxy, shall
constitute a quorum of that voting class for action on that matter at a
meeting of shareholders. If a quorum exists, action on a matter, other than
the election of directors, by a voting class is approved if the votes cast
within the voting class favoring the action exceed the votes cast opposing the
action
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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 corporation authorized to tabulate votes before or at the time of the
meeting. Unless the appointment form conspicuously states that it is
irrevocable and the appointment is coupled with an interest, a proxy
appointment may be revoked at any time. The presence of a shareholder who has
filed a proxy appointment shall not of itself constitute a revocation. No
proxy appointment shall be valid after eleven months from the date of its
execution, unless otherwise expressly provided in the appointment form. The
Board of Directors shall have the power and authority to make rules that are
not inconsistent with the Wisconsin Business Corporation Law as to the
validity and sufficiency of proxy appointments.
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2.10. Voting of Shares. Each outstanding share shall be entitled to
one (1) vote on each matter submitted to a vote at a meeting of shareholders,
except to the extent that the voting rights of the shares are enlarged,
limited or denied by the Articles of Incorporation or the Wisconsin Business
Corporation Law. Shares owned directly or indirectly by another corporation
are not entitled to vote if this corporation owns, directly or indirectly,
sufficient shares to elect a majority of the directors of such other
corporation. However, the prior sentence shall not limit the power of the
corporation to vote any shares, including its own shares, held by it in a
fiduciary capacity. Redeemable shares are not entitled to vote after notice
of redemption is mailed to the holders and a sum sufficient to redeem the
shares has been deposited with a bank, trust company, or other financial
institution under an irrevocable obligation to pay the holders the redemption
price on surrender of the shares.
ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers and Number. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of, its Board of Directors.
The number of directors of the corporation shall be six (6). The number of
directors may be increased or decreased from time to time by amendment to this
Section adopted by the shareholders or the Board of Directors, but no decrease
shall have the effect of shortening the term of an incumbent director.
3.02. Election, Removal, Tenure and Qualifications. Unless action is
taken without a meeting under Section 7.01 of these Bylaws, directors shall be
elected by a plurality of the votes cast by the shares of the voting class
entitled to vote for such directors in the election at a shareholders meeting
at which a quorum is present; i.e., the individuals eligible for election by a
voting class with the largest number of votes in favor of their election are
elected as directors up to the maximum number of directors to be chosen in the
election by such voting class. Votes against a candidate are not given legal
effect and are not counted as votes cast in an election of directors. In the
event two (2) or more persons tie for the last vacancy to be filled, a run-off
vote shall be taken from among the candidates receiving the tie vote. Each
director shall hold office until the next annual meeting of shareholders and
until the director's successor shall have been elected or there is a decrease
in the number of directors, or until his or her prior death, resignation or
removal. Any director may be removed from office by the affirmative vote of a
two-thirds majority of the shares outstanding of the class or classes of stock
which elected such director at a special meeting of shareholders called for
that purpose. Although the foregoing bylaw establishes a greater shareholder
voting requirement than is generally provided by the Wisconsin Business
Corporation Law, it has not been amended or repealed, and it is therefore
effective pursuant to Section
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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.
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
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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.
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
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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.
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,
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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.
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
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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, 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
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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.
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
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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 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
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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 intangible
property or benefit to the corporation, including cash, promissory notes,
services performed, contracts for services to be performed, or other
securities of the corporation. When the corporation receives the
consideration for which the Board of Directors authorized the issuance of
shares, such shares shall be deemed to be fully paid and nonassessable by the
corporation.
5.07. Stock Regulations. The Board of Directors shall have the power
and authority to make all such rules and regulations not inconsistent with the
statutes of the State of Wisconsin as it may deem expedient concerning the
issue, transfer and registration of certificates representing shares of the
corporation, including the appointment or designation of one or more stock
transfer agents and one or more registrars.
ARTICLE VI. WAIVER OF NOTICE
6.01. Shareholder Written Waiver. A shareholder may waive any notice
required by the Wisconsin Business Corporation Law, the Articles of
Incorporation or these Bylaws before or after the date and time stated in the
notice. The waiver shall be in writing and signed by the shareholder entitled
to the notice, shall contain the same information that would have been
required
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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 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
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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 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
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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:
(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
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or in any other capacity, may not be voted in making the determination.
(5) By a court under Section 8.08.
(6) By any other method provided for in any additional right to
indemnification permitted under Section 8.07.
(b) In any determination under (a), the burden of proof is on
the corporation to prove by clear and convincing evidence that indemnification
under Section 8.02 should not be allowed.
(c) A written determination as to a director's or officer's
indemnification under Section 8.02 shall be submitted to both the corporation
and the director or officer within 60 days of the selection made under (a).
(d) If it is determined that indemnification is required under
Section 8.02, the corporation shall pay all liabilities and expenses not
prohibited by Section 8.04 within ten (10) days after receipt of the written
determination under (c). The corporation shall also pay all expenses incurred
by the director or officer in the determination process under (a).
8.06. Advance of Expenses. Within ten (10) days after receipt of a
written request by a director or officer who is a party to a proceeding, the
corporation shall pay or reimburse his or her reasonable expenses as incurred
if the director or officer provides the corporation with all of the following:
(a) A written affirmation of his or her good faith belief that
he or she has not breached or failed to perform his or her duties to the
corporation.
(b) A written undertaking, executed personally or on his or
her behalf, to repay the allowance to the extent that it is ultimately
determined under Section 8.05 that indemnification under Section 8.02 is not
required and that indemnification is not ordered by a court under Section
8.08(b)(2). The undertaking under this Section 8.06(b) shall be an unlimited
general obligation of the director or officer and may be accepted without
reference to his or her ability to repay the allowance. The undertaking may
be secured or unsecured.
8.07. Nonexclusivity.
(a) Except as provided in Section 8.07(b), Sections 8.01, 8.02
and 8.06 do not preclude any additional right to indemnification or allowance
of expenses that a director or officer may have under any of the following:
(1) The Articles of Incorporation.
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(2) A written agreement between the director or officer and the
corporation.
(3) A resolution of the Board of Directors.
(4) A resolution, after notice, adopted by a majority vote of all of
the corporation's voting shares then issued and outstanding.
(b) Regardless of the existence of an additional right under
Section 8.07(a), the corporation shall not indemnify a director or officer, or
permit a director or officer to retain any allowance of expenses unless it is
determined by or on behalf of the corporation that the director or officer did
not breach or fail to perform a duty he or she owes to the corporation which
constitutes conduct under Section 8.02(a)(1), (2), (3) or (4). A director or
officer who is a party to the same or related proceeding for which
indemnification or an allowance of expenses is sought may not participate in a
determination under this Section 8.07(b).
(c) Sections 8.01 to 8.14 do not affect the corporation's
power to pay or reimburse expenses incurred by a director or officer in either
of the following circumstances:
(1) As a witness in a proceeding to which he or she is not a party.
(2) As a plaintiff or petitioner in a proceeding because he or she is
or was an employee, agent, director or officer of the corporation.
8.08. Court-Ordered Indemnification.
(a) Except as provided otherwise by written agreement between
the director or officer and the corporation, a director or officer who is a
party to a proceeding may apply for indemnification to the court conducting
the proceeding or to another court of competent jurisdiction. Application
shall be made for an initial determination by the court under Section
8.05(a)(5) or for review by the court of an adverse determination under
Section 8.05(a)(1), (2), (3), (4) or (6). After receipt of an application,
the court shall give any notice it considers necessary.
(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
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relevant circumstances, regardless of whether indemnification is required
under Section 8.02.
(c) If the court determines under Section 8.08(b) that the
director or officer is entitled to indemnification, the corporation shall pay
the director's or officer's expenses incurred to obtain the court-ordered
indemnification.
8.09. Indemnification and Allowance of Expenses of Employees and
Agents. The corporation shall indemnify an employee of the corporation who is
not a director or officer of the corporation, to the extent that he or she has
been successful on the merits or otherwise in defense of a proceeding, for all
reasonable expenses incurred in the proceeding if the employee was a party
because he or she was an employee of the corporation. In addition, the
corporation may indemnify and allow reasonable expenses of an employee or
agent who is not a director or officer of the corporation to the extent
provided by the Articles of Incorporation or these Bylaws, by general or
specific action of the Board of Directors or by contract.
8.10. Insurance. The corporation may purchase and maintain insurance
on behalf of an individual who is an employee, agent, director or officer of
the corporation against liability asserted against or incurred by the
individual in his or her capacity as an employee, agent, director or officer,
regardless of whether the corporation is required or authorized to indemnify
or allow expenses to the individual against the same liability under Sections
8.01, 8.02, 8.06, 8.07 and 8.09.
8.11. Securities Law Claims.
(a) Pursuant to the public policy of the State of Wisconsin,
the corporation shall provide indemnification and allowance of expenses and
may insure for any liability incurred in connection with a proceeding
involving securities regulation described under Section 8.11(b) to the extent
required or permitted under Sections 8.01 to 8.10.
(b) Sections 8.01 to 8.10 apply, to the extent applicable to
any other proceeding, to any proceeding involving a federal or state statute,
rule or regulation regulating the 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.
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8.13. Definitions Applicable to this Article. For purposes of this
Article:
(a) "Affiliate" shall include, without limitation, any
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise that directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the
corporation.
(b) "Corporation" means this corporation and any domestic or
foreign predecessor of this corporation where the predecessor corporation's
existence ceased upon the consummation of a merger or other transaction.
(c) "Director or officer" means any of the following:
(1) An individual who is or was a director or officer of this
corporation.
(2) An individual who, while a director or officer of this
corporation, is or was serving at the corporation's request as a director,
officer, partner, trustee, member of any governing or decision-making
committee, employee or agent of another corporation or foreign corporation,
partnership, joint venture, trust or other enterprise.
(3) An individual who, while a director or officer of this
corporation, is or was serving an employee benefit plan because his or her
duties to the corporation also impose duties on, or otherwise involve services
by, the person to the plan or to participants in or beneficiaries of the plan.
(4) Unless the context requires otherwise, the estate or personal
representative of a director or officer.
For purposes of this Article, it shall be conclusively presumed that
any director or officer serving as a director, 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.
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(g) "Proceeding" means any threatened, pending or completed
civil, criminal, administrative or investigative action, suit, arbitration or
other proceeding, whether formal or informal, which involves foreign, federal,
state or local law and which is brought by or in the right of the corporation
or by any other person.
ARTICLE IX. SEAL
The Board of Directors may provide a corporate seal which may be
circular in form and have inscribed thereon the name of the corporation and
the state of incorporation and the words "Corporate Seal."
ARTICLE X. AMENDMENTS
10.01. By Shareholders. These Bylaws may be amended or repealed and
new Bylaws may be adopted by the shareholders by the vote provided in Section
2.07 of these Bylaws or as specifically provided in this Section 10.01. If
authorized by the Articles of Incorporation, the shareholders may adopt or
amend a Bylaw that fixes a greater or lower quorum requirement or a greater
voting requirement for shareholders or voting classes of shareholders than
otherwise is provided in the Wisconsin Business Corporation Law. The adoption
or amendment of a Bylaw that adds, changes or deletes a greater or lower
quorum requirement or a greater voting requirement for shareholders must meet
the same quorum requirement and be adopted by the same vote and voting 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
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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 4.4(c)
(1997 10-K)
SECOND AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated as of February 28, 1997
Among
APPLIED POWER CREDIT CORPORATION
as Seller
---------
APPLIED POWER INC.
As 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>
TABLE OF CONTENTS
Section Page
- - ------- ----
ARTICLE I
THE COMMITMENT
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. Assignment............................................... 4
ARTICLE II
UNDIVIDED INTEREST AND PURCHASERS' SHARE
2.01. Undivided Interest....................................... 5
2.02. Frequency of Computation of Undivided Interest........... 6
2.03. Purchasers' Investment................................... 6
2.04. Loss Reserve............................................. 6
2.05. Earned Discount.......................................... 7
2.06. Servicer's Fee........................................... 8
2.07. Certain Definitions...................................... 8
2.08. Purchasers' Share........................................ 9
ARTICLE III
SETTLEMENTS
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................................... 12
3.04. Credit Recourse.......................................... 13
3.05. Reporting................................................ 14
3.06. Payments and Computations, Etc........................... 14
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<PAGE>
3.07. Dividing or Combining Undivided Interests................ 15
3.08. Treatment of Collections and Deemed Collections.......... 16
3.09. Repurchases for Administrative Convenience............... 16
ARTICLE IV
FEES AND YIELD PROTECTION
4.01. Fees..................................................... 17
4.02. Yield Protection......................................... 17
ARTICLE V
CONDITIONS PRECEDENT
5.01. Conditions Precedent to Effectiveness.................... 19
5.02. Conditions Precedent to All Purchases and
Reinvestments............................................ 20
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of Seller............... 21
6.02. Representations and Warranties of API.................. 25
ARTICLE VII
GENERAL COVENANTS
7.01. Affirmative Covenants of Seller........................ 27
7.02. Affirmative Covenants of API........................... 29
7.03. Reporting Requirements................................. 30
7.04. Negative Covenants of Seller........................... 32
7.05. Negative Covenants of API.............................. 33
7.06. Separate Existence..................................... 36
ARTICLE VIII
ADMINISTRATION AND COLLECTION
8.01. Designation of Servicer................................ 38
8.02. Duties of Servicer..................................... 39
8.03. Rights of the Agent.................................... 40
8.04. Responsibilities of Seller............................. 41
8.05. Further Action Evidencing Purchases.................... 41
8.06. Application of Collections............................. 42
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ARTICLE IX
TERMINATION EVENTS
9.01. Termination Events..................................... 42
9.02. Remedies............................................... 44
ARTICLE X
THE AGENT
10.01. Authorization and Action.............................. 45
10.02. Agent's Reliance, Etc................................. 45
10.03. Agent and Affiliates.................................. 46
10.04. Indemnity............................................. 46
10.05. Successor............................................. 47
10.06. Credit Decisions...................................... 47
10.07. Notices, etc. to Agent................................ 48
ARTICLE XI
ASSIGNMENT OF UNDIVIDED INTERESTS
11.01. Assignments........................................... 48
11.02. Documentation......................................... 48
11.03. Rights of Assignee.................................... 48
11.04. Assignment by Seller or API........................... 48
ARTICLE XII
INDEMNIFICATION
12.01. Indemnities by Seller................................. 49
12.02. Indemnities by Servicer............................... 50
12.03. General Provisions.................................... 51
ARTICLE XIII
MISCELLANEOUS
13.01. Amendments, Etc....................................... 52
13.02. Notices, Etc.......................................... 52
13.03. No Waiver; Remedies................................... 52
13.04. Binding Effect; Assignability......................... 53
13.05. Governing Law......................................... 53
13.06. Costs, Expenses and Taxes............................. 53
13.07. Captions and Cross References......................... 54
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13.08. Execution in Counterparts............................. 54
13.09. Pledge of Demand Note................................. 54
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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 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 5.01(h) Form of Opinion of Counsel for Seller and the Originators
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>
SECOND AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
------------------------------
Dated as of February 28, 1997
THIS IS A SECOND AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT,
among APPLIED POWER CREDIT CORPORATION, a Nevada corporation, having its
principal office at 13000 W. Silver Spring Drive, Butler, Wisconsin 53007,
APPLIED POWER INC., a Wisconsin corporation having its principal office at
13000 W. Silver Spring Drive, Butler, Wisconsin 53007 ("API"), as initial
Servicer, PNC BANK, NATIONAL ASSOCIATION, a national banking association
having its principal office at 249 Fifth Avenue, Pittsburgh, Pennsylvania
15222-2707 (together with the other financial institutions that are or may
hereafter become parties hereto from time to time as purchasers,
"Purchasers"), and PNC BANK, NATIONAL ASSOCIATION, a national banking
association having its principal office at 249 Fifth Avenue, Pittsburgh,
Pennsylvania 15222-2707 ("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
----------
I API, certain subsidiaries of API, the Purchasers and PNC Bank, as Agent,
entered into the Amended and Restated Receivables Purchase Agreement, dated as
of August 30, 1995, as amended by the First Amendment to Amended and Restated
Receivables Purchase Agreement, dated as of August 30, 1996 (the "Original
Purchase Agreement"). The parties hereto wish to amend and restate the
Original Purchase Agreement in its entirety as set forth herein.
1. Seller has, and expects to have, Pool Receivables in which it
intends to sell interests referred to herein as Undivided
<PAGE>
Interests. Such Pool Receivables shall have been generated in the ordinary
course of an Originator's business, and sold to Seller pursuant to the
Purchase and Sale Agreement. Seller has 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 Seller from time to time during the term of this Agreement.
2. Seller 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 Seller 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.
3. PNC Bank has been requested, and is willing, to act as the
Agent.
4. API has been required, and is willing, to act as the initial
Servicer.
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 II
THE COMMITMENT
SECTION II.01. Commitment. On the terms and subject to the
conditions set forth in this Agreement (including Article V):
<PAGE>
(a) Purchases. The Agent, on behalf of Purchasers, shall
purchase from Seller 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 II.02. Commitment Termination Date. The "Commitment
Termination Date" shall be the earlier to occur of (i) August 30, 1999
(herein, as the same may be extended, called the "Scheduled Commitment
Termination Date"), and (ii) the date of termination of the Commitment
pursuant to Section 1.05 or Section 9.02.
SECTION II.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 Aggregate Purchasers' 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
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(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 $5,000,000 (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 II.04. Making Purchases from Sellers. (a) Notice of
Purchase. Each Purchase from Seller by the Agent, on behalf of Purchasers,
shall be made on notice from Seller or Servicer 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), 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 in immediately available funds, in the Approved Currency
designated in the notice delivered by Seller or Servicer pursuant to paragraph
(a) and after receipt by the Agent of such funds, the
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Agent will make such funds immediately available to Seller 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 Seller, the
Servicer and each Purchaser of the Discount Rate for such Yield Period and
whether the Seller has exceeded the Foreign Currency Limit.
SECTION II.05. Voluntary Termination of Commitment or Reduction of
Purchase Limit. Seller 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 II.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 II.07. Limitation of Ownership Interest. Nothing in
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this Agreement shall be interpreted as providing any Purchaser with an
ownership interest in any Receivables that are not Pool Receivables.
SECTION II.08. Assignment. Seller hereby sells, transfers, assigns
and sets over each Undivided Interest from time to time purchased hereunder to
the Agent, for the benefit of the Purchasers. The parties hereto intend that
this Agreement constitutes the absolute sale and assignment of the Undivided
Interests to the Agent, for the benefit of the Purchasers.
ARTICLE III
UNDIVIDED INTEREST AND PURCHASERS' SHARE
SECTION III.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, (iii) all
Collections with respect to, and other proceeds of, such Pool Receivables,
(iv) all lock-boxes and accounts to which such Collections are sent or
deposited, all amounts on deposit therein, all certificates and instruments,
if any, from time to time evidencing such accounts and amounts on deposit
therein, (v) all of Seller's rights, interests and claims under the Purchase
and Sale Agreement, (vi) all books and records (including computer tapes and
disks) to the extent relating to the foregoing and (vii) all proceeds of the
foregoing (collectively, the "Pool Assets"). Such undivided percentage
interest for any time for such Undivided Interest shall be computed as:
PA = PI + LR
---- -------
NPB NPB
where:
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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 III.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
Seller. 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 the Purchasers, with respect to such
Undivided Interest. Such Undivided Interest shall become zero at such time as
the Purchasers shall have received the Earned Discount for such Undivided
Interest 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
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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 III.03. Purchasers' Investment. "Purchasers' Investments"
as to any Undivided Interest means an amount equal to the original amount paid
to Seller for such Undivided Interest at the time of its acquisition by the
Agent, on behalf of the 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 III.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;
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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, Seller, on a recourse basis,
agrees 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 III.05. Earned Discount. The "Earned Discount" for any
Undivided Interest for each day in a related Yield Period means an amount
determined as follows:
ED = PI x DR x 1/360 (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.
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Notwithstanding any other provision of this Agreement to the contrary, Earned
Discount shall be a recourse obligation of the Seller. No provision of this
Agreement 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 III.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 recourse obligation of
the Seller.
SECTION III.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 shall be equal to the Alternate
Reference Rate for such Yield Period.
"Discount Rate" for any Yield Period for any related Undivided
Interest means:
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(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 $2,000,000 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 Seller; 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 Seller,
the Agent and all of the Purchasers. In the case of any Obligor that is an
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Affiliate of any other Obligor (an "Affiliated Obligor"), the Concentration
Limit, the Special Concentration Limit and the Receivables related thereto
shall be calculated as if such Obligor and such Affiliated Obligor were one
Obligor.
"Spread" means the percentage set forth under the then applicable Debt
to Capital Ratio on Schedule ID.
SECTION III.08. Purchasers' Share. "Purchasers' Share" of any
Undivided Interest with regard to any Collections of Pool Receivables received
(or deemed received) by Seller, any Originator 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.
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ARTICLE IV
SETTLEMENTS
SECTION IV.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 Seller,
(ii) apply an amount equal to the remainder of
Purchasers' Share of such Collections (the "Remaining Collections") to
reduce the Purchasers' Investments of such Undivided Interest (it
being understood that such amount need not be physically paid to the
Agent or the Purchasers under this clause (ii)),
(iii) after such reduction, apply such Remaining Collections
to the Reinvestment, for the benefit of Purchasers, of additional
undivided interests in Pool Receivables 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 Seller such Remaining Collections.
The recomputed Undivided Interest shall constitute the percentage
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ownership interest in Pool Receivables on such day held by the Agent, on
behalf of the 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, Seller agrees 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 IV.02. Liquidation Settlement Procedures for Collections.
(a) Daily Procedure. On each Liquidation Day with regard to each Yield Period
for each Undivided Interest, Servicer shall set aside and hold in trust for
Purchasers, Purchasers' Share of
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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 Seller
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 Seller 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 Seller 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 Seller 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
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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 IV.03. General Settlement Procedures; Reduction of
Purchaser's Investment.
(a) Deemed Collections. If on any day the Unpaid Balance of any
Pool Receivable is (i) reduced as a result of any defective, rejected or
returned merchandise or services, any cash discount, or any adjustment by
Seller, the related Originator or any Affiliate of 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 Seller, the related Originator or any Affiliate of 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
Seller or any Originator to pay to the related Obligor any rebate or refund,
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 Seller set forth in Section 6.01(l) or
(p) is no longer true with respect to a Pool Receivable, 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
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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 Seller, 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.
SECTION IV.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 Seller 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
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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 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.
Seller 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 Seller has made the payment required by the
last sentence of Section 2.04, Seller 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, plus (4)
the aggregate amount of the Unpaid Balances of Receivables generated by an
Originator that is no longer a Subsidiary of API that became Defaulted
Receivables during such month. Such Collections shall be in addition to the
Collections actually received on such date.
SECTION IV.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 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
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End Date, and (iii) an aging of the 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 IV.06. Payments and Computations, Etc. All amounts to be
paid or deposited by Seller or Servicer 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 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707,
or at such other account or accounts as are designated by the Agent to the
Seller (the "Agent's Account"). Seller 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
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denominated in British Pounds Sterling, 365/366 days) for the actual number of
days (including the first but excluding the last day) elapsed.
SECTION IV.07. Dividing or Combining Undivided Interests.
(a) Division of Undivided Interests. Seller or Servicer 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. Seller or Servicer 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
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under and for all purposes of this Agreement.
SECTION IV.08. Treatment of Collections and Deemed Collections.
Seller shall forthwith deliver to Servicer all Collections deemed received by
Seller pursuant to Sections 3.03(a) and 3.04 in the Approved Currency of the
related Receivable and Servicer 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 Seller shall hold any Collections or
deemed Collections required to be paid to Servicer or the Agent, it shall hold
such Collections in trust and separate and apart from its own funds and shall
clearly mark its records to reflect such trust.
SECTION IV.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, Seller shall be entitled to repurchase all (but not less than all) of the
Undivided Interests from the Agent, on behalf of the Purchasers, on the
respective Settlement Dates. Seller 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 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. Seller 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)
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the related Purchasers' Investments therefor in the Approved Currency of such
Undivided Interest, (iii) the aggregate of other amounts then owed hereunder
by Seller 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 in the case
of clauses (a) and (b)) (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 Seller 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.
ARTICLE V
FEES AND YIELD PROTECTION
SECTION V.01. Fees. (a) Agent's Fee. Seller shall pay to the
Agent for its own account such fees as the Agent and Seller may agree to from
time to time.
(b) Commitment Fee. From the date hereof until the Commitment
Termination Date, Seller 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.
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SECTION V.02. Yield Protection. (a) If any Regulatory Change
occurring after the date hereof
(A) shall subject an Affected Party to any tax, duty or
other charge with respect to any Undivided Interest or Interests owned
by or funded by it, 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
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(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
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
(z) in the reasonable determination of such Affected
Party, to reduce the rate of return on the capital of an Affected
Party as a consequence of its obligations hereunder or arising in
connection herewith to a level below that which any such Affected
Party could otherwise have achieved,
then within thirty days after demand by such Affected Party, Seller 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 Seller 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
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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 Seller 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 Seller.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION VI.01. Conditions Precedent to Effectiveness. The
effectiveness of this Second 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 effectiveness the following, each
(unless otherwise indicated) dated such date, in form and substance
satisfactory to the Agent:
(a) The Purchase and Sale Agreement duly executed by Seller and
each Originator, and evidence that the conditions precedent set forth therein
have been satisfied;
(b) A copy of the resolutions of the Board of Directors of Seller
and each Originator approving this Agreement and the other Agreement Documents
to be delivered by it hereunder and the transactions contemplated hereby,
certified by its Secretary or Assistant Secretary;
(c) Good standing certificates for Seller issued by the
Secretaries of State of Nevada and Wisconsin and for each domestic Originator
issued by the Secretaries of State of Wisconsin, Nevada or Massachusetts, as
appropriate;
(d) A certificate of the Secretary or Assistant Secretary of
Seller and each Originator certifying the names and true
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signatures of the officers authorized on its behalf to sign this Agreement 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 Seller or such Originator, as the case may be,
a revised certificate meeting the requirements of this subsection (d));
(e) The Articles of Incorporation of Seller and each domestic
Originator, duly certified by the Secretary of State of the state of its
incorporation, as of a recent date acceptable to Agent, together with a copy
of the By-laws of Seller and each Originator, duly certified by the Secretary
or an Assistant Secretary of such Person;
(f) Acknowledgment copies of (i) financing statements naming each
Originator, respectively, as debtor/seller, Seller as secured party/purchaser
and the Agent as assignee and (ii) financing statements naming Seller, as
debtor/seller and the Agent, for the benefit of Purchasers, as secured
party/purchaser, in each case filed in such jurisdictions as are necessary or
advisable to perfect Seller's or the Agent's interest in the Pool Assets;
(g) A search report provided in writing to the Agent by CT
Corporation, listing all effective financing statements that name any domestic
Originator 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 Pool Assets);
(h) A favorable opinion of Quarles & Brady, counsel to Seller and
the Originators, in substantially the form of Exhibit 5.01(h);
(i) Evidence of the payment of any applicable Agent's fee;
(j) Duly executed copy of a Periodic Report together with a
completed Schedule I thereto calculated as of January 31, 1997; and
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(k) The original of the Demand Note, duly executed by API and
endorsed by Seller, shall have been delivered to the Agent.
SECTION VI.02. Conditions Precedent to All Purchases and
Reinvestments. Each Purchase (including the initial Purchase) hereunder and
the right of Servicer to reinvest in Pool Receivables, on behalf of
Purchasers, those Collections allocable to an Undivided Interest pursuant to
Section 3.01 shall be subject to the further conditions precedent ("Conditions
Precedent") that on the date of such Purchase or Reinvestment the following
statements shall be true (and 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 Article
VI 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
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(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 VII
REPRESENTATIONS AND WARRANTIES
SECTION VII.01. Representations and Warranties of Seller. Seller
represents and warrants as follows:
(a) Organization and Good Standing. Seller has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of Nevada, 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
Assets.
(b) Due Qualification. 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
Seller to perform its obligations hereunder or (iii) the validity or
enforceability of any Pool Receivable.
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(c) Power and Authority; Due Authorization. Seller has (i) all
necessary power, authority and legal right to (A) execute and deliver this
Agreement and the other 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 Seller has duly authorized by all necessary corporate action the
execution, delivery and performance of this Agreement and the other Agreement
Documents to which it is a party.
(d) Valid Sale; Binding Obligations. This Agreement constitutes (i)
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, Seller and (ii) a valid security interest in the Demand Note;
and this Agreement constitutes, and each other Agreement Document to be signed
by Seller when duly executed and delivered will constitute, a legal, valid and
binding obligation of Seller enforceable in accordance with its terms, except,
in the case of all the foregoing clauses, as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the other Agreement Documents and the fulfillment of the
terms hereof will not conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or by-laws of Seller, or any
indenture, loan agreement, mortgage, deed of trust or other material agreement
or instrument to which 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
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other agreement or instrument, other than this Agreement, or violate any law
or any order, rule, or regulation applicable to Seller of any court or of any
federal or state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Seller or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to Seller's 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 consummation of any of the transactions
contemplated by this Agreement or any other Agreement Document, (C) seeking
any determination or ruling that might materially and adversely affect (i) the
performance by Seller or Servicer of its obligations under this Agreement or
any other Agreement Document, or (ii) the validity or enforceability of this
Agreement, any other Agreement Document, the Receivables or the Contracts or
(D) seeking to adversely affect the federal income tax attributes of the
transactions contemplated hereby.
(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
Seller of this Agreement 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 pro forma balance sheets of Seller
as at the date hereof, certified by Seller's chief financial officer, copies
of which have been furnished to the Agent and each Purchaser, fairly present
the financial position of Seller as at such date, after giving effect to the
transactions
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contemplated hereby, all in accordance with GAAP consistently applied, and (y)
since the date of its formation, there has been no material adverse change in
the financial condition, business, business prospects or operations of Seller.
(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 Seller's knowledge, no threat by any Person has been
made to attempt to obtain any such decision that would prevent, Seller from
conducting a significant part of its business operations.
(k) Margin Regulations. The use of all funds acquired by Seller
under this Agr eement 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 Asset is owned by 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 Asset, 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
Asset is on file in any recording office except such as may be filed in favor
of the related Originator in accordance with the Contracts, in favor of Seller
in accordance with the Purchase and Sale Agreement, 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. Upon delivery to the Agent of the
original of the Demand Note, the Agent shall have a perfected
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first priority security interest therein.
(m) Accurate Reports. No Periodic Report (if prepared by Seller, or
to the extent that information contained therein was supplied by Seller),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by 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 Seller are located at the address of Seller referred to in Section 13.02
and the offices where 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 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 7.04(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.
SECTION VII.02. Representations and Warranties of API. API
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represents and warrants as follows:
(a) Organization and Good Standing. API has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Wisconsin, 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.
(b) Due Qualification. API 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
API to perform its obligations hereunder or (iii) the validity or
enforceability of any Pool Receivable.
(c) Power and Authority; Due Authorization. API has (i) all
necessary power, authority and legal right to (A) execute and deliver this
Agreement and the other Agreement Documents and (B) carry out the terms of the
Agreement Documents to which it is a party, and (ii) duly authorized by all
necessary corporate action the execution, delivery and performance of this
Agreement and the other Agreement Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each other
Agreement Document to be signed by API when duly executed and delivered will
constitute, a legal, valid and binding obligation of API 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
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contemplated by this Agreement and the other Agreement Documents and the
fulfillment of the terms hereof will not conflict with, result in any breach
of any of the terms and provisions of, or constitute (with or without notice
or lapse of time) a default under, the articles of incorporation or by-laws of
API, or any indenture, loan agreement, mortgage, deed of trust or other
material agreement or instrument to which API 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 the
Purchase and Sale Agreement, or violate any law or any order, rule, or
regulation applicable to API of any court or of any federal or state
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over API or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or, to API's 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 consummation of any of the transactions
contemplated by this Agreement or any other Agreement Document, (C) seeking
any determination or ruling that might materially and adversely affect (i) the
performance by API of its obligations under this Agreement or any other
Agreement Document, or (ii) the validity or enforceability of this Agreement,
any other Agreement Document, the Receivables or the Contracts or (D) seeking
to adversely affect the federal income tax attributes of the transactions
contemplated hereby.
(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,
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delivery and performance by API of this Agreement or any other Agreement
Document except for the filing of the UCC Financing Statements referred to in
the Purchase and Sale Agreement, all of which, at the time required in the
Purchase and Sale Agreement 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, 1996, 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, copies of which have been furnished
to the Agent and each 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, 1996 there has been no material
adverse change in the financial condition, business, business prospects or
operations of API and its consolidated subsidiaries, taken as a whole.
(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 API's knowledge, no threat by any Person has been made
to attempt to obtain any such decision that would prevent, API from conducting
a significant part of its business operations.
(k) Accurate Reports. No Periodic Report (if prepared by API, or to
the extent that information contained therein was supplied by API),
information, exhibit, financial statement, document, book, record or report
furnished or to be furnished by API 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
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material fact or any fact necessary to make the statements contained therein
not materially misleading.
ARTICLE VIII
GENERAL COVENANTS
SECTION VIII.01. Affirmative Covenants of Seller. From the date hereof
until the first day following the Commitment Termination Date on which all
Undivided Interests shall be reduced to zero, 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 Seller or
Servicer to perform their respective obligations hereunder or (iii) the
validity or enforceability of any Pool Receivable.
(b) Preservation of Corporate Existence. 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 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,
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without limitation, computer tapes and disks) in the possession or under the
control of 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 Seller for the purpose of examining such
materials described in clause (i) next above, and to discuss matters relating
to Pool Receivables or 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,
or cause to be maintained and implemented, 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, or cause to be kept and maintained, 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, cause each Originator to 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 agreements related to such Pool Receivables (and all
original documents relating thereto), at the address(es) of Seller referred to
in Section 6.01(n) or, upon 30 days' prior written notice to the Agent, at
such other locations in jurisdictions where all
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action required by Section 8.05 shall have been taken and completed.
(g) Credit and Collection Policies. Comply in all material respects
with the Credit and Collection Policy in regard to each Pool Receivable and
the related Contracts.
(h) Collections. Instruct, or cause to be instructed, 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 VIII.02. Affirmative Covenants of API. 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:
(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 API to perform
its obligations hereunder or (iii) the validity or enforceability of any Pool
Receivable.
(b) Preservation of Corporate Existence. 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 API to perform its obligations
hereunder or (iii) the validity or enforceability of any Pool Receivable.
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(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 API 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
API for the purpose of examining such materials described in clause (i) next
above, and to discuss matters relating to Pool Receivables or API's
performance hereunder with any of the officers or employees of API having
knowledge of such matters.
(d) Keeping of Records and Books of Account. Maintain and implement,
or cause to be maintained and implemented, 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, or cause to be kept and maintained, 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) Credit and Collection Policies. Comply in all material respects
with the Credit and Collection Policy in regard to each Pool Receivable and
the related Contracts.
(f) 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,
except Collections of Pool Receivables generated by Calterm, Everest
Electronics Division of WLI or Vision Plastics Division of GB (provided,
however, that, upon the occurrence of a Termination Event, such Collections
shall, at the direction of the Agent, be transmitted
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to a Lock-Box Bank on a daily basis for deposit to a Lock-Box Account).
SECTION VIII.03. Reporting Requirements. From the date hereof until
the first day following the Commitment Termination Date on which all Undivided
Interests shall be reduced to zero, unless the Agent shall otherwise consent
in writing:
(a) Quarterly Financial Statements. API will furnish to the Agent
and each Purchaser, 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. API will furnish to the Agent and
each Purchaser, 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 cash flow of such Fiscal Year, with
comparable
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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, API will
furnish to the Agent and each Purchaser 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 7.05;
(d) Reports to Holders and Exchanges. In addition to the reports
required by subsections (a) and (b) next above, API will furnish to the Agent
and each Purchaser 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, API will
furnish to the Agent and each Purchaser copies of all reports and notices with
respect to any Reportable Event defined in Article IV of ERISA which API or
any other Originator files under ERISA with the Internal Revenue Service or
the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or
which API or any other Originator receives from such Corporation;
(f) Termination Events. As soon as possible and in any event within
five Business Days after Seller or API has become aware of the occurrence of
any Termination Event or any Unmatured Termination Event, Seller or API, as
the case may be, will furnish to the Agent and each Purchaser a written
statement of the chief financial officer or chief accounting officer of Seller
or API, as the case may be, setting forth details of such Termination Event
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or Unmatured Termination Event and the action that Seller or API, as the case
may be, proposes to take with respect thereto;
(g) Litigation. As soon as possible and in any event within fifteen
Business Days of Seller's or API's knowledge thereof, Seller or API, as the
case may be, will furnish to the Agent and each Purchaser 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 Seller or API or impair the ability of Seller or API to
perform its obligations under this Agreement or any other Agreement Document,
unless Seller or API, as the case may be, is insured (including self retention
amounts consistent with past practice and the exercise of prudent business
judgment) with respect thereto and the insurer, except to the extent covered
by permitted self insurance, has assumed responsibility therefor in writing
and (ii) any material adverse development in previously disclosed litigation;
and (h) Other. Promptly, from time to time, Seller and API will furnish to
the Agent and each Purchaser, such other information, documents, records or
reports respecting the Receivables or the conditions or operations, financial
or otherwise, of Seller or API 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 VIII.04. Negative Covenants of Seller. From the date hereof
until the date following the Commitment Termination Date on which all
Undivided Interests shall be reduced to zero, Seller will not, 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, 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
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income in respect thereof, provided that Seller may transfer an undivided
interest in the Pool Receivables to any Originator so long as (i) such
undivided interest is not senior in priority to the Undivided Interests, (ii)
after giving effect thereto, the Aggregate Participation Amounts do not exceed
the Participation Amounts Limit and (iii) the documentation with respect to
such transfer is satisfactory to the Agent.
(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. 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 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 pursuant to or as
permitted by this Agreement, sell, transfer, convey or lease all or any
substantial part of its assets, or sell or assign with or without recourse any
Receivables (other than pursuant hereto).
(f) Demand Note; Purchase and Sale Agreement. Amend, terminate,
waive, revoke or modify any provision of the Demand Note, the Purchase and
Sale Agreement, the Initial Purchaser Note
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or its certificate of incorporation.
(g) Net Worth. Permit its Tangible Net Worth to be less than
$18,300,000.
(h) Change in Name. Change its name or corporate structure unless
Seller has provided the Agent with at least 60 days' prior written notice
thereof and shall have taken all action required by Section 8.05.
SECTION VIII.05. Negative Covenants of API. From the date hereof
until the date following the Commitment Termination Date on which all
Undivided Interests shall be reduced to zero, API will not, without the prior
written consent of the Agent:
(a) 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.
(b) 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.
(c) Change in Payment Instructions to Obligors. Add or terminate any
bank as a Lock-Box Bank from those listed in Exhibit 6.01(o) or make any
change in its instructions to Obligors regarding payments to be made to API 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.
(d) 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,
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sell, transfer, convey or lease all or any substantial part of its assets, or
sell or assign with or without recourse any Receivables (other than pursuant
hereto), or permit any Subsidiary to do any of the foregoing, except for:
(i) any such merger or consolidation, sale, transfer,
conveyance, lease or assignment of or by any Subsidiary into, with or
to API or into, with or to any wholly-owned Subsidiary (other than
Seller);
(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 and the Purchase and
Sale Agreement) 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 (other than Seller) is the surviving
corporation, or (C) after such acquisition API (if it is the acquiring
entity) or a Subsidiary (other than Seller) 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
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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 7.05(d) and that any other conditions under this
Agreement relating to such acquisition have been satisfied; or
(v) any sale of a Subsidiary (other than Seller), provided
that, if such Subsidiary is an Originator and 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 Originator, 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 Receivables generated by such
Originator 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 base don their respective Percentages)
(a) in payment of the Earned Discount for the related Purchasers'
Investments and (b) in reduction of the related Purchasers'
Investments
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(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 extend paid.
(e) 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%.
SECTION VIII.06. Separate Existence. Each of Seller and API
hereby acknowledges that each Purchaser and the Agent, are entering into the
transactions contemplated by this Agreement and the other Agreement Documents
in reliance upon Seller's identity as a legal entity separate from API each
other Originator. Therefore, from and after the date hereof, each of Seller
and API shall take all steps specifically required by this Agreement to
continue Seller's identity as a separate legal entity and to make it apparent
to third Persons that Seller is an entity with assets and liabilities distinct
from those of any Originator and any other Person, and is not a division of
any Originator or any other Person. Without limiting the generality of the
foregoing and in addition to and consistent with the other covenants set forth
herein, each of Seller and API shall take such actions as shall be required in
order that:
(a) Seller will be a limited purpose corporation whose
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primary activities are restricted in its certificate of incorporation to
purchasing or otherwise acquiring, owning, holding, granting security
interests, or selling interests, in Pool Assets or other receivables, entering
into agreements for the selling and servicing of receivables, and conducting
such other activities as it deems necessary or appropriate to carry out its
primary activities;
(b) Seller shall not engage in any business or activity, or incur
any indebtedness or liability other than as expressly permitted or
contemplated by the Agreement Documents;
(c) Any employee, consultant or agent of Seller will be
compensated from Seller's funds for services provided to Seller. Seller will
not engage any agents other than its attorneys, auditors and other
professionals, and a servicer and any other agent contemplated by the
Agreement Documents for the Pool Assets, which servicer will be fully
compensated for its services by payment of the Servicer's Fee [and a manager,
which manager will be fully compensated from Seller's funds];
(d) Seller will contract with Servicer to perform for Seller all
operations required on a daily basis to service the Receivables Pool. Seller
will pay Servicer the Servicer's Fee pursuant hereto. Seller will not incur
any material indirect or overhead expenses for items shared with API (or any
other Affiliate thereof) which are not reflected in the Servicer's Fee [or the
fee to API in its role as manager for Seller.] To the extent, if any, that
Seller (or any other Affiliate thereof) share items of expenses not reflected
in the Servicer's Fee or the manager's fee, such as legal, auditing and other
professional services, such expenses will be allocated to the extent practical
on the basis of actual use or the value of services rendered, and otherwise on
a basis reasonably related to the actual use or the value of services
rendered, it being understood that API shall pay all expenses relating to the
preparation, negotiation, execution and delivery of the Agreement Documents,
including, without limitation, legal, agency and other fees;
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(e) Seller's operating expenses will not be paid by API or any
other Affiliate thereof (except for expenses paid by API that are reimbursed
pursuant to the manager's fee);
(f) Seller will have its own stationery;
(g) Seller's books and records will be maintained separately from
those of API and any other Affiliate thereof;
(h) All financial statements represented by the audited annual
report of API will contain detailed notes clearly stating that (A) all of
Seller's assets are owned by Seller, and (B) Seller is a separate entity with
creditors who have received security interests in Seller's assets;
(i) Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of API or any
Affiliate thereof;
(j) Seller will strictly observe corporate formalities in its
dealings with API or any Affiliate thereof, and funds or other assets of
Seller will not be commingled with those of API or any Affiliate thereof
except as permitted or contemplated by the Agreement Documents. Seller shall
not maintain joint bank accounts or other depository accounts to which API or
any Affiliate thereof (other than API or an Originator in its capacity as
Servicer or subservicer, respectively) has independent access. Seller is not
named, and has not entered into any agreement to be named, directly or
indirectly, as a direct or contingent beneficiary or loss payee on any
insurance policy with respect to any loss relating to the property of API or
any Affiliate of API (other than Seller). Seller will pay to the appropriate
Affiliate its allocable portion of the premium payable with respect to any
insurance policy that covers Seller and such Affiliate; and
(k) Seller will maintain arm's-length relationships with API (and
any Affiliate thereof). Any Person that renders or otherwise furnishes
services to Seller will be compensated by Seller at
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market rates for such services it renders or otherwise furnishes to Seller.
Neither Seller nor API will be or will hold itself out to be responsible for
the debts of the other or the decisions or actions respecting the daily
business and affairs of the other. Seller and API will immediately correct any
known misrepresentation with respect to the foregoing, and they will not
operate or purport to operate as an integrated single economic unit with
respect to each other or in their dealing with any other entity.
ARTICLE IX
ADMINISTRATION AND COLLECTION
SECTION IX.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
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activities hereunder as Servicer and allow the newly designated Servicer
to perform such activities on the date provided by the Agent as described
above, notwithstanding the commencement or continuation of any proceeding to
resolve the aforementioned dispute.
(c) Servicer may allow any Originator to service, administer and
collect any Receivables generated by such Originator 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 and that such sub-servicing
arrangement can be terminated if such Servicer is replaced pursuant hereto.
SECTION IX.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
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 Seller 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
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immediately available funds. So long as no Termination Event or Purchase
Termination Event shall have occurred and be continuing, while API is
Servicer, 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). Seller and Servicer 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.
(b) Servicer shall as soon as practicable following receipt turn over
to Seller (or to such other Person as Seller shall designate) (i) that portion
of Collections of Pool Receivables not representing Purchasers' Undivided
Interest therein, less, in the event API is no longer Servicer, all reasonable
and appropriate out-of-pocket costs and expenses of such Servicer of
servicing, collecting and administering the Pool Receivables to the extent not
covered by the Servicer's Fee received by it and (ii) the Collections of any
Receivable which is not a Pool Receivable. Servicer, if other than API, shall
as soon as practicable upon demand deliver to Seller all documents,
instruments and records in its possession that evidence or relate to
Receivables of 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 Seller and (unless
otherwise agreed to by the Agent and Servicer) Servicer under this Agreement.
SECTION IX.03. Rights of the Agent. (a) At any time following the
occurrence of a Termination Event, the Agent is
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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. 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) Seller shall, at the Agent's request, (A) assemble, or
cause to be assembled, 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 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
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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 Seller hereby authorizes the
Agent to take any and all steps in Seller's name and on behalf of
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 Seller's name on
checks and other instruments representing Collections and enforcing
such Pool Receivables and the related Contracts.
SECTION IX.04. Responsibilities of Seller. Anything herein to the
contrary notwithstanding:
(a) Seller shall cause each Originator to 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 Seller or any
Originator 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 Seller or any Originator
thereunder.
(c) 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 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 Seller or transmitted or received by any Purchaser (whether or
not from Seller) in connection with any Receivable.
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SECTION IX.05. Further Action Evidencing Purchases. 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 the Agent, on behalf of the
Purchasers, hereunder, or to enable any Purchaser or the Agent to exercise or
enforce any of their respective rights hereunder. Without limiting the
generality of the foregoing, 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. 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 Assets now existing or hereafter arising in the name of Seller. If
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 Seller as provided
in Section 12.01.
SECTION IX.06. Application of Collections. Any payment by an Obligor
in respect of any indebtedness owed by it to Seller or any Originator 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.
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ARTICLE X
TERMINATION EVENTS
SECTION X.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 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
Seller, any Originator or Servicer (or any of their respective officers) under
or in connection with this Agreement, any other Agreement Document or any
Periodic Report or other information or report delivered pursuant hereto shall
prove to have been false or incorrect in any material respect when made; or
(c) Seller, API or any Originator shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement or any other
Agreement Document 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 Seller or API; 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, API 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
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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 Seller, API, any Originator 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 Seller or API to the Agent and Purchasers prior to the date of
execution and delivery of this Agreement is pending against Seller, API or any
Originator 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
Seller, API or any Originator or impair the ability of Seller, API or any
Originator to perform its obligations under this Agreement or any other
Agreement Document; or
(h) The 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' 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
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adversely affects the collectability of the Pool Receivables or there shall
have occurred any other event which materially adversely affects the ability
of Seller, any Originator or Servicer to collect Pool Receivables or the
ability of Seller, any Originator or Servicer to perform hereunder or under
any other Agreement Document or the warranty in Section 6.01(i)(y) or
6.02(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 Seller or any Originator 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 Seller or any
Originator 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 Seller or any Originator 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%;
(n) The average of the Net Charge-Off Ratios for any three
successive Month End Dates exceeds 2%; or
(o) The Seller's Tangible Net Worth is less than $18,300,000; or
(p) A Purchase and Sale Termination Event occurs.
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SECTION X.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 Seller 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; 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 XI
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THE AGENT
SECTION XI.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 XI.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 Seller), 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 the performance or observance of any of the terms, covenants or
conditions of this Agreement or any other Agreement Document on the part of
Seller, Servicer or any Originator or to inspect the property (including the
books and records) of any Seller, Servicer or any Originator; (iv) shall not
be responsible to any Purchaser for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any other
Agreement Document 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
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sent by the proper party or parties.
SECTION XI.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 Seller, any
Originator or any Obligor, any of their respective Affiliates and any Person
who may do business with or own securities of Seller, any Originator 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 XI.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 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 Seller, Servicer or any Originator
under this Agreement and the other Agreement Documents, in all cases as to
which the Agent is not reimbursed by the Seller or an Originator; 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 or under any other Agreement Document, or to prosecute or
defend any suit in respect of this Agreement or any other Agreement Document,
unless indemnified to its satisfaction by the Purchasers against loss, costs,
liability,
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and expense, which indemnity need not indemnify the Agent for its gross
negligence or willful misconduct. If any indemnity in favor of the Agent
shall become impaired, it may call for additional indemnity and cease to do
the acts indemnified against until such additional indemnity is given. The
Agent may delegate its duties hereunder to Affiliates, agents or
attorneys-in-fact selected in good faith by the Agent.
SECTION XI.05. Successor. The Agent may resign as such at any time
upon at least thirty days' prior notice to the Seller 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 Seller. 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 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 XI.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 Sections 6.01(i) and 6.02(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
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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 or the other Agreement Documents.
SECTION XI.07. Notices, etc. to Agent. The Agent shall give prompt
notice to each Purchaser of each notice or request given to the Agent by
Seller or Servicer 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 from
Seller or API 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 XII
ASSIGNMENT OF UNDIVIDED INTERESTS
SECTION XII.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 Seller, 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, Seller 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
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on the effective date of such assignment.
SECTION XII.02. Documentation. Each assignment by a Purchaser
hereunder shall be evidenced by an Assignment.
SECTION XII.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 XII.04. Assignment by Seller or API. Neither API nor 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 XIII
INDEMNIFICATION
SECTION XIII.01. Indemnities by Seller. Without limiting any other
rights which any such Person may have hereunder or under applicable law,
Seller hereby agree to indemnify each of the Agent, each Purchaser, PNC Bank,
each of PNC Bank's Affiliates, their respective successors, transferees and
assigns and all officers, directors, shareholders, controlling persons,
employees and agents of any of the foregoing (each an "Indemnified Party"),
forthwith on demand, from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys'
fees and disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any of them arising out
of or as a result of this Agreement or any of the other Agreement Documents or
the transactions contemplated thereby or the use of the proceeds by the Seller
therefrom, including, without limitation, in respect of the ownership or
funding of an Undivided Interest or in respect of
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any Receivable or any Contract, excluding, however, recourse (except as
otherwise specifically provided in this Agreement) for Defaulted Receivables.
Without limiting the foregoing, Seller shall indemnify each Indemnified Party
for Indemnified Amounts relating to or resulting from:
(i) the transfer by Seller of any interest in any Receivable
other than an Undivided Interest; (ii) the breach of any
representation or warranty made by Seller (or any of its officers)
under or in connection with this Agreement, any Periodic Report or any
other information or report delivered by Seller pursuant hereto, which
shall have been false or incorrect in any material respect when made
or deemed made;
(iii) the failure by 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 the Agent,
for the benefit of the Purchasers, 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 a 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 other applicable laws with respect to
any receivables in, or purporting to be in, the Receivables Pool,
whether at the
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time of any Purchase, Reinvestment or at any subsequent time, or the
failure of the Agent's or 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 products liability claim arising out of or in
connection with merchandise or services that are the subject of any
Pool Receivable; or
(viii) 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 Seller hereunder,
such Indemnified Party shall give prompt and timely notice of such
attempt to Seller and Seller shall have the right, at its expense, to
conduct or participate in any proceedings resisting or objecting to
the imposition or collection of any such tax, governmental fee or
charge.
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SECTION XIII.02. Indemnities by Servicer. Without limiting any other
rights which any Indemnified Party may have hereunder or under applicable law,
Servicer hereby agrees to indemnify each Indemnified Party, forthwith on
demand, from and against any and all Indemnified Amounts awarded against or
incurred by any of them arising out of or related to (i) the fact that any
representation or warranty made by Servicer (or any of its officers) under or
in connection with this Agreement, any Periodic Report or any other
information or report delivered by Servicer pursuant hereto shall have been
false or incorrect in any material respect when made or deemed made; (ii) the
failure by Servicer to comply with any applicable law, rule or regulation with
respect to any Pool Receivable or the related Contract, or the collection or
servicing thereof; (iii) any failure of the Servicer to perform its duties or
obligations in accordance with Article VIII or any other provision hereof; or
(iv) the commingling of any Collections with other funds of Servicer.
SECTION XIII.03. General Provisions. Indemnification hereunder shall
be in an amount necessary to make the Indemnified Party whole after taking
into account any tax consequences to the Indemnified Party of the payment of
any of the aforesaid taxes and the receipt of the indemnity provided hereunder
or of any refund of any such tax previously indemnified hereunder, including
the effect of such tax or refund on the amount of tax measured by net income
or profits which is or was payable by the Indemnified Party.
Notwithstanding anything to the contrary herein, an Indemnified Party shall
refund to the Seller or Servicer, as the case may be, any amount received from
the Seller or Servicer, as the case may be, 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 Seller or any Affiliate
thereof). Neither Seller nor Servicer shall be
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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 Article XII is unavailable
to an Indemnified Party or is insufficient to hold an Indemnified Party
harmless to the extent contemplated by such indemnification, then Seller or
Servicer, as the case may be, 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 Seller or Servicer, as
the case may be, on the other hand but also the relative fault of such
Indemnified Party as well as any other relevant equitable considerations.
ARTICLE XIV
MISCELLANEOUS
SECTION XIV.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement nor consent to any departure by Seller or Servicer
therefrom shall in any event be effective unless the same shall be in writing
and signed by (i) Seller, the Agent, Servicer 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 Seller and Servicer (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
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Agreement, together with the other Agreement Documents, contains a final and
complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire agreement
among the parties hereto with respect to the subject matter hereof,
superseding all prior oral or written understandings.
SECTION XIV.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 XIV.03. No Waiver; Remedies. No failure on the part of the
Agent, any Purchaser, Seller or Servicer 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 XIV.04. Binding Effect; Assignability. This Agreement shall
be binding upon and inure to the benefit of Seller, the Agent, the Purchasers,
Servicer 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
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<PAGE>
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 Seller and Servicer 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 XIV.05. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of Illinois,
except to the extent that the validity or perfection of the interests of 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 XIV.06. Costs, Expenses and Taxes. In addition to its
obligations under Article XII, Seller agrees to pay on demand:
(a) all costs and expenses in connection with the preparation,
execution and delivery of this Agreement, 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
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<PAGE>
(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 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 XIV.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 XIV.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 XIV.09. Pledge of Demand Note. Seller hereby pledges,
assigns and transfers to the Agent and grants to the Agent a first priority
security interest in the Demand Note and all proceeds thereof in order to
secure the prompt payment and performance of Seller's obligations hereunder.
Seller hereby represents and warrants that the Demand Note and the proceeds
thereof are free and clear of all other Adverse Claims. In the event that
Seller fails to make any payment when due hereunder, including, without
limitation, any amounts payable as deemed Collections pursuant to Section
3.04, the Agent may make a demand on API pursuant to the Demand Note in the
amount of such payment. API hereby acknowledges and consents to the
provisions of this Section 13.09.
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<PAGE>
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,
40% as a Purchaser
By: /s/Richard T. Jander
---------------------
Name Printed: Richard T. Jander
Title: Assistant Vice President
One PNC Plaza
249 Fifth Avenue
3rd Floor
Pittsburgh, Pennsylvania 15222-2707
with notice to:
PNC Bank, National Association
500 West Madison, Suite 3140
Chicago, Illinois 60606
Phone: (312) 906-3440
Facsimile: (312) 906-3420
Attention: Richard T. Jander
Second Amended and
Restated Receivables
Purchase Agreement
S-1
<PAGE>
Percentage THE SANWA BANK, LIMITED,
20% as a Purchaser
By: /s/ Seiji Daito
----------------------------
Name Printed: Seiji Daito
Title: Vice President Manager
10 South Wacker Drive, Ste. 3115
Chicago, Illinois 60606
Attention: Seiji Daito
Phone: (312) 368-3017
Facsimile: (312) 346-6677
Second Amended and
Restated Receivables
Purchase Agreement
S-2
<PAGE>
Percentage SOCIETE GENERALE,
30% as a Purchaser
By: /s/ Joseph Philbin
----------------------------
Name Printed: Joseph Philbin
Title: Vice President and 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
Second Amended and
Restated Receivables
Purchase Agreement
S-3
<PAGE>
Percentage HARRIS TRUST & SAVINGS BANK,
10% as a Purchaser
By: /s/ Andrew K. Peterson
----------------------------
Name Printed: Andrew K. Peterson
Title: Vice President
111 West Monroe Street
Chicago, Illinois 60690
Attention: Andrew K. Peterson
Phone: (312) 461-6537
Facsimile: (312) 461-2591
Second Amended and
Restated Receivables
Purchase Agreement
<PAGE>
PNC BANK, NATIONAL ASSOCIATION,
as the Agent
By: /s/ Richard T. Jander
---------------------------
Name Printed: Richard T. Jander
Title: Assistant Vice President
One PNC Plaza
249 Fifth Avenue
3rd Floor
Pittsburgh, Pennsylvania 15222-2707
Eurocurrency Office:
One PNC Plaza
249 Fifth Avenue
3rd Floor
Pittsburgh, Pennsylvania 15222-2707
with notice to:
PNC Bank, National Association
500 West Madison, Suite 3140
Chicago, Illinois 60606
Phone: (312) 906-3440
Facsimile: (312) 906-3420
Attention: Richard T. Jander
Second Amended and
Restated Receivables
Purchase Agreement
S-4
<PAGE>
APPLIED POWER INC.,
as 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
APPLIED POWER CREDIT CORPORATION,
as Seller
By: /s/ Douglas R. Dorszynski
-------------------------------
Name Printed: Douglas R. Dorszynski
Title:
Address: 13000 W. Silver Spring Drive
Butler, Wisconsin 53007
Phone: 414/781-6600
Facsimile No.: 414/783-9790
Attention: Treasurer
Second Amended and
Restated Receivables
Purchase Agreement
S-5
<PAGE>
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
<PAGE>
as it was in effect, and thereafter this Second 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" means this Agreement, the Purchase and Sale
Agreement, the Demand Note, the Initial Purchaser Note, the Joinder Agreements
and the other documents and instruments executed and delivered in connection
with the transactions contemplated hereby.
"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
<PAGE>
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.
"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. "Authorized Agent" with respect to any foreign Originator
means an officer of such Originator or an Affiliate thereof that has been
authorized by such Originator through the granting of a power of attorney or
otherwise, to execute and deliver documents on behalf of such Originator.
"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" means Barry Wright Corporation, a Massachusetts corporation.
"Calterm" means, Calterm, Inc., a Nevada corporation.
"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
<PAGE>
as a capital lease on the balance sheet of such Person.
"Collections" means, with respect to any Receivable, all funds which
either (a) are received by Seller, any Originator 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 Seller,
any Originator 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 Seller or any other Person as a Collection pursuant to
Section 3.03 or 3.04; provided that, prior to such time as API shall cease to
be the Servicer, late payment charges, collection fees and extension fees
shall not be deemed to be Collections.
"Commitment" has the meaning set forth in Section 1.01.
"Commitment Fee" has the meaning set forth in Section 4.01(b).
"Commitment Termination Date" has the meaning set forth in Section
1.02.
"Computation Period" means any period of four consecutive Fiscal
Quarters ending on the last day of a Fiscal Quarter. "Conditions Precedent"
has the meaning set forth in Section 5.02.
"Concentration Limit" has the meaning set forth in the definition of
"Net Pool Balance" in Section 2.07.
"Consolidated Interest Expense" means, for any period, the
consolidated interest expense of API and its Subsidiaries for 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
<PAGE>
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 an Originator and any Person, or
an invoice from an Originator 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 an Originator from time to time.
"Credit and Collection Policy" means those credit and collection
policies and practices relating to Contracts and Receivables described in
Exhibit ID, as modified without violating Section 7.03(c).
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, whether or not evidenced by bonds,
debentures, notes or similar instruments, (b) all obligations of such Person
as lessee under Capital Leases which have been recorded as liabilities on a
balance sheet of such Person, (c) all obligations of such Person to pay the
deferred purchase price of property or services (other than current accounts
payable in the ordinary course of business), (d) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness shall
have been assumed by such Person (it being understood that if such Person has
not assumed or otherwise become personally liable for any such indebtedness,
the amount of the Debt of such Person in connection therewith shall be limited
to the lesser of the face amount of such indebtedness or the fair market value
of all property of such Person securing such indebtedness), (e) all
obligations, contingent or otherwise, with respect to the face amount of all
letters of credit (whether or not drawn) and banker's acceptances issued for
the account of such Person, (f) all obligations of such Person in respect of
Hedging Arrangements, (g) all Suretyship Liabilities of such Person and
<PAGE>
(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 Originator 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 Originator 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 Seller's or an Originator'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 Seller or an
Originator.
"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 Originator 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 Originator as of such Month End Date.
<PAGE>
"Demand Note" means the demand promissory note in the original
principal amount of $18,300,000 issued by API to Seller.
"Designated Obligor" means, at any time, all Obligors of any
Originator 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 Servicer 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 Originator granted or allowed by the Originators, 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 Originator 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.
<PAGE>
"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 the Agent's (for the benefit
of the 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;
(ii) the primary Obligor of which is not an Affiliate of API,
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
Originator 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
<PAGE>
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 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 Seller
following thirty days' notice;
(xiii) the face amount of which does not include any amounts
representing sales tax;
(xiv) as to which the Agent has not notified Seller that the
Required Purchasers have determined, in their sole discretion, that
such Receivable (or class of Receivables) is not acceptable for
purchase hereunder; and
(xv) that has been sold to Seller by an Originator pursuant
<PAGE>
to the Purchase and Sale Agreement, and has been included as an
"Eligible Receivable" on a Monthly Report delivered pursuant thereto.
"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 Seller) which shall be funding the
Undivided Interests of the Agent hereunder or such other office or offices
through which the Agent 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
<PAGE>
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
<PAGE>
August 31 of each year.
"Fixed Charge Coverage Ratio" means, for any Computation Period, the
ratio of
(a) the sum of
(i) Consolidated Net Income for such period,
plus
(ii) the aggregate amount deducted in respect of federal,
state, local and foreign income taxes in determining such Consolidated
Net Income,
plus
(iii) Consolidated Interest Expense for such period,
plus
(iv) the aggregate amount deducted in respect of leases
that were not Capital Leases in determining such Consolidated Net
Income,
plus
(v) the aggregate amount deducted in respect of
amortization of intangible assets (including goodwill) in determining
such Consolidated Net Income, to
(b) the sum of
(i) Consolidated Interest Expense for such period,
plus
(ii) the aggregate amount deducted in respect of leases
that were not Capital Leases in determining such Consolidated Net
Income.
<PAGE>
"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".
"GAAP" means those U.S. generally accepted accounting principles
applied in the preparation of the audited financial statements referred to in
Section 6.02(i).
"GB" means GB Electrical, Inc., a Wisconsin corporation.
"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
<PAGE>
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 the Purchase and Sale
Agreement.
"Liquidation Day" for any Undivided Interest means any of (i) each day
which occurs on or after the date designated by the Agent to Seller 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 Seller shall have given written notice to the
Agent that Seller no longer wishes to sell undivided interests in the
Receivables Pool to the Agent, for the benefit of Purchasers. There shall be
no Liquidation Day for any Undivided Interest after it shall equal zero.
"Liquidation Period" means one or more contiguous Liquidation Days.
"Liquidations" means for any period, the Collections of an Originator
for such period.
"Lock-Box Account" means any account located at a Lock-Box Bank to
which Collections are sent that is the subject of a Lock-Box Agreement.
"Lock-Box Agreement" means an agreement, in substantially the form of
Exhibit IE, executed by 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.
<PAGE>
"Monthly Report" has the meaning set forth in Section 1.3 of the
Purchase and Sale Agreement.
"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 Originator recognized during any month was
of (y) Liquidations of Pool Receivables denominated in U.S. Dollars and
directly invoiced by a domestic Originator 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.
"Originator" means any of the entities listed on Schedule III to the
Purchase and Sale Agreement.
"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.
"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,
<PAGE>
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 Seller pursuant to Article II; it being
understood, that a Reinvestment is not a "Purchase".
"Purchase and Sale Agreement" means the Purchase and Sale Agreement,
dated as of February 28, 1997, among Seller, API and the Originators, as it
may be amended, supplemented or otherwise modified from time to time.
"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 an Originator 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 an Originator 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
<PAGE>
immediately preceding the Termination Date for such Undivided Interest, such
Receivable shall continue to be considered a Pool Receivable with respect to
such Undivided Interest at all times thereafter.
"Recourse Amount" has the meaning set forth in Section 3.04.
"Recourse Percentage" means the 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
<PAGE>
Undivided Interest pursuant to Section 3.01.
"Related Security" means, with respect to any Pool Receivable: (i)
all of Seller's and any Originator's right, title and interest in and to all
security agreements or other agreements that relate to such Pool Receivable;
(ii) all of Seller's and any Originator's interest in the merchandise
(including returned merchandise), if any, relating to the sale which gave rise
to such Pool Receivable; (iii) all other security interests or liens and
property subject thereto from time to time purporting to secure payment of
such Pool Receivable, whether pursuant to the Contract related to such Pool
Receivable or otherwise; (iv) all UCC financing statements covering any
collateral securing payment of such Pool Receivable; and (v) all guarantees
and other agreements or arrangements of whatever character from time to time
supporting or securing payment of such Pool Receivable whether pursuant to the
Contract related to such Pool Receivable or otherwise. The interest of the
Purchasers' in any Related Security is only to the extent of the Purchasers'
Undivided Interest, as more fully described in the definition of an Undivided
Interest.
"Remaining Collections" has the meaning set forth in Section
3.01(a)(ii).
"Reporting Date" has the meaning set forth in Section 3.05.
"Repurchase Termination Date" for any Undivided Interest means that
Business Day which Seller 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 Seller so designates) or to Seller (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" has the meanings set forth in the preamble.
"Servicer" means at any time the Person then authorized
<PAGE>
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 2.06.
"Settlement" means the payments and other actions provided for on the
last day of each Settlement Period.
"Settlement Date" means the last day of each Yield Period.
"Settlement Period" for any Undivided Interest means each period
commencing on the first day of each Yield Period for such Undivided Interest
and ending on the last day of such Yield Period, and, on and after the
Termination Date for such Undivided Interest, such period (including, without
limitation, a daily period) as shall be selected from time to time by the
Agent or, in absence of any such selection, each period of thirty days from
the last day of the immediately preceding Settlement Period; provided,
however, that with respect to any Yield Period of one day as described in
clause (ii) of the proviso clause of the definition of "Yield Period", the
related Settlement Period shall be the first day following such Yield Period.
"Shareholders' Equity" means, at any date of determination, all
amounts which would be included under shareholders' equity on a consolidated
balance sheet of API and its Subsidiaries or 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 a 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.
"Successor Notice" has the meaning set forth in Section 8.01(a).
<PAGE>
"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.
"Tangible Net Worth" means tangible net worth as determined in
accordance with GAAP.
"Termination Date" for any Undivided Interest means the earlier of (i)
the Repurchase Termination Date for such Undivided Interest and (ii) the
Commitment Termination Date.
"Termination Event" has the meaning set forth in Section 9.01.
"Total Capital" at any date of determination means the sum of
(a) Funded Debt,
plus
(b) all federal, state, local and foreign income taxes carried as
deferred income taxes in accordance with GAAP on the consolidated balance
sheet of API and its Subsidiaries,
plus
(c) Shareholders' Equity of API and its Subsidiaries.
"Total Investment" has the meaning set forth in Section 2.03.
<PAGE>
"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" means Wright Line Inc., a Massachusetts corporation.
"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 Seller 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 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
<PAGE>
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 GAAP. 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".
<PAGE>
SCHEDULE ID
Pricing Grid
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------
Pricing Pricing Pricing Pricing Pricing
Level I Level II Level III Level IV Level V
- - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Debt to LESS THAN 40% GREATER THAN GREATER THAN OR GREATER THAN GREATER THAN OR
Capital OR EQUAL TO EQUAL TO 45% BUT OR EQUAL TO EQUAL TO 55%
Ratio 40% BUT LESS LESS THAN 50% 50% BUT LESS
THAN 45% THAN 55%
- - ------------------------------------------------------------------------------------------------------
Spread 0.30% 0.375% 0.425% 0.475% 0.625%
- - ------------------------------------------------------------------------------------------------------
Commitment .125% 0.15% 0.175% 0.20% 0.225%
Fee Rate
- - ------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 4.6
(1997 10-K)
MULTICURRENCY CREDIT AGREEMENT
dated as of October 23, 1997
among
APPLIED POWER INC.,
APPLIED POWER EUROPE S.A.,
VARIOUS FINANCIAL INSTITUTIONS,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
Arranged by
BancAmerica Robertson Stephens
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS AND INTERPRETATION 1
1.1 Defined Terms 1
1.2 Other Interpretive Provisions 20
1.3 Accounting Principles 21
1.4 Currency Equivalents Generally 21
ARTICLE II THE CREDITS 22
2.1 Amounts and Terms of Commitments 22
2.2 Loan Accounts 22
2.3 Procedure for Committed Borrowing 23
2.4 Conversion and Continuation Elections for
Committed Borrowings 24
2.5 Utilization of Revolving Commitments in Offshore
Currencies. 26
2.6 Bid Borrowings 27
2.7 Procedure for Bid Borrowings 28
2.8 Reduction of Commitments 32
2.9 Prepayments 32
2.10 Currency Exchange Fluctuations 33
2.11 Repayment 33
2.12 Interest 33
2.13 Fees 34
2.14 Computation of Fees and Interest 35
2.15 Payments by the Borrower 35
2.16 Payments by the Banks to the Agent 36
2.17 Sharing of Payments, Etc. 37
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY 38
3.1 Taxes. 38
3.2 Illegality 39
3.3 Increased Costs and Reduction of Return 40
3.4 Funding Losses 41
3.5 Inability to Determine Rates 41
3.6 Certificates of Banks 42
3.7 Substitution of Banks 42
3.8 Survival 42
ARTICLE IV CONDITIONS PRECEDENT 42
4.1 Conditions of Initial Loans 42
4.2 Conditions to All Borrowings 44
(i)
<PAGE>
ARTICLE V REPRESENTATIONS AND WARRANTIES 44
5.1 Organization, etc 44
5.2 Authorization; No Conflict 45
5.3 Validity and Binding Nature 45
5.4 Financial Statements 45
5.5 No Material Adverse Change 47
5.6 Litigation and Contingent Liabilities 47
5.7 Liens 47
5.8 Subsidiaries 47
5.9 Pension and Welfare Plans 48
5.10 Regulated Industry 48
5.11 Regulations G, U and X 48
5.12 Taxes 48
5.13 Environmental and Safety Matters 49
5.14 Compliance with Law 49
5.15 Information 50
5.16 Ownership of Shares 50
5.17 Ownership of Properties 50
5.18 Patents, Trademarks, etc 50
5.19 Insurance 50
5.20 Versa Merger Agreement 50
5.21 Solvency 51
ARTICLE VI COVENANTS 51
6.1 Reports, Certificates and Other Information 51
6.2 Books, Records and Inspections 53
6.3 Insurance 53
6.4 Compliance with Law; Payment of Taxes and
Liabilities 53
6.5 Maintenance of Existence, etc. 53
6.6 Financial Ratios and Restrictions 54
6.7 Mergers, Consolidations, Purchases
and Sales 54
6.8 Commercial Paper Lines 55
6.9 Liens 55
6.10 Use of Proceeds 56
6.11 Maintenance of Property 57
6.12 Employee Benefit Plans 57
6.13 Business Activities 57
6.14 Environmental Matters 57
6.15 Unconditional Purchase Obligations 58
6.16 Inconsistent Agreements 58
6.17 Transactions with Affiliates 58
6.18 The Company's and Subsidiaries' Stock 58
6.19 Negative Pledges; Subsidiary Payments 58
6.20 Limitation on Debt 59
6.21 Contingent Obligations 59
(ii)
<PAGE>
ARTICLE VII EVENTS OF DEFAULT AND THEIR EFFECT 59
7.1 Events of Default 59
7.2 Effect of Event of Default 61
ARTICLE VIII THE AGENT 61
8.1 Appointment and Authorization; Agent 62
8.2 Delegation of Duties 62
8.3 Liability of Agent 62
8.4 Reliance by Agent 63
8.5 Notice of Default 63
8.6 Credit Decision 64
8.7 Indemnification of Agent 64
8.8 BofA in Individual Capacity 65
8.9 Successor Agent 65
8.10 Withholding Tax 66
ARTICLE IX GUARANTEE 67
9.1 Guarantee from the Company 67
9.2 Expenses 67
9.3 Waivers 67
9.4 No Impairment 68
9.5 Waiver of Resort 68
9.6 Reinstatement 68
9.7 Payment 69
9.8 Subrogation, Waivers, etc. 69
9.9 Delay, etc 69
ARTICLE X MISCELLANEOUS 70
10.1 Amendments and Waivers 70
10.2 Notices 71
10.3 No Waiver; Cumulative Remedies 71
10.4 Costs and Expenses 72
10.5 Borrower Indemnification 72
10.6 Payments Set Aside 73
10.7 Successors and Assigns 73
10.8 Assignments, Participations, etc. 73
10.9 Confidentiality 75
10.10 Set-off 76
10.11 Notification of Addresses, Lending
Offices, Etc. 76
10.12 Counterparts 76
10.13 Severability 76
10.14 No Third Parties Benefited 76
10.15 Governing Law and Jurisdiction 77
(iii)
<PAGE>
10.16 Waiver of Jury Trial 77
10.17 Judgment 77
10.18 Entire Agreement 78
(iv)
<PAGE>
SCHEDULES and EXHIBITS
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-1 Form of Legal Opinions of Borrowers' and Guarantor's U.S.
Counsel
Exhibit D-2 Form of Legal Opinion of APSA's French 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
Exhibit K Form of Guaranty
(v)
<PAGE>
MULTICURRENCY CREDIT AGREEMENT
------------------------------
THIS MULTICURRENCY CREDIT AGREEMENT (this "Agreement") dated as of
October 23, 1997 is among APPLIED POWER INC., a Wisconsin corporation (the
"Company"), APPLIED POWER EUROPE S.A., a French corporation ("APSA"), the
financial institutions listed on the signature pages hereof (together with
their respective successors and assigns, collectively the "Banks" and
individually each a "Bank"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION as agent for the Banks.
WHEREAS, the Company, APSA, certain financial institutions and BofA,
as Agent, are parties to a Multicurrency Credit Agreement dated August 22,
1995 as amended by that First Amendment Agreement dated as of August 29, 1996
(the "Existing Credit Agreement");
WHEREAS, the Company has acquired the capital stock of Versa
Technologies, Inc. pursuant to an Agreement and Plan of Merger dated September
2, 1997;
WHEREAS, to fund the acquisition of Versa Technologies, Inc. in part,
the Company has entered into a Credit Agreement dated as of October 3, 1997
with certain financial institutions and BofA as Agent (the "Bridge Credit
Agreement");
WHEREAS, the Company and APSA wish to enter into this Credit Agreement
for the purpose of repaying the indebtedness under the Existing Credit
Agreement and the Bridge Credit Agreement and to provide for working capital,
capital expenditures and other general corporate purposes;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE II
CERTAIN DEFINITIONS AND INTERPRETATION
--------------------------------------
II.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.
"Acquisition" means any transaction or series of
<PAGE>
related transactions for the purpose of or resulting directly or indirectly, in
(a) the acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of 50% of
the capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger
or consolidation or any other combination with another Person (other than a
Person that is a Subsidiary) provided that the Company or the Subsidiary is the
surviving entity.
"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 in its capacity as Agent 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.
"Agent's Payment Office" means (a) in respect of payments in Dollars,
the address for payments set forth on Schedule 10.2 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
2
<PAGE>
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. The Applicable Margin as of the Closing Date shall
be 0.525%.
"Applicable Non-Use Fee Rate" means the rate set forth opposite
"Non-Use Fee" on the Pricing Grid for the applicable Pricing Level. The
Applicable Non-Use Fee Rate as of the Closing Date shall be 0.175%.
"APSA" has the meaning specified in the Preamble.
"Arranger" means BancAmerica Robertson Stephens (formerly known as
BancAmerica 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).
"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)
3
<PAGE>
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.
"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 a Bank (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.
"Bridge Credit Agreement" has the meaning specified in the recitals.
"Business Day" means any day other than a Saturday,
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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.
"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
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" has the same meaning specified in the Preamble.
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"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 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
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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.
"Debt to EBITDA Ratio" means as at the end of any Fiscal Quarter, the
ratio of (a) Funded Debt as at such date to (b) EBITDA for the four Fiscal
Quarter period then ending.
"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).
"Deutsche Mark" means lawful money of the Federal Republic of Germany.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule 1.1.
"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
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<PAGE>
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.
"EBITDA" means, for any Computation Period the sum of (a) Consolidated
Net Income for such period, plus (b) the aggregate amount deducted with
respect to federal, state, local and foreign income taxes in determining such
Consolidated Net Income, plus (c) Consolidated Interest Expense for such
period; plus (d) depreciation and amortization; provided, however, that if the
Company or any of its Subsidiaries shall have made an Acquisition during a
Computation Period, EBITDA shall be calculated as if the Acquisition had been
made on the first day of such Computation Period.
"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.
8
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"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" means any of the events described in Section 7.1.
"Existing Credit Agreement" has the meaning specified in the recitals.
"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,
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<PAGE>
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
10
<PAGE>
profession), which except as provided in Section 1.3 are 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.
"Guarantor" means Versa, as guarantor pursuant to the Guaranty.
"Guaranty" means the Guaranty of the Guarantor in substantially the
form of Exhibit K.
"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 which are
unacceptable to the Required Banks have 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
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the Company.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
"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
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<PAGE>
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 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.
"Irish Punts" means the lawful currency of the Republic of Ireland.
"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
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property, asset or other right owned or being purchased or acquired by such
Person which secures payment or performance of any obligation and shall
include any mortgage, lien, encumbrance, charge or other security interest of
any kind, whether arising by contract, as a matter of law, by judicial process
or otherwise.
"Loan" means an extension of credit by a Bank to the Company or APSA
under Article II, and may be a Committed Loan or (for the Company only) a Bid
Loan.
"Loan Documents" means this Agreement, any Notes, the Fee Letter, the
Guaranty 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, $5,000,000 or any multiple of $1,000,000 in
excess thereof, and (b) in the case of Offshore Rate Loans, the Dollar
Equivalent amount of $5,000,000 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 or
APSA 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
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arising.
"Offshore Currency" means Guilders, Sterling, Deutsche Marks, Yen,
French Francs, Italian Lira, Swiss Francs and Irish Punts.
"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 = LIBOR
------------------------------------
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
"LIBOR" means the rate of interest per annum determined by the Agent
to be the arithmetic mean (rounded upward to the next 1/16th of 1%) of the
rates of interest per annum notified to the Agent by BofA as the rate of
interest at which deposits in Dollars or other Applicable Currencies in the
approximate amount of the amount of the Loan to be made or continued as, or
converted into, an Offshore Rate Loan by BofA and having a maturity comparable
to such Interest Period would be offered to major banks in the London
interbank market at their request at approximately 11:00 a.m. (London 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.
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"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.
"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 $80,000,000.
"Person" means any natural person, corporation, partnership, trust,
limited liability company, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political
subdivision
16
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thereof) or other entity, whether acting in an individual, fiduciary or other
capacity.
"Pricing Grid" means the Pricing Grid set forth on Schedule 1.2.
"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,
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as the case may be.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the
Illinois Uniform Fraudulent Transfer Act; (b) the present fair saleable value
of the property of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to realize upon its
property and pay its debts and other liabilities (including disputed,
contingent and unliquidated liabilities) as they mature in the normal course
of business; (d) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature; and (e) such Person is not engaged in business
or a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital.
"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 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
18
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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.
"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) October 22, 2002,
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
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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.
"Versa" means Versa Technologies, Inc., a Delaware corporation.
"Versa Acquisition" means the acquisition by the Company of the
capital stock of Versa pursuant to the Versa Merger Agreement.
"Versa Merger Agreement" means the Agreement and Plan of Merger dated
September 2, 1997 by and among the Company, TVPA Corp. and Versa.
"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA.
"Yen" means lawful money of Japan.
II.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.
(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."
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(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.
II.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 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.
II.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.
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ARTICLE III
THE CREDITS
III.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) $80,000,000 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.
III.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
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.
III.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 8:30 a.m. (San
Francisco time) (i) three Business Days prior to the requested Borrowing Date,
in the case of Offshore Rate Loans denominated in Dollars; and (ii) four
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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 8:30 a.m. (San Francisco time) four 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 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 or APSA, as
the case may be, 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
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<PAGE>
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.
III.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 payment, prepayment, or
conversion of part thereof to be less than $5,000,000, 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 8:30 a.m.
(San Francisco time) at least (i) three 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) four Business
Days in
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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 fourth 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 .
(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.
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(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.
III.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 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
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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
decline such request in its sole discretion; provided that no such Loan shall
be made unless all the Banks consent. The Agent will promptly notify the
Borrowers of the acceptance or rejection of any such request and, if accepted,
the time requirements for requesting Borrowings in such Agreed Alternative
Currency.
III.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
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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.
III.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 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 BofA
(or any Affiliate of BofA) in the capacity of a Bank may be submitted, and
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may only be submitted, if BofA 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:
(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
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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;
(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
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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 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.
III.8 Reduction of Commitments. (a) 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
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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.
(b) Mandatory Reduction of Commitments. If as of August 31, 2000,
the Debt to EBITDA Ratio is more than 2.0 to 1.0, the aggregate Commitments
shall be permanently reduced by the amount of $50,000,000. If as of August
31, 2001, the Debt to EBITDA Ratio is more than 2.0 to 1.0, the aggregate
Commitments shall be permanently reduced by $50,000,000. Upon any such
reduction, any outstanding Loans in excess of the reduced Commitments shall be
repaid immediately. Any reduction of the Commitments shall be applied to each
Bank's Commitment according to its Pro Rata Share.
(c) Issuance of Debt. If at the time of the issuance of any Debt
(in excess of $20,000,000 in the aggregate over the amount of Debt outstanding
at the end of the prior Fiscal Year) after the date hereof the Debt to EBITDA
Ratio as of the end of the last Fiscal Quarter shall have been greater than
2.0 to 1.0, the Commitments shall be permanently reduced by the amount of the
net proceeds of such Debt. Any reduction of the Commitments shall be applied
to each Bank according to its Pro Rata Share. Upon any such reduction, any
outstanding Loans in excess of the reduced Commitments shall be repaid
immediately.
III.9 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 (i) 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) three 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 $5,000,000 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.
III.10 Currency Exchange Fluctuations. If on any
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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 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.
III.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.
III.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
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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.
(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).
III.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
September 24, 1997.
(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, 1997 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
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due and payable quarterly in arrears on the last Business Day of each
February, May, August and November commencing on November 30, 1997 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)
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.
III.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.
III.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
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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.
(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.
III.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
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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 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.
III.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 IV
TAXES, YIELD PROTECTION AND ILLEGALITY
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IV.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.
(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
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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 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.
IV.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
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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.
IV.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 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.
IV.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;
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(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 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.
IV.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.
IV.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
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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 due hereunder, use averaging and attribution methods
which are reasonable and which cover all loans similar to the Loans made by
such Bank.
IV.7 Substitution of Banks. Upon the receipt by 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).
IV.8 Survival. The agreements and obligations of the Borrowers in
this Article III shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
--------------------
V.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) Guaranty. The Guaranty executed by the Guarantor.
(d) Resolutions. Certified copies of resolutions of
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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.
(e) Incumbency and Signatures. A certificate of the Secretary or an
Assistant Secretary of each Borrower certifying the names of the officer or
officers of each Borrower authorized to sign this Agreement 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).
(f) Resolutions - Guarantor. Certified copies of resolutions of the
Board of Directors of the Guarantor authorizing or ratifying the execution,
delivery and performance by the Guarantor of the Guaranty.
(g) Incumbency and Signatures - Guarantor. A certificate of the
Secretary or an Assistant Secretary of the Guarantor certifying the names of
the officer or officers of the Guarantor authorized to sign the Guaranty,
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).
(h) Opinion of Counsel for the Company. The opinion of Quarles &
Brady, counsel for the Company and the Guarantor, in the form of Exhibit D-1
and Salans Hertzfeld & Heilbronn, counsel for APSA, in the form of Exhibit
D-2.
(i) Opinion of Counsel for the Agent. The opinion of Mayer, Brown &
Platt, counsel for the Agent, in the form of Exhibit G.
(j) Termination of Existing Credit Agreement and Bridge Credit
Agreement. Evidence, reasonably satisfactory to the Agent, that all
"Commitments" under and as defined in the Existing Credit Agreement and the
Bridge Credit Agreement 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.
(k) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Bank may request.
V.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
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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.
ARTICLE VI
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:
VI.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.
VI.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 each Borrower or the Guarantor of its
obligations
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under this Agreement and the other Loan Documents to which it is a party are
within each of the Borrower's or the Guarantor'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 Guarantor or
of any agreement, instrument, order or decree that is binding upon such
Borrower or any Subsidiary.
VI.3 Validity and Binding Nature. This Agreement and each other Loan
Document to which it is a party 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. The Guaranty constitutes the legal, valid and binding obligation of
the Guarantor enforceable against the Guarantor in accordance with its 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.
VI.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 balance sheet at August 31, 1996 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, LLP (ii) the unaudited consolidated balance
sheet dated May 31, 1997 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, 1996
and related consolidated statements of earnings and shareholders equity of
APSA and its Subsidiaries and (iv) the unaudited consolidated balance sheet
dated May 31, 1997 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
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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.
(c) To the best of the Company's knowledge, all balance sheets, all
statements of earnings, stockholders' equity and cash flow, and all other
financial information furnished by or on behalf of Versa to the Agent and the
Banks, including (i) the audited consolidated balance sheet at March 31, 1997
and the related audited consolidated statements of earnings, stockholders'
equity and cash flow, for the fiscal year then ended, of Versa and its
Subsidiaries, certified by Deloitte and Touche LLP and (ii) the unaudited
consolidated balance sheet dated June 30, 1997 and the related unaudited
consolidated statements of earnings and cash flow, for the fiscal quarter then
ended, of Versa and its Subsidiaries, as appearing in the report of Versa on
Form 10-Q for such fiscal quarter filed by Versa with the U.S. Securities and
Exchange Commission, 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 Versa and its
Subsidiaries, as at the dates thereof and the results of their operations for
the periods then ended. To the best of the Company's knowledge, Versa 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.
(d) Pro Forma Financial Statement. The pro forma financial
statement and compliance certificate of the Company and its Subsidiaries as of
August 31, 1997, giving effect to the
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Versa Acquisition fairly presents the financial condition of the Company and
its Subsidiaries as of the date thereof.
VI.5 No Material Adverse Change. No event has occurred or condition
has arisen that has had or is reasonably likely to have a Material Adverse
Effect since August 31, 1996 with respect to the Company and its Subsidiaries
or March 31, 1997 with respect to Versa and its Subsidiaries.
VI.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 the Company or any Subsidiary that would, if
adversely determined, be reasonably likely to have a Material Adverse Effect,
except as set forth in Item 5.6 of the Disclosure Schedule. Other than any
liability incident to such litigation or proceedings, neither the Company nor
any Subsidiary has any contingent liabilities, except as provided for or
disclosed in the financial statements referred to in Section 5.4, which would
if adversely determined be reasonably likely to have a Material Adverse
Effect.
VI.7 Liens. None of the assets of the Company or any Subsidiary is
subject to any Lien, except as permitted by Section 6.9.
VI.8 Subsidiaries. Item 5.8 of the Disclosure Schedule correctly
sets forth the corporate name, jurisdiction of incorporation and ownership of
each Subsidiary of the Company. Such Subsidiaries and each corporation
becoming a Subsidiary of the Company after the date hereof is and will be a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and each Subsidiary of the Company
is and will be duly qualified to do business in each other jurisdiction where
failure to so qualify would have a Material Adverse Effect.
VI.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 L of the
Company's 1996 annual report, neither the Borrowers nor any of the
Subsidiaries have any 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
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I of ERISA.
VI.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.
VI.11 Regulations G, U and X. Neither the Company nor any Subsidiary
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying Margin Stock,
and no proceeds of any Loan will be used for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any Margin Stock or
maintaining or extending credit to others for such purpose.
VI.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.
VI.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, 3 and 15 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
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Schedule, and, except as disclosed in items 2, 3 and 15 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, 3 and 15 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 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, 3 and 15 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.
VI.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.
VI.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.
VI.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.
VI.17 Ownership of Properties. Each of the Company and each
Subsidiary owns good and marketable title to or holds
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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.
VI.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 Material
Adverse Effect, except as may be disclosed in Item 5.18 of the Disclosure
Schedule.
VI.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.
VI.20 Versa Merger Agreement. The Versa Acquisition has been
consummated pursuant to the terms of the Versa Merger Agreement. The
representations and warranties contained in the Versa Merger Agreement (a true
and correct copy of which Versa Merger Agreement, together with all schedules
and exhibits thereto, has been delivered to the Banks), are true and correct
in all respects except where the failure to be so true and correct could not
reasonably be expected to have a Material Adverse Effect. As of the date of
the Versa Acquisition, (i) the Company had taken all necessary corporate
actions to authorize the Versa Acquisition; and (ii) no representation made by
Versa or the Company in any notices or filings with the shareholders of the
Company or of Versa, with the SEC or any applicable state securities
commissions or with any governmental authority, including, without limitation,
any representations concerning any agreement with, or financing provided by,
the Banks, contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which
they are made, not misleading as of the time when made or delivered. Any
representation or warranty by the Company under this Section 5.20 as to the
representations and
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warranties of Versa in the Versa Merger Agreement is made to the best of
the knowledge of the Company.
VI.21 Solvency. Each of the Borrowers and the Guarantor is Solvent.
ARTICLE VII
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:
VII.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), 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
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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 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.
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VII.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.
VII.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.
VII.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.
VII.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).
VII.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 $170,000,000
plus 50% of the proceeds (net of issuance costs and underwriters discounts) of
any equity offering of the
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Company or any Subsidiary after the date hereof and (ii) Shareholders Equity
for APSA to be less than $1.
(b) Fixed Charge Coverage Ratio. Not permit the Fixed Charge
Coverage Ratio of the Company and its Subsidiaries to be less than 1.75:1.0.
(c) Debt to Capital Ratio. Not permit the Debt to Capital Ratio of
the Company and its Subsidiaries to exceed 58% at any time prior to November
29, 2000 or 56% at any time thereafter.
VII.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 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
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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 $15,000,000 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.
VII.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 or other availability backing up such commercial paper.
VII.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 6.9 of the Disclosure Schedule; (d)
Liens in connection with Capital Leases (to the extent permitted hereunder);
(e) any Lien arising in connection with the acquisition of fixed assets
(whether real or 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
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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.
VII.10 Use of Proceeds. Use the proceeds of the Loans to repay its
Debt under the Bridge Credit Agreement and the Existing Credit Agreement and
to provide for working capital, capital expenditures and for other 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.
VII.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).
VII.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.
VII.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.
VII.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.
VII.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.
VII.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.
VII.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 6.17 shall prohibit
any transaction expressly permitted by Section 6.7.
VII.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 Section 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.
VII.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.
VII.20 Limitation on Subsidiary Debt. The Company shall not permit
the Subsidiaries to create, incur, assume, suffer to exist, or otherwise
become or remain directly or indirectly liable with respect to, any Debt
(other than Debt of APSA under this Agreement or Debt of a Subsidiary to the
Company) in excess
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at any time outstanding of 22% of the net worth of the Company and the
Subsidiaries on a consolidated basis.
ARTICLE VIII
EVENTS OF DEFAULT AND THEIR EFFECT
----------------------------------
VIII.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 representation or warranty made by either
Borrower or the Guarantor herein or in any Loan Document 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 or the Guarantor 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
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Subsidiary or for a substantial part of its property and is not discharged
within 30 days; or any bankruptcy, reorganization, debt arrangement or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution
or liquidation proceeding (except the voluntary dissolution, not under any
bankruptcy or insolvency law, of a Subsidiary), is commenced in respect of the
Company or any Subsidiary, and, if such case or proceeding is not commenced by
the Company or such Subsidiary, it is consented to or acquiesced in by the
Company or such Subsidiary or remains for 30 days undismissed; or the Company
or any Subsidiary takes any corporate action to authorize, or in furtherance
of, any of the foregoing.
(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, 6.19 or 6.20.
(f) Non-Compliance with Other Provisions of this Agreement. Failure
by the Borrowers or the Guarantor to comply with or to perform any provision
of this Agreement or any other Loan Document (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) Guaranty. The obligations of the Company under
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Article IX or the Guarantor under the Guaranty shall cease to be in full force
and effect or the Company or the Guarantor shall contest in any manner the
validity, binding nature or enforceability of Article IX or the Guaranty.
VIII.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 IX
THE AGENT
---------
IX.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
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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, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
IX.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.
IX.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.
IX.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
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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 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.
IX.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.
IX.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
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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 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.
IX.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 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.
IX.8 BofA in Individual Capacity. BofA 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, BofA or its Affiliates may receive information
regarding the Company or its
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Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary) and acknowledge that
neither BofA nor the Agent shall be under any obligation to provide such
information to them. With respect to its Loans, BofA shall have the same
rights and powers under this Agreement as any other Bank and may exercise the
same as though BofA were not the Agent.
IX.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.
IX.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
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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
(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,
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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
Banks under this Section 8.10(e) shall survive the payment of all Obligations
and the resignation or replacement of the Agent.
ARTICLE X
GUARANTEE
---------
X.1 Guarantee from the Company. In order to induce the Banks to
agree to make Loans to APSA under this Agreement, the Company 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 of APSA (the "Guaranteed Indebtedness").
X.2 Expenses. The Company 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
rights under or in connection with this Article IX.
X.3 Waivers. The Company 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 Article IX.
The Company hereby waives (a) presentation to, demand of payment from, and
protest and notice of protest 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.
X.4 No Impairment. The obligations of the Company under this Article
IX shall not be impaired by reason of any claim or waiver, release, surrender
or compromise with respect to APSA, 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
APSA. The obligations of the Company hereunder with respect to its guaranty
of the obligations of APSA hereunder shall not be impaired by (a) any lack of
validity or enforceability of this Agreement or any other Loan Document with
respect to APSA, (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 APSA or any
other Person hereunder or under the other Loan Documents or with respect to
this Agreement or the other Loan Documents, (c) any
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extension or renewal, in whole or in part, of this Agreement or any other Loan
Documents, (d) any rescission, waiver, release, compromise, amendment or
modification of, or any consent to departure from, any of the terms or
provisions of this Agreement or the other Loan Documents or any agreement, (e)
any failure by any Person in the performance of any obligation with respect to
this Agreement or any other Loan Documents, (f) any act by the Agent or any
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 APSA or any other Person, or (i) any other act or
omission which may or might in any manner vary the risk of APSA, or which
would otherwise operate as a discharge of or other defense available to APSA,
as a matter of law.
X.5 Waiver of Resort. The Company 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 APSA or any of its Subsidiaries.
X.6 Reinstatement. The Company agrees that this Article IX 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 APSA or any other Person.
X.7 Payment. Upon the failure of APSA to pay any of the Guaranteed
Indebtedness when and as the same shall become due, whether at maturity, by
acceleration or otherwise, the Company 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.
X.8 Subrogation, Waivers, etc. The Company 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, no payment made by or on account of
the Company pursuant to this Article IX shall entitle the Company, by
subrogation or otherwise, to any payment by APSA or from or out of any
property of APSA, and the Company shall not exercise any right or remedy
against APSA or any property of APSA by reason of any performance by the
Company of its obligations under this Article IX, including any claim or other
rights which it may now or hereafter acquire against APSA that arise from the
existence,
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payment, performance or enforcement of the guarantee under this Article IX,
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 APSA or any collateral now or
hereafter pledged to the Banks, the Agent or any other Person acting on behalf
of the Banks by APSA, 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 the
Company 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 the Company 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. The
Company 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.
X.9 Delay, etc. No delay on the part of any of the Banks or the
Agent in exercising any rights under this Article IX or failure to exercise
the same shall operate as a waiver of such rights. No notice to or demand on
the Company 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.
ARTICLE XI
MISCELLANEOUS
-------------
XI.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 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
69
<PAGE>
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 the Guarantor;
(f) release the Company from any of its obligations under Article IV;
or
(g) amend this Section or the definition of "Required Banks" , 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.
XI.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 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
70
<PAGE>
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.
XI.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.
XI.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 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, 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 for all reasonable
71
<PAGE>
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).
XI.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.
XI.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
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
72
<PAGE>
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.
XI.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.
XI.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 the lesser of (i) $5,000,000 or (ii)
the full amount of the Loans, the Commitments and the other rights and
obligations of such Bank; 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
rights and be released from its obligations under the Loan Documents.
73
<PAGE>
(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 §203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
XI.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
74
<PAGE>
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.
XI.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 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.
75
<PAGE>
XI.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.
XI.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.
XI.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.
XI.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.
XI.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 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.
76
<PAGE>
XI.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.
XI.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).
XI.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
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<PAGE>
supersedes all prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof and thereof.
78
<PAGE>
Delivered at Chicago, Illinois as of the day and year first above written.
APPLIED POWER INC.
By: /s/ Robert C. Arzbaecher
---------------------------
Title: Vice President and Chief
------------------------
Financial Officer
------------------------
APPLIED POWER EUROPE S.A.
By: /s/ Robert C. Arzbaecher
---------------------------
Title: Authorized Representative
--------------------------
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Agent
By: /s/ M.H. Claggett
----------------------
Title: Vice President
-------------------
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ M.H. Claggett
----------------------
Title: Vice President
-------------------
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Jerry Kane
-------------------------
Title: Senior Vice President
-----------------------
<PAGE>
FIRST UNION NATIONAL BANK
By: /s/ V.W. Nuellum
---------------------
Title: Vice President
------------------
<PAGE>
SOCIETE GENERALE, CHICAGO BRANCH
By: /s/ Joseph A. Philbin
------------------------
Title: Vice President
---------------------
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: /s/ R.T. Jander
-------------------
Title: Vice President
----------------
<PAGE>
THE BANK OF TOKYO-MITSUBISHI LTD.
CHICAGO BRANCH
By: /s/ Hajime Watanabe
----------------------------
Title: Deputy General Manager
------------------------
<PAGE>
BANK ONE, WISCONSIN
By: /s/ Ronald Carey
---------------------
Title: Vice President
------------------
<PAGE>
BANKBOSTON, N.A.
By: /s/ Robert W. MacElhiney
--------------------------
Title: Vice President
-----------------------
<PAGE>
FIRST BANK NATIONAL ASSOCIATION
By: /s/ Mark Heleen
-------------------
Title: Vice President
---------------
<PAGE>
THE FUJI BANK, LIMITED
By: /s/ Tetsuo Kamatsu
-------------------------
Title: Joint General Manager
----------------------
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By: /s/ Andrew Peterson
----------------------
Title: Vice President
--------------------
<PAGE>
M&I MARSHALL & ILSLEY BANK
By: /s/ James R. Miller
----------------------
Title: Vice President
-------------------
By: /s/ Gina Peter
----------------------
Title: Senior Vice President
----------------------
<PAGE>
NATIONSBANK, N.A.
By: /s/ Mary Carol Daley
----------------------
Title: Vice President
-------------------
<PAGE>
THE SANWA BANK LIMITED,
CHICAGO BRANCH
By: /s/ Joseph P. Howard
----------------------
Title: Vice President
-------------------
<PAGE>
SCHEDULE 1.1
Disclosure Schedule
<PAGE>
SCHEDULE 1.2
Pricing Grid
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------
Pricing Pricing Pricing Pricing Pricing Pricing
Level I Level II Level III Level IV Level V Level VI
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Debt to LESS THAN 30% GREATER THAN OR GREATER THAN OR GREATER THAN GREATER THAN OR GREATER THAN
Capital EQUAL TO 30% BUT EQUAL TO 40% BUT OR EQUAL TO EQUAL TO 50% OR EQUAL TO
Ratio LESS THAN 40% LESS THAN 45% 45% BUT LESS BUT LESS THAN 55%
THAN 50% 55%
- - --------------------------------------------------------------------------------------------------------------------
Offshore 0.275% 0.350% 0.425% 0.475% 0.525% 0.675%
Margin
- - --------------------------------------------------------------------------------------------------------------------
Non-Use Fee .100% 0.125% 0.150% 0.175% 0.175% 0.225%
Rate
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2.1
Commitments and
Pro Rata Shares
Bank Commitment Pro Rata Share
---- ---------- --------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION $ 34,125,000 9.75%
THE FIRST NATIONAL BANK
OF CHICAGO $ 29,750,000 8.50%
FIRST UNION NATIONAL BANK $ 29,750,000 8.50%
SOCIETE GENERALE, CHICAGO
BRANCH $ 29,750,000 8.50%
PNC BANK, NATIONAL
ASSOCIATION $ 29,750,000 8.50%
THE BANK OF TOKYO-MITSUBISHI
LTD. CHICAGO BRANCH $ 21,875,000 6.25%
BANK ONE, WISCONSIN $ 21,875,000 6.25%
BANKBOSTON, N.A. $ 21,875,000 6.25%
FIRST BANK NATIONAL
ASSOCIATION $ 21,875,000 6.25%
THE FUJI BANK,LIMITED $ 21,875,000 6.25%
HARRIS TRUST & SAVINGS BANK $ 21,875,000 6.25%
M&I MARSHALL & ILSLEY BANK $ 21,875,000 6.25%
NATIONSBANK, N.A. $ 21,875,000 6.25%
THE SANWA BANK LIMITED,
CHICAGO BRANCH $ 21,875,000 6.25%
------------ ------
TOTAL $350,000,000 100.00%
<PAGE>
1
<PAGE>
SCHEDULE 10.2
Offshore and Domestic Lending Offices,
Addresses for Notices
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
------------------------------
As Agent
Bank of America National Trust
and Savings Association
Agency Management Services #5596
1850 Gateway Boulevard, 5th Floor
Concord, CA 94520
Attention: Elizabeth Chao
Telephone: (510) 675-8375
Facsimile: (510) 675-8500
Notices (other than Borrowing Notices and Notices of
Conversion/Continuation):
Bank of America National Trust and Savings Association
231 S. LaSalle Street
Chicago, IL 60201
Attention: M.H. Claggett, Vice President
Telephone: (312) 828-1549
Facsimile: (312) 987-1276
AGENT'S PAYMENT OFFICE
----------------------
Bank of America National Trust
and Savings Association
Agency Management Services #5596
1850 Gateway Boulevard, 5th Floor
Concord, CA 94520
ABA No. 121-000-358
For Credit to Account No.: 12336-14489
Attn: Elizabeth Chao
Ref: Applied Power Inc.
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
------------------------------
As a Bank
Domestic and Offshore Lending Office:
Bank of America National Trust
and Savings Association
200 West Jackson Boulevard, 9th Floor
Chicago, IL 60606
Attention: Marion Alongi
Telephone: (312) 828-6212
Facsimile: (312) 974-9626
Notices (other than Borrowing Notices and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
231 S. LaSalle Street
Chicago, IL 60201
Attention: M.H. Claggett, Vice President
Telephone: (312) 828-6212
Facsimile: (312) 974-9626
2
<PAGE>
The First National Bank of Chicago
as a Bank
----------------------------------
Domestic and Offshore Lending Office:
One First National Plaza
Chicago, IL 60670
Attention: Rosario Guzman
Telephone: (312) 732-7874
Facsimile: (312) 732-2715
The First National Bank of Chicago
London Branch
1 Triton Square
London
NW1 3FN
Attention: Dot O'Flaherty
Telephone: (44 171) 903-4150
Facsimile: (44 171) 903-4148
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
The First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
Attention: Jerry Kane
Telephone: (312) 732-1614
Facsimile: (312) 732-1117
3
<PAGE>
First Union National Bank
-------------------------
as a Bank
Domestic and Offshore Lending Office:
One First Union Center
301 South College Street
Charlotte, NC 28288-0745
Attention: Lisa Dillard
Telephone: (704) 374-4282
Facsimile: (704) 374-2802
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288-0745
Attention: Mike Conrad
Telephone: (704) 383-1392
Facsimile: (704) 374-2802
Societe Generale, Chicago Branch
--------------------------------
as a Bank
Domestic and Offshore Lending Office:
181 W. Madison St.
Suite 3400
Chicago, IL 60602
Attention: Joe Philbin
Telephone: (312) 578-5005
Facsimile: (312) 578-5099
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
Societe Generale, Chicago Branch
181 W. Madison St.
Suite 3400
Chicago, IL 60602
Attention: Joe Philbin
Telephone: (312) 578-5005
Facsimile: (312) 578-5099
4
<PAGE>
PNC Bank, National Association
------------------------------
as a Bank
Domestic and Offshore Lending Office:
PNC Bank, National Association
249 Fifth Avenue
Pittsburgh, PA 15222
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
PNC Bank, National Association
500 West Madison Street
Suite 3140
Chicago, IL 60661
Attention: Richard T. Jander/Tina Johnson
Telephone: (312) 906-3440/906-3403
Facsimile: (312) 906-3420
The Bank of Tokyo-Mitsubishi, Ltd. Chicago Branch
-------------------------------------------------
as a Bank
Domestic and Offshore Lending Office:
The Bank of Tokyo-Mitsubishi Ltd. Chicago Branch
227 W. Monroe
Suite 2300
Chicago, IL 60606
Attention: Wayne Yamanaka
Telephone: (312) 696-4664
Facsimile: (312) 696-4535
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
The Bank of Tokyo-Mitsubishi Ltd. Chicago Branch
227 W. Monroe
Suite 2300
Chicago, IL 60606
Attention: Wayne Yamanaka
Telephone: (312) 696-4664
Facsimile: (312) 696-4535
Bank One, Wisconsin
-------------------
as a Bank
Domestic and Offshore Lending Office:
5
<PAGE>
Bank One, Wisconsin
111 East Wisconsin Avenue
Milwaukee, WI 53201
Attention: Linda Harrison
Telephone: (414) 765-2161
Facsimile: (414) 765-2288
Notices:
Bank One, Wisconsin
111 East Wisconsin Avenue
Milwaukee, WI 53201
Attention: Linda Harrison
Telephone: (414) 765-2161
Facsimile: (414) 765-2288
BankBoston, N.A.
----------------
as a Bank
Domestic and Offshore Lending Office:
BankBoston, N.A.
100 Federal Street
Lg. Corp. 01-09-05
Boston, MA 02110
Attention: Robert W. MacElhiney
Telephone: (617) 434-7068
Facsimile: (617) 434-6685
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
BankBoston, N.A.
100 Federal Street
Lg. Corp. 01-09-05
Boston, MA 02110
Attention: Robert W. MacElhiney
Telephone: (617) 434-7068
Facsimile: (617) 434-6685
6
<PAGE>
First Bank National Association
-------------------------------
as a Bank
Domestic and Offshore Lending Office:
First Bank National Association
201 W. Wisconsin Avenue
Milwaukee, WI 53259
Attention: Alan Holman, Vice President
Telephone: (414) 227-5505
Facsimile: (414) 227-5881
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
First Bank National Association
201 W. Wisconsin Avenue
Milwaukee, WI 53259
Attention: Alan Holman, Vice President
Telephone: (414) 227-5505
Facsimile: (414) 227-5881
The Fuji Bank, Limited
----------------------
as a Bank
Domestic and Offshore Lending Office:
The Fuji Bank, Limited
225 West Wacker Drive
Suite 2000
Chicago, IL 60606
Attention: Steve Peca
Telephone: (312)621-9484
Facsimile: (312)621-0529
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
The Fuji Bank, Limited
225 West Wacker Drive
Suite 2000
Chicago, IL 60606
Attention: Steve Peca
Telephone: (312)621-9484
Facsimile: (312)621-0529
7
<PAGE>
Harris Trust and Savings Bank
-----------------------------
as a Bank
Domestic and Offshore Lending Office:
Harris Trust and Savings Bank
111 West Monroe Street
P.O. Box 755
Chicago, IL 60690-0755
Attention: Cathy Shrewsbury
Telephone: (312) 461-3321
Facsimile: (312) 293-5040
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
Harris Trust and Savings Bank
111 West Monroe Street
P.O. Box 755
Chicago, IL 60690-0755
Attention: Andrew Peterson
Telephone: (312) 461-6537
Facsimile: (312) 765-1642
M&I Marshall & Ilsley Bank
--------------------------
as a Bank
Domestic and Offshore Lending Office:
M&I Marshall & Ilsley Bank
770 North Water Street
Milwaukee, WI 53202
Attention: James R. Miller
Telephone: (414) 765-7779
Facsimile: (414) 765-7625
Notices (other than Borrowing Notices and Notices of
Conversion/Continuation):
M&I Marshall & Ilsley Bank
770 North Water Street
Milwaukee, WI 53202
Attention: James R. Miller
Telephone: (414) 765-7779
Facsimile: (414) 765-7625
8
<PAGE>
Nations Bank, N.A.
-------------------
as a Bank
Domestic and Offshore Lending Offices:
Nations Bank, N.A.
101 N. Tryon St.
15th Floor
Charlotte, NC 28201
Attention: Sharon Alexander
Telephone: (704) 386-7258
Facsimile: (704) 386-8694
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation):
Nations Bank, N.A.
233 South Wacker Drive
Suite 2800
Chicago, IL 60614
Attention: Mary Carol Daly
Telephone: (312) 234-5618
Facsimile: (312) 234-5601
The Sanwa Bank, Limited, Chicago Branch
---------------------------------------
as a Bank
Domestic and Offshore Lending Offices
The Sanwa Bank, Limited, Chicago Branch
10 S. Wacker Drive
31st Floor
Chicago, IL 60606
Attention: Joseph P. Howard
Telephone: (312) 368-3007
Facsimile: (312) 346-6677
Notices (other than Borrowing Notices and Notices
of Conversion/Continuation:
The Sanwa Bank Limited, Chicago Branch
10 S. Wacker Drive
31st Floor
Chicago, IL 60606
Attention: Joseph P. Howard
Telephone: (312) 368-3007
Facsimile: (312) 346-6677
9
<PAGE>
EXHIBIT A
NOTICE OF BORROWING
Date: _______________ ,_____
To: Bank of America National Trust and Savings Association as Agent for
the Banks parties to the Multicurrency Credit Agreement dated as of
October 23, 1997 (as extended, renewed, amended or restated from time
to time, the "Credit Agreement") among Applied Power Inc., Applied
Power Europe S.A., and certain Banks which are signatories thereto and
Bank of America National Trust and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned, ___________________________ (the "Borrower"), refers
to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably, pursuant to
Section 2.3 of the Credit Agreement, of the Borrowing specified below:
1. The Business Day of the proposed Borrowing is
____________ , ____
2. The aggregate amount of the proposed Borrowing is
$_____________________.
3. The Borrowing is to be comprised of $___________ of [Base
Rate] [Offshore Rate] Loans.
4. The duration of the Interest Period for the Offshore Rate
Loans included in the Borrowing shall be [_____ months].
A-1
<PAGE>
5. The Applicable Currency is _________________.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed
Borrowing, before and after giving effect thereto and to the application of
the proceeds therefrom:
(a) the representations and warranties of the Company contained
in Article V (other than Sections 5.6 and 5.8) of the Credit Agreement
are true and correct as though made on and as of such date;
(b) no Default or Event of Default has occurred and is
continuing, or would result from such proposed Borrowing.
APPLIED POWER [INC./EUROPE S.A.]
By:
------------------------------
Title:
---------------------------
A-2
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION/CONTINUATION/1/
----------------------------------
Date:__________________,____
To: Bank of America National Trust and Savings Association, as Agent for
the Banks parties to the Multicurrency Credit Agreement dated as of
October 23, 1997 (as extended, renewed, amended or restated from time
to time, the "Credit Agreement") among Applied Power Inc., Applied
Power Europe S.A., and certain Banks which are signatories thereto and
Bank of America National Trust and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned, ___________________________ (the "Borrower"), refers
to the Credit Agreement, the terms defined therein being used herein as
therein defined, and hereby gives you notice irrevocably, pursuant to
Section 2.4 of the Credit Agreement, of the [conversion] [continuation] of
the Loans specified herein, that:
1. The Conversion/Continuation Date is ___________ ,_____.
2. The aggregate amount of the Committed Loans to be
[converted] [continued] is [$] _____________.
3. The Committed Loans are to be [converted into] [continued
as] [Dollar Offshore Rate] [Offshore Currency] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest
- - -----------------
/1/ Offshore Currency Loans may only be continued in the same Offshore
Currency and may not be converted.
B-1
<PAGE>
Period for the Loans included in the [conversion] [continuation]
shall be months.
APPLIED POWER [INC./EUROPE S.A.]
By:_____________________________
Title:__________________________
B-2
<PAGE>
EXHIBIT C
APPLIED POWER INC.
------------------
COMPLIANCE CERTIFICATE
----------------------
Financial
Statement Date:_____________ ,_____
Reference is made to that certain Multicurrency Credit Agreement dated
as of October 23, 1997 (as extended, renewed, amended or restated from time
to time, the "Credit Agreement") among Applied Power Inc., Applied Power
Europe S.A., and the several financial institutions from time to time
parties to this Credit Agreement (the "Banks") and Bank of America National
Trust and Savings Association, as agent for the Banks (in such capacity, the
"Agent"). Unless otherwise defined herein, capitalized terms used herein
have the respective meanings assigned to them in the Credit Agreement.
The undersigned hereby certifies as of the date hereof that he/she is
the ____________ of the Company, and that, as such, he/she is authorized to
execute and deliver this Certificate to the Banks and the Agent on the
behalf of the Company and its consolidated Subsidiaries, and that:
2. The undersigned has reviewed and is familiar with the terms of
the Credit Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial
or otherwise) of the Company during the accounting period covered by the
attached financial statements.
3. To the best of the undersigned's knowledge, the Borrowers,
during such period, have observed, performed or satisfied all of its
covenants and other agreements, and satisfied every condition in the Credit
Agreement to be observed, performed or satisfied by the Borrowers, and the
undersigned has no knowledge of any Default or Event of Default that has
occurred
C-1
<PAGE>
and is continuing.
4. The following financial covenant analyses and information set
forth on Schedule 1 attached hereto are true and accurate on and as of the
date of this Certificate.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of________________ ,_____ .
APPLIED POWER INC.
By:____________________________
Title:_________________________
C-2
<PAGE>
SCHEDULE 1
COMPUTATION SHOWING COMPLIANCE WITH
FINANCIAL RESTRICTIONS AND COVENANTS
For the Fiscal Quarter Ended __________ ,____
MINIMUM SHAREHOLDERS' EQUITY
----------------------------
(A) Shareholder's Equity at Date $________________
Minimum Allowed Shareholders Equity:
Fixed Amount: $ 170,000,000
50% of Net Proceeds of Equity Offerings
since October ___, 1997 _________________
(B) Minimum Allowed Shareholders' Equity $________________
(C) Excess (A) over (B) - Cannot be
less than $0 $
================
(D) APSA Shareholders' Equity -- Cannot
be less than $1 $________________
FIXED CHARGE COVERAGE RATIO (LAST 12 MONTHS)
--------------------------------------------
Net Income $________________
Plus:
Income Tax Expense _________________
Interest Expense _________________
Non-Capitalized Lease Expense _________________
(A) Numerator $________________
Interest Expense $________________
Non-Capitalized Lease Expense _________________
(B) Denominator $________________
(C) Ratio of (A) to (B) _________________
C-1
<PAGE>
Minimum Permitted Ratio
=================
DEBT TO CAPITAL RATIO
---------------------
Short-Term Borrowings $________________
Commercial Paper _________________
Current portion - Long-term debt _________________
Long-term debt _________________
(A) Funded Debt $________________
Funded Debt $________________
Deferred Taxes _________________
Shareholders' Equity _________________
(B) Total Capital $
================
(C) Ratio of (A) to (B)
=================
Maximum Permitted Ratio
=================
SECURITIZATIONS/SALES (CURRENT FISCAL YEAR)
-------------------------------------------
Book Value of Assets Sold during
Fiscal Quarter $________________
Book Value of Assets Sold during
previous Fiscal Quarters of such Fiscal Year $________________
Amount Permitted --15% of Tangible
Net Assets $
================
C-2
<PAGE>
APPLICABLE MARGIN AND NON-USE FEE CALCULATIONS
FOR THE FISCAL QUARTER ENDED ___________ ,_____
APPLICABLE MARGIN CALCULATION:
------------------------------
Debt to Capital Ratio (from
Compliance Calculation) ____ %
Applicable Margin for Offshore Rate
Loans 0.__ %
NON-USE FEE RATE CALCULATION:
-----------------------------
Debt to Capital Ratio (from
Compliance Calculation) ____ %
Applicable Non-Use Fee Rate 0.__ %
C-3
<PAGE>
EXHIBIT D-1
FORM OF OPINIONS OF BORROWERS' COUNSEL
[Letterhead of Quarles & Brady]
October 23,1997
To the Agent and each of the
Banks party to the
Agreement referred to below
c/o Bank of America National Trust
and Savings Association, as Agent
231 S. LaSalle St.
Chicago, IL 60697
Re: Multicurrency Credit Agreement dated as of October 23, 1997
("Agreement") among Applied Power Inc. ("API"), Applied Power
Europe S.A. ("APSA"), Various Financial Institutions listed
therein as Banks ("Banks"), and Bank of America National Trust
and Savings Association, as Agent ("Agent")
Ladies and Gentlemen:
We have acted as counsel to API, APSA and Versa Technologies, Inc.
(the "Guarantor") in connection with (i) the negotiation, execution and
delivery of the Agreement, the Guaranty (the "Guaranty") of the Guarantor
dated the date hereof and the other documents to which they are respectively
parties pursuant to the Agreement ("Loan Documents") and (ii) the borrowing
by API and APSA of the initial Loans. This opinion is being delivered to
you pursuant to Section 4.1(h)of the Agreement. Terms used herein which are
defined in the Agreement shall have the respective meanings set forth in the
Agreement unless otherwise defined herein.
In giving the opinions set forth in this letter, we have (i)
<PAGE>
_____________, 1997
Page D-1-2
reviewed each of (a) the Organic Documents, as in effect on the date hereof,
of API and the Guarantor, including, without limitation, the Articles of
Incorporation and the By-Laws of API and the Guarantor, (b) the records of
the corporate proceedings of API and the Guarantor, (c) the Agreement, the
Guaranty and the other Loan Documents and (d) certificates of various state
governmental authorities as to the corporate subsistence or good standing of
API and the Guarantor; and (ii) examined such other documents, records and
questions of law and made such other investigation and review as we have
deemed necessary or appropriate as a basis for the opinions hereinafter
expressed. As to questions of fact material to the opinions expressed
herein and as to the content and form of by-laws, minutes, and resolutions
and other documents or writings, we have relied, to the extent that we have
considered reasonably appropriate, upon factual representations of API's,
APSA's and the Guarantor's management.
We note that various issues are addressed in the legal opinion of
Salans Hertzfeld and Heilbronn separately provided to you, and we express no
opinion with respect to those matters.
With your permission we have assumed without inquiry or other
investigation (i) the full capacity, power and authority of each Person
(other than API and the Guarantor) to execute, deliver and perform the
Agreement and the other Loan Documents, and each document heretofore
executed and delivered or hereafter to be executed and delivered and to do
such other acts heretofore done or hereafter to be done by such Person as
contemplated by the Agreement and the other Loan Documents; (ii) the
legality, validity, binding effect and enforceability as to each Person
(other than API and the Guarantor) of the Agreement and the other Loan
Documents, and each document executed and delivered as contemplated by the
Agreement and the other Loan Documents; (iii) the genuineness of each
signature on all documents that we have examined; (iv) the completeness and
authenticity of each document submitted to us; and (v) the conformity to the
original of each document submitted to us as a copy.
D-1-2
<PAGE>
_____________, 1997
Page D-1-3
Based upon and subject to the foregoing, and subject to the
qualifications and exceptions set forth herein, we are of the opinion that:
1. Each of API and the Guarantor (i) is validly existing and
in good standing under the laws of the jurisdiction of its incorporation,
and (ii) has full corporate power and authority and, to the best of our
knowledge without specific investigation, holds all material requisite
governmental licenses, permits and other approvals to own and hold under
lease its property, and to conduct its business substantially as currently
conducted by it. Each of API and the Guarantor has full corporate power and
authority to execute, deliver and perform its obligations under the Loan
Documents to which it is a party and to take all other actions incidental to
any thereof. Effective January 1, 1991 the concept of "good standing" was
deleted from the Wisconsin Business Corporation Law. Accordingly, the
opinion as to "good standing" with respect to API in the first sentence of
this paragraph means "active and current with the Wisconsin Department of
Financial Institutions, the successor to the Wisconsin Secretary of State".
2. The execution and delivery by API and the Guarantor of
each Loan Document executed or to be executed by it to which it is a party
and the performance by API and the Guarantor of all obligations thereunder
and all of its respective other actions incidental to any thereof (i) have
been duly authorized by the Board of Directors of API and the Guarantor,
(ii) do not and will not conflict with, result in any violation of, or
constitute any default under, (A) any provision of any Organic Document or
material Contractual Obligation of which we have knowledge after due inquiry
which is binding on API or the Guarantor, or (B) any applicable Wisconsin,
Delaware corporate or federal law or governmental regulation or, to the best
of our knowledge after due inquiry, any applicable decree, order, writ or
injunction or any court, arbitrator or governmental authority having
jurisdiction over API or the Guarantor or the property, of
D-1-3
<PAGE>
_____________, 1997
Page D-1-4
API or the Guarantor, and (iii) will not result in or require the creation
or imposition of any Lien on any of the properties of API or the Guarantor
pursuant to the provisions of any material Contractual Obligation of which
we have knowledge after due inquiry.
3. The execution and delivery by APSA of each Loan Document
executed or to be executed by it and the performance by APSA of all its
obligations thereunder and other actions incidental to any thereof (i) do
not and will not conflict with, result in any violation of, or constitute
any default under any applicable Wisconsin or federal law or governmental
regulation or, to the best of our knowledge after due inquiry, any
applicable decree, order, writ or injunction or any federal or Wisconsin
court, arbitrator or governmental authority having jurisdiction over APSA or
the property of APSA, and (ii) will not result in or require the creation or
imposition of any Lien under federal or Wisconsin law on any of the
properties of APSA pursuant to the provisions of any material Contractual
Obligation of which we have knowledge after due inquiry.
4. Each of API and the Guarantor has duly executed and
delivered the Loan Documents to which it is a party on the date hereof. Each
of the Loan Documents to which it is a party constitutes the legal, valid
and binding obligation of API and the Guarantor enforceable against API or
the Guarantor in accordance with its respective terms. Assuming that APSA
has duly authorized, executed and delivered the Agreement and the Notes to
which it is a party, each of the Agreement and such Notes constitutes the
legal, valid and binding obligation of APSA, enforceable against APSA in
accordance with its respective terms.
5. To the best of our knowledge after due inquiry, except as
disclosed in the Disclosure Schedule, there is no pending or overtly
threatened litigation, action or proceeding affecting either API or any
Subsidiary of API, or any of their respective properties, assets or
revenues, which would have a
D-1-4
<PAGE>
_____________, 1997
Page D-1-5
Material Adverse Effect.
6. No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or
any other Person pursuant to any law or regulation of the United States of
America or the States of Wisconsin or Illinois is required to be obtained or
made by API, APSA or the Guarantor in connection with the due execution,
delivery or performance by each of API, APSA, and the Guarantor of any Loan
Document to which it is or is to be a party, or the borrowing by API or APSA
of Loans on the date hereof, except for authorizations, approvals, actions,
notices or filings which have been duly obtained or made and are in full
force and effect or where the failure to obtain or make any thereof would
not have a Material Adverse Effect.
7. Neither API, APSA nor any Subsidiary of API is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, or a "holding company," a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company," within the
meaning of and subject to regulation under the Public Utility Holding
Company Act or 1935, as amended.
8. Neither the execution or delivery by API, APSA or the
Guarantor of any of the Loan Documents to which it is a party, nor the
performance of their respective obligations thereunder, will violate F.R.S.
Board Regulation G, T, U or X.
9. The courts of the State of Wisconsin should, based on
existing decisional law of Wisconsin, give effect to the choice of Illinois
law in Section 10.15 of the Agreement and Section 3.9 of the Guaranty as the
governing law in respect of the Agreement, the Notes and the Guaranty,
except as limited by Wisconsin Statute Section 401.105(2) and assuming that:
(a) there has been no fraud in any transaction involving the Agreement, the
Notes or the Guaranty; (b) the consent of any of the parties to the choice
of Illinois law was not obtained by improper means, such as any
misrepresentation, duress, or undue
D-1-5
<PAGE>
_____________, 1997
Page D-1-6
influence, or by mistake; and (c) such application of Illinois law would not
be contrary to any public policy of the State of Wisconsin. Wisconsin
Statute Section 401.105(1) indicates that "when a transaction bears a
reasonable relation to this state and also to another state or nation the
parties may agree that the law either of this state or of such other state
or nation shall govern their rights and duties."
The Wisconsin Supreme Court (the "Court"), in a case addressing
a contractual choice of law, has stated that:
A precise delineation of those policies which are
sufficiently important to warrant overriding a contractual choice of
law stipulation is not possible. In general, however, statutes or
common law which make a particular type of contract enforceable, e.g.,
usury laws, or which make a particular contract provision enforceable,
e.g., laws prohibiting covenants not to compete, or that are designed
to protect a weaker party against the unfair exercise of superior
bargaining power by another party, are likely to embody an important
state public policy.
Bush v. National School Studios, Inc., 139 Wis. 2d 635, 643, 407 N.W.2d 883
(1987). In the Bush case, the Court refused to honor a contractual choice
of law which would have circumvented the Wisconsin Fair Dealership Law. In
a prior case, Hammel v. Ziegler Financing Corp., 113 Wis. 2d 73, 78, 334
N.W.2d 913 (1983), a Wisconsin court honored the parties' choice of Missouri
law in considering claimed usury law violations. Based solely upon our
investigation of Wisconsin law in connection with this opinion and the
assumptions and qualifications set forth herein, we hereby advise you that
we are currently unaware of any reason why the courts of Wisconsin would
determine that such application of Illinois law would be contrary to any
public policy of the State of Wisconsin.
Our opinions expressed in this letter are subject to:
D-1-6
<PAGE>
_____________, 1997
Page D-1-7
(a) the effect or bankruptcy, insolvency, reorganization, receivership,
fraudulent conveyance, moratorium and other similar federal and state laws
and judicially developed doctrines relevant to any such laws affecting the
rights and remedies of creditors generally; and (b) the effect of general
principles of equity, whether applied by a court of law or equity
(including, without limitation, principles governing the availability of
specific performance, injunctive relief or other equitable remedies or
affording equitable defenses against a party seeking enforcement). Without
limiting the foregoing, we note that a Wisconsin court might impose
obligations of good faith, fair dealing, diligence and reasonableness in
connection with any of the Agreement, the Notes and the Guaranty.
The law covered by the opinions expressed herein is limited to
the federal laws of the United States of America, the present internal laws
of the State of Wisconsin, with respect to the opinions expressed as to the
Guarantor in paragraphs 1 and 2 hereof, the corporate law of the State of
Delaware, and (as qualified below) Illinois. In rendering the opinions
expressed herein with respect to matters of the laws of Illinois, we have
assumed, with your permission, that the present internal laws of Illinois
are identical to the present internal laws of Wisconsin in all respects
material to our opinions. We express no opinion whether that assumption is
correct or reasonable under the circumstances.
This opinion deals only with the specific legal issues that it
explicitly addresses and no opinions shall be implied as to matters not so
addressed.
Our opinions herein are subject to the following additional
qualifications:
(a) Except as specifically set forth herein, no opinion is
rendered as to title of API, APSA or the Guarantor to any
assets, nor as to priority of any mortgage or security
interest.
D-1-7
<PAGE>
_____________, 1997
Page D-1-8
(b) This opinion is given as of the date hereof, it is
intended to apply only to those facts and circumstances
which exist as of the date hereof, and we assume no
obligation or responsibility to update or supplement this
opinion to reflect any facts or circumstances which may
hereafter come to our attention, any changes in laws
which may hereafter occur, or to inform the addressee of
any change in circumstances occurring after the date of
this opinion which would alter the opinions rendered
herein.
This opinion letter is intended solely for your benefit and that
of the other Banks who may become parties to the Agreement (including
assignees and participants of such Banks), and may not be relied upon,
referred to or otherwise used by any other Person without our express
written consent, except that Mayer, Brown & Platt are authorized to rely on
this letter, in connection with their representation of you, as if this
letter were addressed to them. Subject to the foregoing, this opinion
letter may be relied upon by you only in connection with the transactions
contemplated by the Agreement, and may not be used or relied upon by you or
any other Person for any other purpose whatsoever without in each instance
our prior written consent.
D-1-8
<PAGE>
_____________, 1997
Page D-1-9
We note that Anthony W. Asmuth III, a partner of this firm, is
also Secretary of API and the Guarantor, and Secretary, Assistant Secretary
and/or a Director of certain Subsidiaries of API.
Very truly yours,
QUARLES & BRADY
D-1-9
<PAGE>
EXHIBIT D-2
[Letterhead of Salans, Hertzfeld & Heilbronn]
_________, 1997
To the Administrative Agent and
each of the Banks party to the
Agreement referred to below
c/o Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Re: Multicurrency Credit Agreement dated as of October 23, 1997 (the
"Agreement") among Applied Power Europe S.A. ("APSA"), Applied
Power Inc. ("API"), various financial institutions (the "Banks")
and Bank of America National Trust and Savings Association, as
Agent (the "Agent")
Ladies and Gentlemen:
We have acted as counsel to APSA in connection with the execution and
delivery of the Agreement and the other Loan Documents to which it is a
party. This opinion is being delivered to you pursuant to Section 4.1(h) of
the Agreement. Terms used herein which are defined in the Agreement shall
have the respective meanings set forth in the Agreement unless otherwise
defined herein.
In giving the opinions set forth in this letter we have (i) reviewed
each of (a) the Organic Documents, as in effect on the date hereof, of APSA,
(b) the records of the corporate proceedings of APSA, and (c) the Agreement
and the Notes; and (ii) examined such questions of law and made such other
investigation and review as we have deemed necessary or
<PAGE>
appropriate as a basis for the opinions hereinafter expressed. As to
questions of fact material to the opinions expressed herein and as to the
content and form of by-laws, minutes, and resolutions and other documents or
writings, we have relied, to the extent that we have considered reasonably
appropriate, upon representations of APSA's management.
We have assumed without inquiry or other investigation (i) the conformity
with originals of all documents submitted to us as copies and the
genuineness of all signatures; (ii) the full capacity, power and authority
of each Person (other than APSA) to execute, deliver and perform the
Agreement, and each document heretofore executed and delivered or hereafter
to be executed and delivered and to do such other acts heretofore done or
hereafter to be done by such Person as contemplated by the Agreement; (iii)
the legality, validity, binding effect and enforceability as to each Person
(other than APSA) of the Agreement, and each document executed and delivered
as contemplated by the Agreement; (iv) the genuineness of each signature on
all documents that we have examined; (v) the completeness and authenticity
of each document submitted to us; and (vi) the conformity to the original of
each document submitted to us as a copy.
Based upon and subject to the foregoing, and subject to the
qualifications and exceptions set forth herein, we are of the opinion that:
1. APSA and each of its Subsidiaries, (i) is a corporation duly
organized in France as a societe anonyme, and validly existing under the
laws of the Republic of France ("France"), and (ii) has full corporate power
and authority and, to the best of our knowledge without specified
investigation, holds all material requisite governmental licenses, permits
and other approvals to own and hold under lease its property and to conduct
its business substantially as currently conducted by it. APSA has full
corporate power and authority to execute, deliver and perform its
obligations under the Agreement and to take all other actions incidental to
any thereof.
2. The execution and delivery by APSA of the Agreement and
<PAGE>
_____________, 1997
Page D-2-3
the Notes, and the performance by APSA of all its respective obligations
thereunder, and all other actions incidental to any thereof (i) have been
duly authorized by all necessary corporate action, (ii) do not and will not
conflict with, result in any violation of, or constitute any default under,
(A) any provision of any Organic Document or material Contractual Obligation
of which we have knowledge after due inquiry, any applicable decree, order,
writ or jurisdiction over APSA or its property, and (iii) will not result in
or require the creation or imposition of any Lien on any of the properties
of APSA pursuant to the provisions of any material Contractual Obligation of
which we have knowledge after due inquiry. APSA has duly executed and
delivered the Agreement and the Notes.
3. There is no pending or, to the best of our knowledge, threatened
litigation, action or proceeding affecting APSA or any Subsidiary of APSA,
or any of their respective properties, assets or revenues, which may have a
Material Adverse Effect.
4. No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any
other Person pursuant to any law or regulation of France is required to be
obtained or made by APSA in connection with the due execution, delivery or
performance by APSA of the Agreement, or the borrowing by APSA of Loans on
the date hereof, except for authorizations, approvals, actions, notices or
filings which have been duly obtained or made and are in full force and
effect or where the failure to obtain or make any thereof would not have a
Material Adverse Effect.
5.(a) The choice of law provisions set forth in the Agreement and the
Notes should be recognized by the courts in France ("French Courts");
(b) APSA can sue and be sued in its own name in French Courts;
(c) under the laws of France, the irrevocable submission of
D-2-3
<PAGE>
_____________, 1997
Page D-2-4
APSA to the jurisdiction of federal and state courts in Chicago, Illinois
(each an "Illinois Court" and collectively the "Illinois Courts"), and the
agreement of APSA that the Agreement and the Notes shall be governed by and
construed in accordance with the laws of Illinois, are legal, valid and
binding; and
(d) any judgment obtained in an Illinois Court arising out of or in
relation to the obligations of APSA under the Agreement, the Notes or the
transactions contemplated thereby should be recognized and enforced in
France, subject to obtaining an exequatur of such judgment from a French
court, which should be obtained provided that:
(i) such judgment is final and obtained in compliance with
legal requirements of the jurisdiction of the court rendering such judgment
and in compliance with the Agreement and the transactions contemplated
thereby,
(ii) service of process was made personally,
(iii) such judgment does not contravene French law, French
public policy, international public policy, international treaties binding
upon France or generally accepted principles of international law,
(iv) the applicable procedure under the law of France with
respect to the enforcement of foreign judgments including exequatur is
complied with,
(v) no judgment or action on the same subject between the
parties thereto shall have been initiated or shall be pending in any French
court.
6. In proceedings brought in the French Courts in relation to the
Agreement or the Notes, APSA will not be entitled to claim for itself or any
of its properties (whether real or personal) situated within the
jurisdiction of such French court immunity on any grounds, to the extent
that it could have or thereafter could
D-2-4
<PAGE>
_____________, 1997
Page D-2-5
acquire any such immunity, from jurisdiction, suit, execution, attachment or
judgment of any court or from any other legal process (whether through
service or notice, attachment prior to judgment, attachment in aid of
execution or otherwise).
7. A judgment in a French Court to a claim brought in connection
with the Agreement or the Notes could be rendered in Dollars.
8. Any payment of principal, interest, fees or other amounts by
APSA will not be subject, under applicable French tax laws and regulations,
to any withholding tax or other deduction.
9. To ensure the legality, validity, enforceability or
admissibility in evidence of the Agreement or the Notes, it is not necessary
that the Agreement or the Notes or any other document be previously filed,
registered or recorded with any court or other authority in France or that
any registration charges or stamp or similar tax be paid on or in respect of
the Agreement or the Notes or any other document issued in connection with
the Agreement.
10. After being translated into French by an accredited translator,
the Agreement and the Notes will be in proper legal form under the laws of
France for the enforcement thereof against APSA.
11. It is not necessary under the laws of France (a) in order to
enable the Agent or any Banks to enforce its rights under the Agreement or
the Notes or (b) by reason of the execution, delivery or performance of the
Agreement or the Notes that it should be licensed, qualified or entitled to
carry on business in France.
12. Neither the Agent nor any Bank will be deemed under present
legislation in France to be resident, domiciled or carrying on business in
France by reason only of the execution, delivery, performance or enforcement
of the Agreement or
D-2-5
<PAGE>
_____________, 1997
Page D-2-6
the Notes.
13. The obligations of APSA under the Agreement and the Notes are
valid and binding obligations enforceable against it according to their
terms and will at all times rank pari passu with all other unsecured and
unsubordinated obligations of APSA but may be limited by statutory
priorities established by tax, labor, bankruptcy, suspension of payments and
similar laws affecting creditors rights generally.
Attorneys involved in the preparation of its opinion letter are
members of the bar of France, and we express no opinion as to the laws of
any jurisdiction other than the laws of France as in effect on the date
hereof.
This letter is intended solely for your benefit and that of the other
Banks who may become parties to the Agreement including assignees and
participants of such Banks, and may not be relied upon, referred to or
otherwise used by any other Person without our express written consent,
except that Mayer, Brown & Platt are authorized to rely on this letter, in
connection with their representation of you, as if this letter were
addressed to them.
Very truly yours,
Salans, Hertzfeld & Heilbronn
<PAGE>
EXHIBIT E
[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of _____________, is made between
______________________________ (the "Assignor") and
__________________________ (the "Assignee").
RECITALS
--------
WHEREAS, the Assignor is party to that certain Multicurrency
Credit Agreement dated as of October 23, 1997 (as amended, amended and
restated, modified, supplemented or renewed, the "Credit Agreement") among
Applied Power Inc., Applied Power Europe S.A., and the several financial
institutions from time to time party thereto (including the Assignor, the
"Banks"), and Bank of America National Trust and Savings Association, as
agent for the Banks (the "Agent"). Any terms defined in the Credit
Agreement and not defined in this Assignment and Acceptance are used herein
as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor
has committed to making Loans (the "Committed Loans") to the Borrowers in an
aggregate amount not to exceed $__________ (the "Commitment");
WHEREAS, [the Assignor has made Committed Loans in the aggregate
principal amount of $__________ to the Company and $______ to APSA] [no
Committed Loans are outstanding under the Credit Agreement];
WHEREAS, the Assignor wishes to assign to the Assignee [part of
the] [all] rights and obligations of the Assignor under the Credit Agreement
in respect of its Commitment, [together with a corresponding portion of each
of its outstanding Committed Loans] in an amount equal to $__________ (the
"Assigned Amount") on the terms and subject to the conditions set forth
herein and the Assignee wishes to accept assignment of such rights and to
E-1
<PAGE>
assume such obligations from the Assignor on such terms and subject to such
conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. Assignment and Acceptance.
--------------------------
(a) Subject to the terms and conditions of this Assignment and
Acceptance, (i) the Assignor hereby sells, transfers and assigns to the
Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse and without representation or warranty
(except as provided in this Assignment and Acceptance) __% (the "Assignee's
Percentage Share") of (A) the Commitment [and the Committed Loans] of the
Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of the Assignor under and in connection with the Credit
Agreement and the Loan Documents.
[If appropriate, add paragraph specifying payment to Assignor by
Assignee of outstanding principal of, accrued interest on, and fees with
respect to, Committed Loans assigned.]
(b) With effect on and after the Effective Date (as defined in
Section 5 hereof), the Assignee shall be a party to the Credit Agreement and
succeed to all of the rights and be obligated to perform all of the
obligations of a Bank under the Credit Agreement, including the requirements
concerning confidentiality and the payment of indemnification, with a
Commitment in an amount equal to the Assigned Amount. The Assignee agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement are required to be performed by
it as a Bank. It is the intent of the parties hereto that the Commitment of
the Assignor shall, as of the Effective Date, be reduced by an amount equal
to the Assigned Amount and the Assignor shall relinquish its rights and be
released from its obligations under the Credit Agreement to the extent such
obligations have been assumed by the
E-2
<PAGE>
Assignee; provided, however, the Assignor shall not relinquish its rights
under Sections 3.1, 3.3, 10.3 and 10.4 of the Credit Agreement to the extent
such rights relate to the time prior to the Effective Date.
(c) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignee's Commitment will be
$__________.
(d) After giving effect to the assignment and assumption set
forth herein, on the Effective Date the Assignor's Commitment will be
$__________.
2. Payments.
---------
(a) As consideration for the sale, assignment and transfer
contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on
the Effective Date in immediately available funds an amount equal to
$__________, representing the Assignee's Pro Rata Share of the principal
amount of all Committed Loans.
(b) The [Assignor] [Assignee] further agrees to pay to the
Agent a processing fee in the amount specified in Section 10.8(a) of the
Credit Agreement.
3. Reallocation of Payments.
-------------------------
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment[,] [and] Committed Loans shall be for the
account of the Assignor. Any interest, fees and other payments accrued on
and after the Effective Date with respect to the Assigned Amount shall be
for the account of the Assignee. Each of the Assignor and the Assignee
agrees that it will hold in trust for the other party any interest, fees and
other amounts which it may receive to which the other party is entitled
pursuant to the preceding sentence and pay to the other party any such
amounts which it may receive promptly upon receipt.
4. Independent Credit Decision.
----------------------------
E-3
<PAGE>
The Assignee (a) acknowledges that it has received a copy of the
Credit Agreement and the Schedules and Exhibits thereto, together with
copies of the most recent financial statements referred to in Section 6.1(a)
and (b) of the Credit Agreement, and such other documents and information as
it has deemed appropriate to make its own credit and legal analysis and
decision to enter into this Assignment and Acceptance; and (b) agrees that
it will, independently and without reliance upon the Assignor, the Agent or
any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit and legal decisions
in taking or not taking action under the Credit Agreement.
5. Effective Date; Notices.
------------------------
(a) As between the Assignor and the Assignee, the effective
date for this Assignment and Acceptance shall be __________, 199__ (the
"Effective Date"); provided that the following conditions precedent have
been satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Company and the Agent required
for an effective assignment of the Assigned Amount by the Assignor to the
Assignee under Section 10.8(a) of the Credit Agreement shall have been duly
obtained and shall be in full force and effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all amounts
due to the Assignor under this Assignment and Acceptance;
[(iv) the Assignee shall have complied with Section 8.10
of the Credit Agreement (if applicable);
(v) the processing fee referred to in Section 2(b)
hereof and in Section 10.8(a) of the Credit Agreement shall have been paid
to the Agent; and
E-4
<PAGE>
(vi) the Assignor shall have assigned and the Assignee
shall have assumed a percentage equal to the Assignee's Percentage Share of
the rights and obligations of the Assignor under the Credit Agreement (if
such agreement exists).
(b) Promptly following the execution of this Assignment and
Acceptance, the Assignor shall deliver to the Company and the Agent for
acknowledgment by the Agent, a Notice of Assignment substantially in the
form attached hereto as Schedule 1.
[6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]
(a) The Assignee hereby appoints and authorizes the Assignor
to take such action as agent on its behalf and to exercise such powers under
the Credit Agreement as are delegated to the Agent by the Banks pursuant to
the terms of the Credit Agreement.
(b) The Assignee shall assume no duties or obligations held by
the Assignor in its capacity as Agent under the Credit Agreement.]
7. Withholding Tax.
----------------
The Assignee (a) represents and warrants to the Bank, the Agent and
the Company that under applicable law and treaties no tax will be required
to be withheld by the Bank with respect to any payments to be made to the
Assignee hereunder, (b) agrees to furnish (if it is organized under the laws
of any jurisdiction other than the United States or any State thereof) to
the Agent and the Company prior to the time that the Agent or Company is
required to make any payment of principal, interest or fees hereunder,
duplicate executed originals of either U.S. Internal Revenue Service Form
4224 or U.S. Internal Revenue Service Form 1001 (wherein the Assignee claims
entitlement to the benefits of a tax treaty that provides for a complete
exemption from U.S. federal income withholding tax on all payments
hereunder) and agrees to provide new Forms 4224 or 1001 upon the expiration
of any previously delivered form or comparable statements in accordance with
applicable U.S. law and regulations and
E-5
<PAGE>
amendments thereto, duly executed and completed by the Assignee, and (c)
agrees to comply with all applicable U.S. laws and regulations with regard
to such withholding tax exemption.
8. Representations and Warranties.
-------------------------------
(a) The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any Lien or other adverse claim;
(ii) it is duly organized and existing and it has the full power and
authority to take, and has taken, all action necessary to execute and
deliver this Assignment and Acceptance and any other documents required or
permitted to be executed or delivered by it in connection with this
Assignment and Acceptance and to fulfill its obligations hereunder; (iii) no
notices to, or consents, authorizations or approvals of, any Person are
required (other than any already given or obtained) for its due execution,
delivery and performance of this Assignment and Acceptance, and apart from
any agreements or undertakings or filings required by the Credit Agreement,
no further action by, or notice to, or filing with, any Person is required
of it for such execution, delivery or performance; and (iv) this Assignment
and Acceptance has been duly executed and delivered by it and constitutes
the legal, valid and binding obligation of the Assignor, enforceable against
the Assignor in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other
laws of general application relating to or affecting creditors' rights and
to general equitable principles.
(b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto. The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the
solvency, financial condition or statements of the Company, or the
performance or observance by the Company, of any of its
E-6
<PAGE>
respective obligations under the Credit Agreement or any other instrument or
document furnished in connection therewith.
(c) The Assignee represents and warrants that (i) it is duly
organized and existing and it has full power and authority to take, and has
taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any
already given or obtained) for its due execution, delivery and performance
of this Assignment and Acceptance; and apart from any agreements or
undertakings or filings required by the Credit Agreement, no further action
by, or notice to, or filing with, any Person is required of it for such
execution, delivery or performance; (iii) this Assignment and Acceptance has
been duly executed and delivered by it and constitutes the legal, valid and
binding obligation of the Assignee, enforceable against the Assignee in
accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application
relating to or affecting creditors' rights and to general equitable
principles; and (iv) it is an Eligible Assignee.
9. Further Assurances.
-------------------
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Agent, which may be required
in connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
--------------
(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties
hereto. No failure or delay by either party hereto in
E-7
<PAGE>
exercising any right, power or privilege hereunder shall operate as a waiver
thereof and any waiver of any breach of the provisions of this Assignment
and Acceptance shall be without prejudice to any rights with respect to any
other or further breach thereof.
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own costs
and expenses incurred in connection with the negotiation, preparation,
execution and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF ILLINOIS. The Assignor
and the Assignee each irrevocably submits to the non-exclusive jurisdiction
of any State or Federal court sitting in Illinois over any suit, action or
proceeding arising out of or relating to this Assignment and Acceptance and
irrevocably agrees that all claims in respect of such action or proceeding
may be heard and determined in such Illinois State or Federal court. Each
party to this Assignment and Acceptance hereby irrevocably waives, to the
fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated
E-8
<PAGE>
between the Assignor and the Assignee, provided that such provisions are not
inconsistent with the Credit Agreement.]
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly
authorized officers as of the date first above written.
[ASSIGNOR]
By:
Title:
By:
Title:
Address:
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<PAGE>
[ASSIGNEE]
By:
Title:
By:
Title:
Address:
E-10
<PAGE>
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
_______________, 19__
Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Agency Management Services #5596
Applied Power Inc.
13000 West Silver Springs Drive
Butler, Wisconsin 53007
Ladies and Gentlemen:
We refer to the Multicurrency Credit Agreement dated as of October 23,
1997 (as amended, amended and restated, modified, supplemented or renewed
from time to time the "Credit Agreement") among Applied Power Inc., Applied
Power Europe S.A., and the Banks referred to therein and Bank of America
National Trust and Savings Association as agent for the Banks (the "Agent").
Terms defined in the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in
and to the Credit Agreement (including, without limitation, the right, title
and interest of the Assignor in and to the Commitments of the Assignor[,]
[and] all outstanding Loans made by the Assignor) pursuant to the Assignment
and Acceptance Agreement attached hereto (the "Assignment and Acceptance").
Before giving effect to such assignment the Assignor's Commitment is $
___________[,] [and]
<PAGE>
the aggregate amount of its outstanding Loans is $_____________.
2. The Assignee agrees that, upon receiving the consent of the
Agent and, if applicable, Applied Power Inc. to such assignment, the
Assignee will be bound by the terms of the Credit Agreement as fully and to
the same extent as if the Assignee were the Bank originally holding such
interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: __________________________
Address: _______________________________
_______________________________
_______________________________
Attention: _____________________________
Telephone: (___) _______________________
Telecopier: (___) ______________________
Telex (Answerback): ____________________
(B) Payment Instructions:
Account No.: ___________________________
At: ___________________________
___________________________
___________________________
Reference: ___________________________
Attention: ___________________________
4. You are entitled to rely upon the representations, warranties
and covenants of each of the Assignor and Assignee contained in the
Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above
mentioned.
<PAGE>
Very truly yours,
[NAME OF ASSIGNOR]
By:
Title:
By:
Title:
[NAME OF ASSIGNEE]
By:
Title:
By:
Title:
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
APPLIED POWER INC.
By:_______________________________
Title: __________________________
By:_______________________________
Title: __________________________
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: __________________________
Its: _________________________
<PAGE>
EXHIBIT F-1
[FORM OF] BID NOTE
_____________, ______
FOR VALUE RECEIVED, the undersigned, Applied Power Inc. (the
"Borrower"), hereby promises to pay to the order of (the
"Bank") the aggregate unpaid principal amount of all Bid Loans made by the
Bank to the Borrower pursuant to the Multicurrency Credit Agreement, dated
as of October 23, 1997 (such Multicurrency Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time,
being hereinafter called the "Credit Agreement"), among Applied Power Inc.,
Applied Power Europe S.A., the Bank, the other banks parties thereto, and
Bank of America National Trust and Savings Association, as Agent for the
Banks, on the dates and in the amounts provided in the Credit Agreement. The
Borrower further promises to pay interest on the unpaid principal amount of
the Bid Loans evidenced hereby from time to time at the rates, on the dates,
and otherwise as provided in the Credit Agreement.
The Bank is authorized to endorse the amount and the date on
which each Bid Loan is made, the maturity date therefor and each payment of
principal with respect thereto on the schedules annexed hereto and made a
part hereof, or on continuations thereof which shall be attached hereto and
made a part hereof; provided, that any failure to endorse such information
on such schedule or continuation thereof shall not in any manner affect any
obligation of the Borrower under the Credit Agreement and this Bid Note (the
"Note").
This Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement, which Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
F-1-1
<PAGE>
Terms defined in the Credit Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note shall
be governed by, and construed and interpreted in accordance with, the laws
of the State of Illinois applicable to contracts made and to be performed
entirely within such State.
APPLIED POWER INC.
By:_______________________________
Title:____________________________
F-1-2
<PAGE>
Schedule to Bid Note
BID LOANS AND REPAYMENT OF BID LOANS
(3) (4)
(2) Maturity Amount (5)
(1) Amount of Date of of Bid Notation
Date Bid Loan Bid Loan Loan Repaid Made By
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
F-1-3
<PAGE>
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
___________ ____________ ___________ ___________ _________
F-1-4
<PAGE>
EXHIBIT F-2
[FORM OF] COMMITTED NOTE
$_____________________ _____________,_____
FOR VALUE RECEIVED, the undersigned, [Applied Power Inc./Applied
Power Europe S.A.] (the "Borrower"), hereby promises to pay to the order of
(the "Bank"), the aggregate unpaid principal amount of all Committed Loans
made by the Bank to the Borrower pursuant to the Multicurrency Credit
Agreement, dated as of October 23, 1997 (such Multicurrency Credit
Agreement, as it may be amended, restated, supplemented or otherwise
modified from time to time, being hereinafter called the "Credit
Agreement"), among Applied Power Inc., Applied Power Europe S.A., the Bank,
the other banks parties thereto, and Bank of America National Trust and
Savings Association, as Agent for the Banks, on the dates and in the amounts
provided in the Credit Agreement. The Borrower further promises to pay
interest on the unpaid principal amount of the Committed Loans evidenced
hereby from time to time at the rates, on the dates, and otherwise as
provided in the Credit Agreement.
The Bank is authorized to endorse the amount and the date on
which each Committed Loan is made, the maturity date therefor and each
payment of principal with respect thereto on the schedules annexed hereto
and made a part hereof, or on continuations thereof which shall be attached
hereto and made a part hereof; provided, that any failure to endorse such
information on such schedule or continuation thereof shall not in any manner
affect any obligation of the Borrower under the Credit Agreement and this
Committed Note (the "Note").
This Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement, which Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
F-2-1
<PAGE>
therein specified.
F-2-2
<PAGE>
Terms defined in the Credit Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note shall
be governed by, and construed and interpreted in accordance with, the laws
of the State of Illinois applicable to contracts made and to be performed
entirely within such State.
[APPLIED POWER INC./
APPLIED POWER EUROPE S.A.]
By:_____________________________
Title:__________________________
F-2-3
<PAGE>
Schedule A to Committed Note
BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS
(2) (3) (4)
Amount Maturity Amount of
of Date of Base (5)
(1) Base Base Rate Loan Notation
Date Rate Loan Rate Loan Repaid Made By
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
F-2-4
<PAGE>
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
F-2-5
<PAGE>
Schedule B to Committed Note
OFFSHORE RATE LOANS AND REPAYMENT OF OFFSHORE RATE LOANS
--------------------------------------------------------
(2) (3) (4)
Amount Maturity Amount of
of Date of Offshore (5)
(1) Offshore Offshore Rate Notation
Date Rate Loan Rate Loan Loan Repaid Made By
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
F-2-6
<PAGE>
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
___________ ___________ ___________ _____________ ____________
F-2-7
<PAGE>
EXHIBIT G
FORM OF OPINION OF COUNSEL FOR THE AGENT
[Letterhead of Mayer, Brown & Platt]
_________, 1997
To each financial institution that is a
party to the Credit Agreement referred
to below
Re: Applied Power Inc.
Ladies and Gentlemen:
We have acted as counsel for Bank of America National Trust and Savings
Association in its capacity as Agent in connection with the preparation,
execution and delivery of the Multicurrency Credit Agreement, dated as of
October 23, 1997 (the "Credit Agreement"), among Applied Power Inc. (the
"Company"), Applied Power Europe S.A. ("APSA") the financial institutions
which are parties thereto (the "Banks"), and Bank of America National Trust
and Savings Association, as agent for the Banks (in such capacity, the
"Agent"). Terms defined in the Credit Agreement are used herein as defined
therein.
In connection herewith, we have examined the following (collectively,
the "Closing Documents"):
(1) counterparts of the Credit Agreement executed by the Company,
APSA, the Agent, and the Banks (or, in the case of certain Banks, facsimile
confirmation that such Banks have executed a counterpart of the Credit
Agreement);
(2) the documents, certificates and opinion of counsel furnished on
October 23, 1997 pursuant to Section 4.1 of the Credit Agreement.
In our examination of the Closing Documents, we have assumed the
genuineness of all signatures, the authority of the persons
G-1
<PAGE>
signing each of the Closing Documents, the authenticity of all documents
submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
photostatic copies. We also have assumed that (a) each of the Company and
APSA has duly executed and delivered the Credit Agreement pursuant to due
authorization and (b) the Credit Agreement is the legal, valid and binding
obligation of the Agent and each Bank, enforceable against each such entity
in accordance with its terms.
Based upon the foregoing, and subject to the qualifications set forth
below, we are of the opinion that, under the laws of the State of Illinois:
1. The Credit Agreement constitutes the legal, valid and binding
obligation of the Company and APSA, enforceable against each of the Company
and APSA in accordance with its terms; and
2. The other Closing Documents are substantially responsive to the
requirements of the Credit Agreement.
Our opinion is subject to the following qualifications:
(a) We express no opinion as to the effect of the law of any
jurisdiction other than the State of Illinois wherein any Bank or any Bank's
initial or successor Lending Office may be located, or wherein enforcement
of the Credit Agreement may be sought, which limits the rates of interest
legally chargeable or collectible.
(b) We express no opinion with respect to the rights of any
Participant under Section 10.8(d) of the Credit Agreement.
(c) Our opinion in paragraph (1) above is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and to the effect of general
principles of equity (regardless of whether considered in a proceeding in
equity or at law), including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing.
(d) We express no opinion with respect to indemnification or
contribution obligations which contravene public policy.
G-2
<PAGE>
We are members of the Bar of the State of Illinois and do not purport
to be experts on, or to express any opinions herein concerning, any law
other than the laws of the State of Illinois.
This opinion is furnished by us as counsel to the Agent in connection
with the Credit Agreement and the transactions contemplated thereby and is
solely for the benefit of the Agent and the Banks, and this opinion may not
be relied upon for any other purpose or by any other Person.
Very truly yours,
MAYER, BROWN & PLATT
G-3
<PAGE>
EXHIBIT H
INVITATION FOR COMPETITIVE BIDS
Via Facsimile
To the Banks Listed on Schedule A attached hereto:
Ladies and Gentlemen:
Reference is made to that certain Multicurrency Credit Agreement dated
as of October 23, 1997 (as amended from time to time, the "Credit
Agreement"), among Applied Power Inc., Applied Power Europe S.A., and the
Banks party thereto, and Bank of America National Trust and Savings
Association, as Agent for the Banks (the "Agent"). Capitalized terms used
herein have the meanings specified in the Credit Agreement.
Pursuant to Section 2.7(b) of the Credit Agreement, you are hereby
invited to submit offers to make Bid Loans to the Company based on the
following specifications:
1. Borrowing date: _______________, 199_;
2. Aggregate amount requested by the Company:
$___________________;
3. Interest Period[s]: ____________________, [________________] and
[________________].
All Competitive Bids must be in the form of Exhibit J to the Credit
Agreement and must be received by the Agent no later than 6:30 a.m. (San
Francisco time) on ___________, 199_.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
H-1
<PAGE>
By: _____________________________
Title: __________________________
H-2
<PAGE>
Schedule A
List of Banks
[Bank]
Facsimile: (___) ___-____
[Bank]
Facsimile: (___) ___-____
[Bank]
Facsimile: (___) ___-____
[Bank]
Facsimile: (___) ___-____
[Bank]
Facsimile: (___) ___-____
H-3
<PAGE>
EXHIBIT I
COMPETITIVE BID REQUEST
________________, 199_
Bank of America National Trust
and Savings Association,
as Agent
[1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596]
Ladies and Gentlemen:
Reference is made to the Multicurrency Credit Agreement dated as of
October 23, 1997 (as amended from time to time, the "Credit Agreement"), by
and among Applied Power Inc., Applied Power Europe S.A., and the Banks party
thereto, and Bank of America National Trust and Savings Association, as
Agent for the Banks (the "Agent"). Capitalized terms used herein have the
meanings specified in the Credit Agreement.
This is a Competitive Bid Request for Bid Loans pursuant to Section 2.7
of the Credit Agreement as follows:
(i) The Business Day of the proposed Bid Borrowing is ______________,
199_.
(ii) The aggregate amount of the proposed Bid Borrowing is
$___________________.
(iii) The Interest Period[s] for the Bid Loans comprised in the
Borrowing shall be _______________, [_________________] and
[___________________].
APPLIED POWER INC.
I-1
<PAGE>
By: _____________________
Title: __________________
I-2
<PAGE>
EXHIBIT J
FORM OF COMPETITIVE BID
________________, _____
Bank of America National Trust
and Savings Association,
as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Agency Management Services #5596
Ladies and Gentlemen:
Reference is made to the Multicurrency Credit Agreement dated as of
October 23, 1997 (as amended from time to time, the "Credit Agreement"), by
and among Applied Power Inc., Applied Power Europe S.A., and the Banks party
thereto, and Bank of America National Trust and Savings Association, as
Agent for the Banks (the "Agent"). Capitalized terms used herein have the
meanings specified in the Credit Agreement.
In response to the Competitive Bid Request of the Company dated
_____________, 199_ and in accordance with Section 2.7(c)(ii) of the Credit
Agreement, the undersigned Bank offers to make [a] Bid Loan[s] thereunder in
the following principal amount[s] at the following interest rates for the
following Interest Period[s]:
Date of Borrowing: ________________, 199_
Aggregate Maximum Bid Amount: $__________________
Principal Principal Principal
Amount $_________ Amount $_________ Amount $_________
Interest: Interest: Interest:
[Absolute [Absolute [Absolute
Rate __%, __%, __%] Rate __%, __%, __%] Rate __%, __%, __%]
J-1
<PAGE>
Interest Interest Interest
Period __________ Period __________ Period __________
[By accepting this Bid Loan, the Company agrees that it shall not,
directly or indirectly, use any portion of the proceeds of this Bid Loan (i)
knowingly to purchase Ineligible Securities from the Arranger during any
period in which the Arranger makes a market in such Ineligible Securities,
(ii) knowingly to purchase during the underwriting or placement period
Ineligible Securities being underwritten or privately placed by the
Arranger, or (iii) to make payments of principal placed by the Arranger, or
(iii) to make payments of principal or interest on Ineligible Securities
underwritten or privately placed by the Arranger and issued by or for the
benefit of the Company or any Affiliate of the Company.] [This paragraph is
to be used ONLY by BofA NT&SA, when applicable, upon submission of a
Competitive Bid.]
[NAME OF BANK]
By: _____________________
Title: __________________
J-2
<PAGE>
EXHIBIT K
GUARANTY
--------
THIS GUARANTY (this "Guaranty"), dated as of October 23, 1997, made by
Versa Technologies, Inc., a Delaware corporation (the "Guarantor"), in favor
of each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of October 23, 1997
(together with all amendments and other modifications, if any, from time to
time thereafter made thereto, the "Credit Agreement"), among Applied Power
Inc., a Wisconsin corporation (the "Company"), Applied Power Europe S.A., a
French corporation ( APSA; together with the Company, the Borrowers ), the
various commercial lending institutions (individually a "Lender" and
collectively the "Lenders") as are, or may from time to time become, parties
thereto and Bank of America National Trust and Savings Association, as agent
(together with any successor(s) thereto in such capacity, the "Agent") for the
Lenders, the Lenders have extended Commitments to make Loans to the Borrowers;
and
WHEREAS, as a condition precedent to the making of the initial Loans
under the Credit Agreement, the Guarantor is required to execute and deliver
this Guaranty; and
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Loans made from time to time to the Borrowers by the Lenders
pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which
is hereby acknowledged, and in order to induce the Lenders to make Loans
(including the initial Loans) to the Borrowers pursuant to the Credit
Agreement, the Guarantor agrees, for the benefit of each Lender Party,
K-1
<PAGE>
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable
to the singular and plural forms thereof):
"Agent" is defined in the first recital.
"Borrowers" is defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Guarantor" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Lender" is defined in the first recital.
"Lender Party" means, as the context may require, any Lender or the
Agent and each of its respective successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Taxes" is defined in clause (a) of Section 2.8.
SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this
Guaranty, including its preamble and recitals, have the meanings provided in
the Credit Agreement.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1 Guaranty. The Guarantor hereby absolutely, unconditionally
and irrevocably
K-2
<PAGE>
(a) guarantees the full and punctual payment when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise, of all Obligations of the Borrowers now or hereafter existing under
the Credit Agreement, the Notes and each other Loan Document to which either
Borrower is or may become a party, whether for principal, interest, fees,
expenses or otherwise (including all such amounts which would become due but
for the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. Section 362(a), and the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C.
Section 502(b) and Section 506(b)), and
(b) indemnifies and holds harmless each Lender Party and each
holder of a Note for any and all costs and expenses (including reasonable
attorneys fees and expenses) incurred by such Lender Party or such holder, as
the case may be, in enforcing any rights under this Guaranty;
provided, however, that the Guarantor shall only be liable under this Guaranty
for the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty, as it relates to the Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and
not for any greater amount. This Guaranty constitutes a guaranty of payment
when due and not of collection, and the Guarantor specifically agrees that it
shall not be necessary or required that any Lender Party or any holder of any
Note exercise any right, assert any claim or demand or enforce any remedy
whatsoever against either Borrower (or any other Person) before or as a
condition to the obligations of the Guarantor hereunder.
SECTION 2.2 Acceleration of Guaranty. The Guarantor agrees that, in the
event of the dissolution or insolvency of the Guarantor, or the inability or
failure of the Guarantor to pay debts as they become due, or an assignment by
the Guarantor for the benefit of creditors, or the commencement of any case or
proceeding in respect of the Guarantor under any bankruptcy, insolvency or
similar laws, and if such event shall occur at a time when any of the
Obligations of the Borrowers may not then be due and payable, the Guarantor
will pay to the Lenders forthwith the full amount which would be payable
hereunder by the Guarantor if all such Obligations were then due and payable.
K-3
<PAGE>
SECTION 2.3 Guaranty Absolute, etc. This Guaranty shall in all respects
be a continuing, absolute, unconditional and irrevocable guaranty of payment,
and shall remain in full force and effect until all Obligations of the
Borrowers have been paid in full, all obligations of the Guarantor hereunder
shall have been paid in full and all Commitments shall have terminated. The
Guarantor guarantees that the Obligations of the Borrowers will be paid
strictly in accordance with the terms of the Credit Agreement and each other
Loan Document under which they arise, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of any Lender Party or any holder of any Note with respect
thereto. The liability of the Guarantor under this Guaranty shall be
absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
Credit Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any right or
remedy against either Borrower or any other Person (including any other
guarantor) under the provisions of the Credit Agreement, any Note, any other
Loan Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of, or collateral securing, any Obligations of either Borrower;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of either Borrower, or any
other extension, compromise or renewal of any Obligation of either Borrower;
(d) any reduction, limitation, impairment or termination of any
Obligations of either Borrower for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to (and
the Guarantor hereby waives any right to or claim of) any
K-4
<PAGE>
defense or setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness, irregularity,
compromise, unenforceability of, or any other event or occurrence affecting,
any Obligations of the Borrowers or otherwise;
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of the Credit
Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or non- perfection
of any collateral, or any amendment to or waiver or release or addition of, or
consent to departure from, any other guaranty, held by any Lender Party
securing any of the Obligations of the Borrowers; or
(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, either Borrower,
any surety or any guarantor.
SECTION 2.4 Reinstatement, etc. The Guarantor agrees that this Guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment (in whole or in part) of any of the Obligations is rescinded
or must otherwise be restored by any Lender Party or any holder of any Note,
upon the insolvency, bankruptcy or reorganization of either Borrower or
otherwise, all as though such payment had not been made.
SECTION 2.5 Waiver, etc. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of
the Obligations of the Borrowers and this Guaranty and any requirement that
the Agent or any other Lender Party protect, secure, perfect or insure any
security interest or Lien, or any property subject thereto, or exhaust any
right or take any action against either Borrower or any other Person
(including any other guarantor) or entity or any collateral securing the
Obligations of either Borrower.
SECTION 2.6 Subrogation, etc. The Guarantor will not exercise any rights
which it may acquire by reason of any payment made hereunder, whether by way
of rights of subrogation, reimbursement or otherwise, until the prior
K-5
<PAGE>
payment, in full and in cash, of all Obligations of the Borrowers. Any amount
paid to the Guarantor on account of any payment made hereunder prior to the
payment in full of all Obligations of the Borrowers shall be held in trust for
the benefit of the Lender Parties and shall immediately be paid to the Agent
and credited and applied against the Obligations of the Borrowers, whether
matured or unmatured, in accordance with the terms of the Credit Agreement;
provided, however, that if
(a) the Guarantor has made payment to the Lender Parties of all
or any part of the Obligations of the Borrowers, and
(b) all Obligations of the Borrowers have been paid in full and
all Commitments have been permanently terminated,
each Lender Party agrees that, at the Guarantor's request, the Agent, on
behalf of the Lender Parties, will execute and deliver to the Guarantor
appropriate documents (without recourse and without representation or
warranty) necessary to evidence the transfer by subrogation to the Guarantor
of an interest in the Obligations of the Borrowers resulting from such payment
by the Guarantor. In furtherance of the foregoing, for so long as any
Obligations or Commitments remain outstanding, the Guarantor shall refrain
from taking any action or commencing any proceeding against the Borrowers (or
their successors or assigns, whether in connection with a bankruptcy
proceeding or otherwise) to recover any amounts in respect of payments made
under this Guaranty to any Lender Party.
SECTION 2.7 Successors, Transferees and Assigns; Transfers of Notes, etc.
This Guaranty shall:
(a) be binding upon the Guarantor, and its successors,
transferees and assigns; and
(b) inure to the benefit of and be enforceable by the Agent and
each other Lender Party.
Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Loan held by it
to any other Person or entity, and such other Person or
K-6
<PAGE>
EXHIBIT 10.2(d)
(1997 10-K)
RESOLUTION OF THE BOARD OF DIRECTORS
OF APPLIED POWER INC.
Adopted May 8, 1997
NOW, THEREFORE, BE IT RESOLVED that the 1985 Plan is amended to add a new
Section 19 to read as follows:
"19. Deferral of Stock Option Gain.
The Committee may permit, in its discretion, an optionee who
exercises a stock option to defer the taxable income
attributable to such exercise. In the event the Committee
elects to permit such deferrals, the Committee shall identify
the optionees to whom such deferral elections shall be made
available and establish procedures for implementing such
deferrals. All deferrals which are permitted under this
section shall be distributed in Applied Power Inc. common
stock."
<PAGE>
EXHIBIT 10.3(c)
(1997 10-K)
RESOLUTION OF THE BOARD OF DIRECTORS
OF APPLIED POWER INC.
Adopted May 8, 1997
FURTHER RESOLVED, that the 1987 Plan is amended to add a new Section 4.07 to
read as follows:
"4.07. Deferral of Stock Option Gain.
The Committee may permit, in its discretion, an optionee who
exercises a stock option to defer the taxable income
attributable to such exercise. In the event the Committee
elects to permit such deferrals, the Committee shall identify
the optionees to whom such deferral elections shall be made
available and establish procedures for implementing such
deferrals. All deferrals which are permitted under this section
shall be distributed in Applied Power Inc. common stock."
<PAGE>
EXHIBIT 10.4(c)
(1997 10-K)
RESOLUTION OF THE BOARD OF DIRECTORS
OF APPLIED POWER INC.
Adopted May 8, 1997
FURTHER RESOLVED, that the 1990 Plan is amended to add a new Section 7.04 to
read as follows:
"7.04. Deferral of Stock Option Gain.
The Committee may permit, in its discretion, an optionee who
exercises a stock option to defer the taxable income
attributable to such exercise. In the event the Committee
elects to permit such deferrals, the Committee shall identify
the optionees to whom such deferral elections shall be made
available and establish procedures for implementing such
deferrals. All deferrals which are permitted under this
section shall be distributed in Applied Power Inc. common
stock."
<PAGE>
EXHIBIT 10.6
(1997 10-K)
EXECUTIVE STAFF F'98 BONUS PLAN MEASUREMENTS AND CRITERIA
Executive Staff Measurements:
- - -----------------------------
The fiscal 1998 bonus plan for executive staff will consist of the following:
a) 50% APW Shareholder Value Generated (SVG)
b) 50% APW Earnings Per Share (EPS)
Supporting Definitions:
- - -----------------------
Earnings Per Share = Net Income / Average Number of Common and Common
Equivalent Shares Outstanding during the period.
Shareholder Value Generated = Operating Profit (before amortization) less 8%
of Assets Deployed.
Assets Deployed = Adjusted Assets less Operating Liabilities
Bonus Measurement:
<TABLE>
<CAPTION>
0% 100% 200%
(Target)
--------------------------------------------
<S> <C> <C> <C>
50% APW Shareholder Value Generated $50.0 MM $70.0 MM $80.0 MM
50% APW Earnings Per Share $ 3.00 $ 3.50 $ 3.75
</TABLE>
Name Functional Area Proposed Bonus Payout @ 100%
- - ------------------------------------------------------------------------------
Sim CEO $375,000
Arzbaecher CFO $100,000
<PAGE>
ENGINEERED SOLUTIONS MULTI-BUSINESS UNITS F 98 BONUS PLAN MEASUREMENTS
Multi-Business Unit Leader Measurements:
- - ----------------------------------------
The fiscal 1998 bonus plan for Engineered Solutions multi-business unit
leader will consist of the following:
a) 80% Engineered Solutions CMM (1) (2) (3)
b) 20% APW Financial Results (SVG and EPS)
Albrecht
0% 100% 200%
(Target)
----------------------------------------
CMM $21.0 MM $27.0 MM $32.0 MM
APW Results 0 100% 200%
----------------------------------------
Payout $0 $120,000 $240,000
The business unit financial targets for fiscal 1998 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 = Internal 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.
(3) Excludes Moxness Industrial
<PAGE>
TOOLS AND SUPPLIES MULTI-BUSINESS UNIT LEADERS F 98 BONUS PLAN MEASUREMENTS
F'98 Bonus Measurements:
a) 70% Individual Unit CMM (1) (2)
b) 10% Tools and Supplies CMM (1) (2)
c) 20% APW Financial Results (SVG and EPS)
Boel
0% 100% 200%
(Target)
------------------------------------------
Unit CMM (3) $16.0 MM $20.5 MM $27.0 MM
T&S CMM (3) $16.0 MM $21.5 MM $30.0 MM
APW Results 0 100% 200%
------------------------------------------
Payout $0 $100,000 $200,000
Lecher
0% 100% 200%
(Target)
------------------------------------------
Unit CMM $ 0.0 MM $ 1.3 MM $ 4.0 MM
T&S CMM (3) $16.0 MM $21.5 MM $30.0 MM
APW Results 0 100% 200%
------------------------------------------
Payout $0 $95,000 $190,000
(1) CMM = Internal Operating Profit - (20% x Monthly Net Assets)
(2) Excludes carrying charge related to Asia Pacific/Japan.
(3) Targeted bonus plan levels for CMM may be modified during the plan
year due to mergers and acquisitions.
<PAGE>
TECHNICAL ENVIRONMENTS AND ENCLOSURES MULTI-BUSINESS UNITS F'98
BONUS PLAN MEASUREMENTS
The fiscal 1998 bonus plan for Technical Environments and Enclosures
leader will consist of the following:
a) 80% Technical Environments and Enclosures CMM (1) (2) (3)
b) 20% APW Financial Results (SVG and EPS)
Burkart
0% 100% 200%
(Target)
----------------------------------------
CMM $28.0 MM $39.0 MM $43.0 MM
APW Results 0 100% 200%
----------------------------------------
Payout $0 $120,000 $240,000
(1) CMM = Internal 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.
(3) Excludes Eder
<PAGE>
EXHIBIT 10.10(b)
(1997 10-K)
RESOLUTION OF THE BOARD OF DIRECTORS
OF APPLIED POWER INC.
Adopted May 8, 1997
FURTHER RESOLVED, that the 1996 Plan is amended to add a new Section 6.09 to
read as follows:
"6.09. Deferral of Stock Option Gain.
The Committee may permit, in its discretion, an optionee who
exercises a stock option to defer the taxable income
attributable to such exercise. In the event the Committee
elects to permit such deferrals, the Committee shall identify
the optionees to whom such deferral elections shall be made
available and establish procedures for implementing such
deferrals. An optionee who defers a stock option gain under
this Plan or any other Company stock option plan shall be
credited with deemed dividends under this Plan on such terms as
the Committee shall prescribe. All deferrals which are
permitted under this section and all deemed dividends shall be
distributed in Applied Power Inc. common stock."
<PAGE>
EXHIBIT 11
(1997 10-K)
APPLIED POWER INC.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Years ended August 31,
--------------------------------------
1997 1996 1995
---- ---- ----
PRIMARY
- - -------
Average shares outstanding 13,765 13,478 13,280
Net effect of dilutive options
based on the treasury stock
method using average market price 612 505 466
------- ------- -------
Total 14,377 13,983 13,746
======= ======= =======
Net Earnings(Loss):
Earnings before extraordinary loss $42,038 $33,729 $25,005
Extraordinary loss - - (4,920)
------- ------- -------
Net Earnings $42,038 $33,729 $20,085
======= ======= =======
Primary Earnings(Loss) per share:
Earnings before extraordinary loss $2.92 $2.41 $1.82
Extraordinary loss - - (0.36)
------- ------- -------
Net Earnings Per Share $2.92 $2.41 $1.46
======= ======= =======
FULLY DILUTED
- - -------------
Average shares outstanding 13,765 13,478 13,280
Net effect of dilutive options
based on the treasury stock
method using the greater of
average or year-end market price 848 505 678
------- ------- -------
Total 14,613 13,983 13,958
======= ======= =======
Net Earnings(Loss):
Earnings before extraordinary loss $42,038 $33,729 $25,005
Extraordinary loss - - (4,920)
------- ------- -------
Net Earnings $42,038 $33,729 $20,085
======= ======= =======
Fully Diluted Earnings(Loss) per share:
Earnings before extraordinary loss $2.88 $2.41 $1.79
Extraordinary loss - - (0.35)
------- ------- -------
Net Earnings Per Share $2.88 $2.41 $1.44
======= ======= =======
<PAGE>
EXHIBIT 21
(1997 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.
Jurisdiction of
Name of Subsidiary Incorporation
- - ------------------ ---------------
UNITED STATES:
- - --------------
Applied Power Credit Corporation Nevada
Applied Power International Ltd. Nevada
Applied Power Investments II Inc. Nevada
Barry Controls Corporation Delaware
Barry Wright Corporation Massachusetts
CalTerm, Inc. Nevada
CalTerm Taiwan, Inc. Nevada
Columbus Manufacturing Company L.L.C. Wisconsin
GB Electrical, Inc. Wisconsin
New England Controls, Inc. Connecticut
TVPA Corp. Delaware
Wright Line Inc. Massachusetts
OUTSIDE THE UNITED STATES:
- - --------------------------
AIC (Hong Kong) Ltd. (49%) Hong Kong
AP International Corporation Barbados
Applied Power Distribution 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 Europe S.A. France
Applied Power Export Corp. US Virgin Islands
Applied Power (Far East) Ltd. Japan
Applied Power Finance B.V. Netherlands
Applied Power GmbH Germany
Applied Power Holding GmbH Germany
Applied Power Hytec (M) Sdn. Bhd. Malaysia
Applied Power International, S.A. France
Applied Power International, S.A. Switzerland
Applied Power Italiana S.p.A. Italy
Applied Power Japan, Ltd. Japan
Applied Power Korea Ltd. South Korea
Applied Power (Mexico) S. de R.L. de C.V. Mexico
Applied Power Moscow CIS
Applied Power New Zealand Limited New Zealand
APW Enclosures, Ltd Ireland
Barry Controls GmbH Germany
Barry Controls U.K. Ltd. United Kingdom
C Fab Manufacturing Ltd. Ireland
C Fab Developments Ltd. Ireland
Enerpac Asia Pte. Ltd. Singapore
Enerpac Nederland B.V. Netherlands
Enerpac Hydraulic Technology (India) Pte. Ltd. India
Enerpac Ltd. United Kingdom
Enerpac S.A. France
Hormann Electronics Ltd. Ireland
Norelem S.A. France
Power-Packer do Brasil Ltd. Brazil
Power-Packer Espana, S.A. Spain
Power-Packer Europa B.V. Netherlands
Power Packer France, S.A. France
Shanghai Blackhawk Machinery Co. Ltd. China
Wright Line Europe, B.V. Netherlands
All of the foregoing subsidiaries are included in the consolidated financial
statements file herewith.
<PAGE>
INDEPENDENT AUDITORS CONSENT EXHIBIT 23
(1997 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 25,
1997 appearing in this Annual Report on Form 10-K of Applied Power Inc. for
the year ended August 31, 1997
/s/ DELOITTE & TOUCHE LLP
Milwaukee, Wisconsin
November 14, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
audited financial statements of Applied Power Inc. for the year ended
August 31, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<CASH> 5,846
<SECURITIES> 0
<RECEIVABLES> 89,026
<ALLOWANCES> 4,329
<INVENTORY> 115,761
<CURRENT-ASSETS> 225,906
<PP&E> 191,336
<DEPRECIATION> 100,756
<TOTAL-ASSETS> 463,592
<CURRENT-LIABILITIES> 128,274
<BONDS> 101,663
0
0
<COMMON> 2,763
<OTHER-SE> 201,346
<TOTAL-LIABILITY-AND-EQUITY> 463,592
<SALES> 672,316
<TOTAL-REVENUES> 672,316
<CGS> 419,420
<TOTAL-COSTS> 419,420
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,003
<INCOME-PRETAX> 62,743
<INCOME-TAX> 20,705
<INCOME-CONTINUING> 42,038
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,038
<EPS-PRIMARY> 2.92
<EPS-DILUTED> 2.88
</TABLE>
