SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended April 1, 1995
or
( ) Transaction Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
for the Transition period from to
Commission File Number 0-13886
Oshkosh Truck Corporation
[Exact name of registrant as specified in its charter]
Wisconsin 39-0520270
[State of other jurisdiction of [I.R.S. Employer
incorporation or organization] Identification No.]
2307 Oregon Street, P.O. Box 2566, Oshkosh, Wisconsin 54903
[Address of principal executive offices] [Zip Code]
Registrant's telephone number, including area code (414) 235-9151
None
[Former name, former address and former fiscal year, if changed since
last report]
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) or the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X
No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class A Common Stock Outstanding as of April 1, 1995: 449,370
Class B Common Stock Outstanding as of April 1, 1995: 8,262,595
<PAGE>
OSHKOSH TRUCK CORPORATION
FORM 10-Q INDEX
FOR QUARTER ENDED 04/01/95
Page
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet . . . . . . . . 3
Consolidated Statement of Operations . . . 4
Condensed Consolidated Statement of
Cash Flows . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements 6, 7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition. . . . . . . . . . . . . 8, 9, 10, 11, 12
PART II. Other Information. . . . . . . . . . . . . 13
Signatures. . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
OSHKOSH TRUCK CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands except share and per share amounts)
04/01/95 09/30/94
ASSETS (unaudited)
Current assets:
Cash $ 381 $ 15,836
Receivables 74,003 65,926
Inventories (Note 2) 71,284 54,909
Prepaid expenses 3,636 6,334
Refundable income taxes -- 801
Deferred income taxes 9,311 8,156
-------- --------
Total current assets 158,615 151,962
Deferred charges 2,774 2,884
Deferred income taxes 626 626
Other assets 16,410 10,887
Property, plant, & equipment,
at cost:
Land & improvements 7,954 7,944
Buildings 34,801 34,364
Machinery & equipment 73,629 71,389
-------- --------
116,384 113,697
Less accumulated depreciation 66,974 63,196
-------- --------
Net property, plant & equipment 49,410 50,501
-------- --------
Total assets $227,835 $216,860
======== ========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 41,961 $ 37,973
Federal excise taxes 3,140 1,550
Payroll-related obligations 6,783 6,484
Accrued warranty 5,921 6,788
Income taxes 1,911 --
Other liabilities 19,734 17,157
-------- --------
Total current liabilities 79,450 69,952
Long-term debt (Note 3) 11,200 8,737
Postretirement benefit obligations 8,509 8,159
Other long-term liabilities 7,716 8,454
Shareholders' equity:
Preferred stock, par value $.01
per share, authorized 2,000,000
shares, none issued -- --
Common stock, par value $.01 per share:
Class A, authorized 1,000,000
shares, issued and outstanding
449,370 shares 4 4
Class B, authorized 18,000,000
shares, issued 8,558,795 shares 86 86
Additional paid-in capital 7,709 7,623
Retained earnings 117,577 116,890
-------- --------
125,376 124,603
Less: Cost of Class B common stock
in treasury; 296,200 and 300,367
shares at 04/01/95 and 9/30/94,
respectively 2,556 2,591
Pension liability adjustment 454 454
Cumulative translation adjustment 1,406 --
-------- --------
Total shareholders' equity 120,960 121,558
-------- --------
Total liabilities and
shareholders' equity $227,835 $216,860
======== ========
<PAGE>
OSHKOSH TRUCK CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited/In thousands except per share amounts)
Three months ended Six months ended
04/01/95 03/26/94 04/01/95 03/26/94
Net shipments $129,274 $192,891 $241,582 $355,216
Cost of goods sold 112,350 170,873 209,846 313,988
-------- -------- -------- --------
Gross profit 16,924 22,018 31,736 41,228
Operating expenses:
Selling, general &
administrative 11,343 15,464 20,860 26,354
Engineering, research &
development 2,098 1,756 4,186 4,124
-------- -------- -------- --------
Total operating expenses 13,441 17,220 25,046 30,478
-------- -------- -------- --------
Income from operations 3,483 4,798 6,690 10,750
Other income (expense):
Interest expense (495) (558) (798) (1,008)
Interest income 153 140 402 338
Miscellaneous, net (630) 143 (1,058) 120
-------- -------- -------- --------
(972) (275) (1,454) (550)
-------- -------- -------- --------
Income before income
taxes 2,511 4,523 5,236 10,200
Provision for income
taxes 1,172 1,764 2,386 3,978
-------- -------- -------- --------
Net income $ 1,339 $ 2,759 $ 2,850 $ 6,222
======== ======== ======== ========
Net earnings per
common share $0.16 $0.32 $0.33 $0.72
Cash dividends per
common share:
Class A $0.10875 $0.10875 $0.21750 $0.21750
Class B $0.12500 $0.12500 $0.25000 $0.25000
<PAGE>
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited/In thousands)
Six months ended
04/01/95 03/26/94
Operating activities:
Net income $ 2,850 $6,222
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 4,517 4,768
Deferred income taxes (1,155) (3,137)
Other 21 11
Changes in operating assets and
liabilities (19,448) 17,666
------- -------
Total adjustments (16,065) 19,308
------- -------
Net cash provided (used) by operating
activities (13,215) 25,530
------- -------
Investing activities:
Additions to property, plant &
equipment (2,915) (2,797)
(Increase) decrease in other assets 339 (254)
------- -------
Net cash used by investing activities (2,576) (3,051)
------- -------
Financing activities:
Net borrowings (payments) on
lines of credit 2,463 (20,921)
Sale of common stock from treasury 36 198
Dividends paid (2,163) (2,158)
------- -------
Net cash provided (used) by
financing activities 336 (22,881)
------- -------
Decrease in cash and cash equivalents (15,455) (402)
Cash at beginning of period 15,836 592
------- -------
Cash at end of period $ 381 $ 190
======= =======
Supplementary disclosures:
Cash paid for interest $ 804 $ 1,051
Cash paid for income taxes $ 829 $ 7,729
<PAGE>
OSHKOSH TRUCK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands except share amounts)
NOTE 1 BASIS OF PRESENTATION
The consolidated financial statements included herein have been prepared
by the company without audit. However, the foregoing statements contain
all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of company management, necessary to present fairly the
financial position as of April 1, 1995 and September 30, 1994, the results
of operations for the three and six month periods ended April 1, 1995 and
March 26, 1994, and cash flows for the six month periods ended April 1,
1995 and March 26, 1994.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission. It is
suggested that these consolidated financial statements be read in
conjunction with the financial statements and notes thereto included in
the company's 1994 annual report to shareholders.
NOTE 2 INVENTORIES
Inventories consist of the following:
04/01/95 09/30/94
Finished products $ 8,459 $12,618
Products in process 17,899 9,572
Raw material 52,300 38,931
------- -------
78,658 61,121
Less:
Progress payments on U.S.
Government contracts 912 --
Allowance for reduction to
LIFO cost 6,462 6,212
------- -------
$71,284 $54,909
======= =======
Title to all inventories related to U.S. Government contracts which
provide for progress payments vests in the U.S. Government to the extent
of unliquidated progress payments.
NOTE 3 LONG-TERM DEBT
Long-Term Debt consists of the following:
04/01/95 09/30/94
Revolving Credit Facility $ 2,500 $ --
Industrial Revenue Bonds 8,700 8,700
Other -- 37
------- -------
$11,200 $ 8,737
======= =======
NOTE 4 NET INCOME PER COMMON SHARE
Net income per common share is computed by dividing net income by the
weighted average number of shares outstanding. Average number of shares
outstanding was 8,711,342 and 8,697,221, respectively, for the three month
periods and was 8,710,239 and 8,692,671, respectively, for the six month
periods ended April 1,1995 and March 26, 1994. Stock options are not
presently dilutive.
NOTE 5 RECLASSIFICATIONS
Certain reclassifications have been made to the 1994 condensed
consolidated financial statements to conform to the 1995 presentation.
NOTE 6 CUMULATIVE TRANSLATION ADJUSTMENT
The company reclassified its $7,800,000 short-term note receivable due
from its 45% owned joint venture in Mexico, previously reported as
"receivables", into "other assets" as advances and investment in the joint
venture. This non-cash transaction is not reflected in the consolidated
statement of cash flows for the six month period ended April 1, 1995. As
a result of the devaluation of the peso the company recorded as a
component of shareholders' equity at April 1, 1995 a cumulative
translation adjustment for its portion of the joint venture's transaction
losses, as settlement is not planned or anticipated in the foreseeable
future.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
___________________________________________________________
Results of Operations
For the Three Months Ended March 1995
Compared to the Three Months Ended March 1994
Net shipments for the three months ended March 1995 were $129.3 million, a
decrease of $63.6 million, or 33.0% from shipments of $192.9 million
during the second quarter for the 1994 fiscal year.
The company had net income of $1.3 million, or $.16 per share during the
second quarter of its 1995 fiscal year compared to net income of $2.8
million, or $.32 per share during the second quarter of its 1994 fiscal
year.
The decline in net shipments and net income is due to reduced unit
shipments of defense products in the current quarter as compared to a year
earlier. Shipments under the Palletized Load System (PLS) contract
declined in the 1995 fiscal quarter reflecting a decrease in the
production rate of PLS trucks, partially offset by increased production of
PLS flatracks. During the second quarter of the 1994 fiscal year the
company had shipments under the Heavy Equipment Transporter (HET)
contract. The HET contract was substantially completed at September 30,
1994.
Net shipments of commercial products were $75.0 million in the second
quarter of the 1995 fiscal year in comparison to $76.2 million in the same
quarter of the 1994 fiscal year. Compared to a year ago unit shipments of
construction vehicles improved, but were offset by lower motorhome chassis
shipments due to an unanticipated production gap caused by a delay in a
major customer's new product introduction. Virtually all of the company's
revenues are derived from firm customer orders prior to commencing
production
Gross profits for the three month period ended March 1995 were $16.9
million, or 13.1% of shipments compared to $22.0 million, or 11.5% of
shipments during the second quarter of the 1994 fiscal year, as the
defense volume decrease was partially offset by improved margins across
all lines of business through improved efficiency and cost reductions.
Operating expenses totaled $13.4 million in the 1995 fiscal year second
quarter, a decline from $17.2 million during the 1994 fiscal year second
quarter, and is reflective of the company's actions during the 1994 fiscal
year to reduce continuing head count and overall expenditure levels in
line with anticipated lower defense production volumes. The second
quarter of the 1994 fiscal year includes charges of $3.3 million
associated with work force reductions relating to reduced defense
business. As a percent of sales operating expenses were 10.4 and 9.0% in
the 1995 and 1994 fiscal periods, respectively.
Interest expense, net of interest income and other expense, totaled $1.0
million in the 1995 fiscal year second quarter compared to
$0.3 million in the 1994 fiscal year second quarter, as reduced interest
expense was more than offset by other expenses from the company's equity
interest in the operating losses incurred by its joint venture in Mexico.
These losses are primarily the result of the significant peso devaluation
that has occurred beginning mid December 1994.
The effective income tax rate was 46.7% in the 1995 fiscal year second
quarter compared to 39.0% in the 1994 fiscal year second quarter due to
the non-tax deductible status of losses incurred by the company's joint
ventures in Mexico.
Results of Operations
For the Six Months Ended March 1995
Compared to the Six Months Ended March 1994
Net shipments for the six months ended March 1995 were $241.6 million, a
decrease of $113.6 million, or 32.0% from shipments of $355.2 million
during the first half of the 1994 fiscal year.
The company had net income of $2.8 million, or $.33 per share during the
first half of the 1995 fiscal year compared to net income of $6.2 million,
or $.72 per share in the first half of the 1994 fiscal year.
The decline in net shipments and net income is due to reduced unit
shipments of defense products in the current period as compared to a year
earlier. Shipments under the Palletized Load System (PLS) contract
declined in the 1995 fiscal period reflecting a decrease in the production
rate of PLS trucks, partially offset by increased production of PLS
flatracks. During the first half of the 1994 fiscal year the company had
shipments under the Heavy Equipment Transporter (HET) contract. The HET
contract was substantially completed at September 30, 1994.
Net shipments of commercial products increased to $126.2 million in the
first half of the 1995 fiscal year in comparison to $125.0 million in the
first half of the 1994 fiscal year. Compared to a year ago unit shipments
of construction vehicles improved, but were offset by lower motorhome
chassis shipments due to an unanticipated production gap caused by a delay
in a major customer's new product introduction. Virtually all of the
company's revenues are derived from firm customer orders prior to
commencing production.
Gross profits for the six month period ended March 1995 were $31.7
million, or 13.1% of shipments compared to $41.2 million, or 11.6% of
shipments during the first half of the 1994 fiscal year, as the defense
volume decrease was partially offset by improved margins across all lines
of business through improved efficiency and cost.
Operating expenses totaled $25.0 million in the 1995 fiscal year first
half, a decline from $30.5 million during the 1994 fiscal year first half,
and is reflective of the company's actions during the 1994 fiscal year to
reduce continuing head count and overall expenditure levels in line with
anticipated lower defense production volumes. The 1994 fiscal period
includes $3.3 million for non-recurring charges associated with workforce
reductions related to reduced defense business. As a percent of sales
operating expenses were 10.4% and 8.6% in the 1995 and 1994 fiscal
periods, respectively.
Interest expense, net of interest income and other, totaled $1.5 million
in the 1995 fiscal year first half compared to $0.5 million in the 1994
fiscal year first half, as reduced interest expense was more than offset
by other expenses from the equity interest in the operating losses
incurred by the company's joint venture in Mexico. These losses are
primarily the result of the significant peso devaluation that has
occurred beginning mid December 1994.
The effective income tax rate was 45.6% in the 1995 fiscal year first half
compared to 39.0% in the 1994 fiscal year first half, due to non-tax
deductible status of losses incurred by the company's joint ventures in
Mexico.
Liquidity and Capital Resources
Working capital was reduced to $79.2 million at the end of the 1995 fiscal
year second quarter in comparison to $82.0 million at September 30, 1994.
This reduction is a combination of the company's conversion of $7.8
million in short-term receivables from its joint venture in Mexico into
additional long-term investment, offset by increased working capital
associated with higher seasonal volumes in the company's commercial
businesses.
The company's operations in the six month period ending March 1995 had
working capital expansion of $20.6 million resulting in working capital
used by operations of $13.2 million, net of income and non-cash charges.
Additions to property, plant, and equipment, net of a decrease in other
assets was $2.6 million. Dividend payments were $2.2 million, with
borrowings of $2.5 million.
On February 20, 1995 the company negotiated a new credit agreement with
its bank group reducing its credit facility from $85 million to $45
million. The facility allows the company to borrow at various rates
equivalent to, or less than, the current prime rate of Firstar Bank. The
agreement contains various restructive covenants under which the company
must meet certain financial ratio tests and has some restrictions relative
to the payment of dividends, acquisitions and other indebtedness. The
company is in compliance with all restrictive covenants.
The company believes its internally generated cash flow, supplemented by
progress payments when applicable, and the existing credit facilities will
be adequate to meet working capital and other operating and capital
requirements in the foreseeable future.
Forward Looking Information
In January 1995 the company began production under a Heavy Expanded
Mobility Tactical Truck (HEMTT) contract award for 384 vehicles valued at
$82.2 million, and will complete HEMTT production in December 1995. The
company had produced HEMTTs continuously from 1982 through April 1993 and
in total has delivered over 14,000 of these eight wheel drive, 10 ton
capacity trucks. In spite of the HEMTT production the decline in defense
shipments will continue with expected future shipments in line with the
current quarter.
The company is dependent on its shipments of defense products to the U.S.
Government as evidenced by shipments of 62% and 66% of total shipments
during fiscal 1994 and 1993, respectively. Substantial decreases in the
company's level of defense business from the current level could have an
adverse effect on the company's profitability. The company is
anticipating a lower level of sales to the U.S. Government in fiscal 1995
due to the completion of the HET contract in September 1994. The PLS
contract will remain in production through August 1996 at the current
rate.
Additional orders could increase the rate of production or extend the
period of production. The company remains optimistic about its defense
business prospects, and its ability to sustain a reasonable level of
business into the future. The expected effect of the decline in defense
shipments on operations is that profitability could be negatively impacted
if the company does not take measures to decrease operating expenses. The
impact of a decline in defense shipments on the liquidity of the company
will be to improve liquidity due to the reduction of working capital
previously required for this business. It would be inappropriate to
extrapolate shipments or net income levels for the full 1995 fiscal year
based on an annualization of the interim 1995 fiscal year results, as the
company's commercial products shipments are typically at their lowest
level early in the fiscal year.
The company entered into a letter of intent dated February 28, 1995 with
Freightliner Corporation wherein the two companies will enter into a far
reaching strategic alliance.
Under the alliance, the two companies plan to:
- expand the distribution, marketing and customer support of Oshkosh's
current commercial heavy-duty specialty and vocational trucks through
Freightliner and its dealer organization;
- cooperate in the enhancement of current and development of new
commercial vehicle products and certain components;
- transfer Freightliner's specialized defense business and the assembly
of some of Freightliner's severe-duty vocational business to Oshkosh;
- effect the purchase by Freightliner of Oshkosh's chassis division,
located in Gaffney, S.C. and its 45% ownership of OSHMEX. The
Gaffney chassis division assembles chassis primarily for the U.S.
motor home, delivery step van and bus markets, while OSHMEX is a
partnership based in Mexico City that manufactures chassis for the
Mexican bus market.
As part of the alliance agreement to be negotiated, Freightliner will
purchase 350,000 unissued Oshkosh B shares for $15.00 per share and will
purchase warrants for 1,250,000 additional shares exercisable for $16.50
per share. Currently, there are 8,712,000 shares outstanding of Oshkosh
Truck common stock. Further, Freightliner's President and CEO James L.
Hebe will serve on the Oshkosh Truck Board of Directors.
The chassis division and OSHMEX investment will be sold to Freightliner
Corporation and will result in a moderate gain for Oshkosh Truck
Corporation. During fiscal 1994, the chassis division totaled sales of
$107 million and operating income of $2.6 million.
Inflation
The company believes that the risks of inflation are minimized by the
nature of its businesses. All revenue derived by the company from its
contracts with the U.S. Government were received under firm fixed-price
contracts. The company prices major government programs and contracts on
a current basis that takes into account cost increases expected to occur
during performance of the contract. Generally, major suppliers receive
terms from the company similar to what the company receives under its
contracts with the U.S. Government. Commercial business is performed on
the basis of pricing specific orders. Any impact from inflation will be
minimized by the company's ability to include inflationary cost increases
in prices.
Backlog
The company's backlog at March 31, 1995 was $472 million, compared to $512
million at September 30, 1994. The change in backlog represents delivery
of products on long-term contracts net of additional funding received.
Backlog on U.S. Government contracts comprises $389 million of the current
backlog with the remainder being commercial.
Environmental
The company continues to engage in environmental monitoring activities
that include both investigation and remediation. The company does not
anticipate that costs relating to environmental activities will have a
material adverse impact on the company's results of operations or
financial condition.
<PAGE>
OSHKOSH TRUCK CORPORATION
PART II - OTHER INFORMATION
FORM 10-Q
April 1, 1995
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 4.1 - Credit Agreement by and among Oshkosh Truck
Corporation and Firstar Bank Milwaukee, N.A., Bank One,
Milwaukee, National Association, NationsBank, N.A.
(Carolinas), and Harris Trust and Savings Bank, dated
as of February 20, 1995
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
The company was not required to file a report on Form 8-K during the
quarter ended April 1, 1995.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
OSHKOSH TRUCK CORPORATION
DATE: /s/ R. Eugene Goodson
R. Eugene Goodson
Chairman and Chief Executive Officer
DATE: /s/ Fred S. Schulte
Fred S. Schulte
Vice President, Chief Financial
Officer and Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4.1 Credit Agreement by and among Oshkosh Truck Corporation and
Firstar Bank Milwaukee, N.A., Bank One, Milwaukee, National
Association, NationsBank, N.A. (Carolinas), and Harris
Trust and Savings Bank, dated as of February 20, 1995
27 Financial Data Schedule
==========================================================================
$45,000,000
CREDIT AGREEMENT
by and among
OSHKOSH TRUCK CORPORATION
and
FIRSTAR BANK MILWAUKEE, N.A., BANK ONE,
MILWAUKEE, NATIONAL ASSOCIATION,
NATIONSBANK, N.A. (CAROLINAS), and
HARRIS TRUST AND SAVINGS BANK
and
FIRSTAR BANK MILWAUKEE, N.A.
as Agent
Dated as of February 20, 1995
==========================================================================
<PAGE>
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . 1
1.2 Interpretation . . . . . . . . . . . . . . . . . . . . . . 14
Section 2. THE CREDIT FACILITY; FEES . . . . . . . . . . . . . . . . 14
2.1 Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Borrowing Procedure for Revolving Loans . . . . . . . . . . 14
2.3 Continuation and Conversion Procedure . . . . . . . . . . . 16
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.5 Reduction of Facility . . . . . . . . . . . . . . . . . . . 17
2.6 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . 18
2.7 Payments . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.8 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 19
2.9 Letters of Credit . . . . . . . . . . . . . . . . . . . . . 19
2.10 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.11 Pro Rata Treatment; Sharing of Payments . . . . . . . . . . 22
2.12 Special Provisions . . . . . . . . . . . . . . . . . . . . 23
Section 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 26
3.1 Organization; Subsidiaries; Corporate Power . . . . . . . . 26
3.2 Authorization and Binding Effect . . . . . . . . . . . . . 26
3.3 Financial Statements . . . . . . . . . . . . . . . . . . . 27
3.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 27
3.5 Restricted Payments . . . . . . . . . . . . . . . . . . . . 27
3.6 Indebtedness; No Default . . . . . . . . . . . . . . . . . 27
3.7 Ownership of Properties; Liens and Encumbrances . . . . . . 27
3.8 Tax Returns Filed . . . . . . . . . . . . . . . . . . . . . 28
3.9 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . 28
3.10 Investment Company . . . . . . . . . . . . . . . . . . . . 28
3.11 ERISA Liabilities . . . . . . . . . . . . . . . . . . . . . 28
3.12 No Burdensome Agreements . . . . . . . . . . . . . . . . . 29
3.13 Trademarks, Etc. . . . . . . . . . . . . . . . . . . . . . 29
3.14 Dump Sites . . . . . . . . . . . . . . . . . . . . . . . . 29
3.15 Tanks . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.16 Other Environmental Conditions . . . . . . . . . . . . . . 29
3.17 Changes in Laws . . . . . . . . . . . . . . . . . . . . . . 30
3.18 Environmental Judgments, Decrees and Orders . . . . . . . . 30
3.19 Environmental Permits and Licenses . . . . . . . . . . . . 30
3.20 Accuracy of Information . . . . . . . . . . . . . . . . . . 30
Section 4. CONDITIONS FOR BORROWING . . . . . . . . . . . . . . . . 30
4.1 On or Before the Closing Date . . . . . . . . . . . . . . . 30
4.2 On or Before Each Subsequent Borrowing Date . . . . . . . . 31
Section 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 32
5.1 Annual Financial Statement . . . . . . . . . . . . . . . . 32
5.2 Interim Financial Statements . . . . . . . . . . . . . . . 33
5.3 Other Financial Information . . . . . . . . . . . . . . . . 33
5.4 Books and Records . . . . . . . . . . . . . . . . . . . . . 33
5.5 Inspections . . . . . . . . . . . . . . . . . . . . . . . . 33
5.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.7 Condition of Property . . . . . . . . . . . . . . . . . . . 34
5.8 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . 34
5.9 Maintain Existence, Rights and Licenses . . . . . . . . . . 34
5.10 Compliance with Law . . . . . . . . . . . . . . . . . . . . 34
5.11 ERISA Certificate . . . . . . . . . . . . . . . . . . . . . 34
5.12 Compliance with Other Loan Documents . . . . . . . . . . . 35
5.13 Required Notices . . . . . . . . . . . . . . . . . . . . . 35
5.14 Compliance with all Contracts . . . . . . . . . . . . . . . 36
5.15 Notice of Material Adverse Changes . . . . . . . . . . . . 36
5.16 Special Bank Event . . . . . . . . . . . . . . . . . . . . 36
Section 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 36
6.1 Restricted Payments . . . . . . . . . . . . . . . . . . . . 36
6.2 Limitations on Indebtedness . . . . . . . . . . . . . . . . 37
6.3 Limitations on Guaranties . . . . . . . . . . . . . . . . . 37
6.4 Limitations on Liens and Encumbrances . . . . . . . . . . . 37
6.5 Limitations on Mergers, Etc . . . . . . . . . . . . . . . . 38
6.6 Limitations on Acquisitions, Advances and Investments . . . 38
6.7 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . 39
6.8 Indebtedness to Tangible Net Worth Ratio . . . . . . . . . 39
6.9 Debt Service Coverage Ratio . . . . . . . . . . . . . . . . 39
6.10 Transactions with Affiliates . . . . . . . . . . . . . . . 39
6.11 Litigation Payment . . . . . . . . . . . . . . . . . . . . 39
6.12 Cherokee Co. Industrial Revenue Bonds . . . . . . . . . . . 39
Section 7. EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . . . . . 39
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . 39
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1 Appointment and Duties of Agent . . . . . . . . . . . . . . 42
8.2 Discretion and Liability of the Agent . . . . . . . . . . . 43
8.3 Event of Default . . . . . . . . . . . . . . . . . . . . . 43
8.4 Consultation . . . . . . . . . . . . . . . . . . . . . . . 43
8.5 Communications To and From the Agent . . . . . . . . . . . 43
8.6 Limitations of Agency . . . . . . . . . . . . . . . . . . . 44
8.7 No Representation or Warranty . . . . . . . . . . . . . . . 44
8.8 Bank Credit Decision . . . . . . . . . . . . . . . . . . . 44
8.9 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.10 Resignation or Removal of Agent; Successor Agent . . . . . 45
Section 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 45
9.1 Survival of Representations and Warranties . . . . . . . . 45
9.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . 45
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.5 Participations . . . . . . . . . . . . . . . . . . . . . . 47
9.6 Titles . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.7 Parties Bound; Waiver . . . . . . . . . . . . . . . . . . . 47
9.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 48
9.9 Submission to Jurisdiction; Service of Process . . . . . . 48
9.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 48
9.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . . 48
9.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 49
9.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . 49
9.14 Limitation of Liability . . . . . . . . . . . . . . . . . . 49
Exhibits
Exhibit A Note
Exhibit B Opinion of Counsel
Schedules
Schedule 1 Permitted Liens
Schedule 3.4 Litigation
<PAGE>
OSHKOSH TRUCK CORPORATION
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of this 20th day of February,
1995, is made and entered by and between OSHKOSH TRUCK CORPORATION, a
Wisconsin corporation (the "Company"), FIRSTAR BANK MILWAUKEE, N.A., a
national banking association, BANK ONE, MILWAUKEE, NATIONAL ASSOCIATION, a
national banking association, NATIONSBANK, N.A. (CAROLINAS), a national
banking association, and HARRIS TRUST AND SAVINGS BANK, an Illinois
banking corporation (individually, a "Bank" and, collectively, the
"Banks"), and FIRSTAR BANK MILWAUKEE, N.A., as agent for the Banks (the
"Agent").
The Company has applied to the Banks for their several
commitments, subject to the terms and conditions hereof and on the basis
of the representations and warranties hereinafter set forth, to extend
credit to the Company in an aggregate principal amount not to exceed
$45,000,000, the Banks have severally agreed to extend such credit, and
the Agent has agreed to act as the agent for the Banks with respect
thereto, all as more fully hereinafter set forth. Accordingly, the
parties hereto agree as follows:
Section 1. Definitions
1.1 Certain Defined Terms. As used in this Agreement, the
following terms have the following meanings:
"Adjusted Libor Rate" means, with respect to the Loan
Period for a Libor Rate Loan, a rate per annum (rounded upward, if
necessary, to the nearest 1/16 of 1%) determined by the Agent pursuant to
the following formula:
Libor Rate
Adjusted Libor Rate = 100% - Libor Reserve + Libor Margin Percentage
"Affiliate" means (a) any person, corporation or other
entity directly or indirectly controlling, controlled by or under common
control with the Company and (b) any director or officer of the Company or
any Subsidiary. A Person shall be deemed to control another Person for
the purposes of this definition if such first Person possesses, directly
or indirectly, the power to direct, or cause the direction of, the
management and policies of the second Person, whether through the
ownership of voting securities, common directors, trustees or officers, by
contract or otherwise.
"Agreement" means this Credit Agreement, as amended,
modified or supplemented from time to time.
"Assessment Rate" means, with respect to calculating a CD
Rate, the assessment rate (rounded upwards, if necessary, to the nearest
1/100 of 1%) imposed by the Federal Deposit Insurance Corporation for
insuring a bank's liability for time deposits, as in effect from time to
time.
"Basic Documents" means two or more, including all, of the
Cherokee Co. Industrial Revenue Bonds, the Indenture, the Loan Agreement,
and the Pledge and Security Agreement, all as defined in the Indenture and
all as the same may be amended, modified, supplemented or restated from
time to time, and "Basic Document" shall mean any one of the foregoing.
"Borrowing Date" means each date on which a Revolving Loan
is made to the Company, on which any Type of Revolving Loan is converted
to another Type of Revolving Loan or continued, or on which a Letter of
Credit is issued by the Issuing Bank at the request of the Company.
"Business Date" means any day other than Saturday or Sunday
on which banks in the States of Wisconsin, Illinois, and North Carolina
are open for the transaction of substantially all their banking functions;
provided, however, that for purposes of determining the applicable Loan
Period for a Libor Rate Loan, references to Business Day shall include
only those days on which dealings in Dollar deposits are carried out by
U.S. financial institutions in the London interbank market.
"Capitalized Lease" means any lease, the obligations under
which have been, or in accordance with GAAP are required to be, recorded
as a capital lease liability on the consolidated balance sheet of the
Company and its Consolidated Subsidiaries.
"Cash Collateral" means cash or cash equivalents
satisfactory to the Agent, held by the Agent for the ratable benefit of
the Banks as security for the Company's obligations under the Loan
Documents.
"CD Base Rate" means, for any Loan Period for any CD Rate
Loan, except as provided below, the per annum rate of interest equal to
the bid rate in the secondary market for certificates of deposit having a
maturity approximately equal to the applicable Loan Period which appears
on Telerate Screen Page 5 (or such other page on which the appropriate
information may be displayed), on the electronic communications terminals
in the Agent's money center, as of approximately 11 a.m., Milwaukee time,
on the applicable Borrowing Date. If no bid rate appears for the
applicable Loan Period or if the appropriate screen is not accessible, the
applicable rate shall be determined by the Agent to be the arithmetic
average (rounded upward, if necessary, to the nearest 1/16 of 1%) of the
offered rates, on the applicable Borrowing Date, by the Banks, for the
sale at par of certificates of deposit having a maturity equal to the
applicable Loan Period and in an amount comparable to the principal amount
of the proposed CD Rate Loan to which such Loan Period applies.
"CD Margin" means 1.25%.
"CD Rate" means, with respect to any Loan Period for any CD
Rate Loan, a rate per annum (rounded upward, if necessary, to the nearest
1/16 of 1%) determined pursuant to the following formula:
CD Base Rate
CD Rate = 100% - CD Reserve + Assessment + CD Margin Rate
Percentage
"CD Rate Loan" means any Revolving Loan which bears
interest at or by reference to the CD Rate.
"CD Reserve Percentage" means, with respect to CD Rate
Loans for each Loan Period, the stated maximum rate, on the first day of
such Loan Period, of all reserve requirements (including all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve
requirements during such Loan Period) specified under Regulation D of the
Board of Governors of the Federal Reserve System, or any other regulation
of the Board of Governors which prescribes reserve requirements applicable
to nonpersonal time deposits as presently defined in Regulation D, as then
in effect, as applicable to the class of banks of which the Agent is a
member on deposits of the type used as a reference in determining the CD
Rate and having a maturity approximately equal to such Loan Period.
"Cherokee Co. IRB Default" means such term as defined in
Section 7.1(k) hereof.
"Cherokee Co. Industrial Revenue Bonds" means those
Cherokee County, South Carolina Variable/Fixed Rate Demand Industrial
Revenue Bonds, Series 1989 (Oshkosh Truck Corporation Project) in the
original aggregate principal amount of $9,300,000.
"Cherokee Co. IRB Letter of Credit" shall mean that
irrevocable letter of credit issued pursuant to the terms of this
Agreement in support of the Cherokee Co. Industrial Revenue Bonds, as
amended, modified, extended, renewed or replaced from time to time.
"Closing Date" means the first Borrowing Date.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time and the regulations thereunder.
"Consolidated Subsidiaries" means Subsidiaries whose
financial statements are consolidated with those of the Company in
accordance with GAAP.
"Controlled Group" means a group of trades or businesses
(whether or not incorporated) under common control, as defined in the
regulations issued pursuant to Section 414(c) of the Code or such other
regulations prescribed by the Pension Benefit Guaranty Corporation
pursuant to Section 4001(b)(1) of ERISA, of which the Company or a
Subsidiary is a part.
"Current Ratio" means the relationship, expressed as a
numerical ratio, between:
(a) the amount of all assets which, under GAAP, would
appear as current assets on the consolidated balance sheet of the Company
and its Consolidated Subsidiaries, and
(b) the amount of all liabilities which, under GAAP, would
appear as current liabilities on such balance sheet of the Company and its
Consolidated Subsidiaries, including all Indebtedness payable on demand or
maturing (whether by reason of specified maturity, fixed prepayments,
sinking funds or accruals of any kind, or otherwise) within 12 months or
less from the date of the relevant statement, all Capitalized Lease
obligations due in 12 months or less and customers' advances and progress
billings on contracts (exclusive of progress payments on Government
Contracts), but excluding the aggregate unpaid principal balance of the
Notes.
"Debt Service Coverage Ratio" means the relationship,
expressed as a numerical ratio, between:
(a) the sum of (i) Net Income, (ii) depreciation,
amortization and other noncash charges, to the extent that they have been
deducted in determining Net Income, and (iii) interest expense (including
imputed interest charges with respect to Capitalized Leases); and
(b) the sum of (i) interest expense (including imputed
interest charges with respect to Capitalized Leases), (ii) scheduled
principal payments with respect to Funded Debt (exclusive of the aggregate
unpaid principal balance of the Notes), and (iii) principal payments made
with respect to Capitalized Leases; all as determined without duplication
in accordance with GAAP for the Company and its Consolidated Subsidiaries
for the period consisting of the four fiscal quarters of the Company
immediately preceding the first day of any fiscal quarter.
"Default" means any act, event, condition or omission
which, with the giving of notice or lapse of time, would constitute an
Event of Default if uncured or unremedied.
"Default Rate" means the annual rate of interest equal to
the applicable rate specified in Section 2.6(a) hereof plus two percentage
points.
"Delinquent Bank" means any Bank that fails to make
available to the Agent its pro rata share of any Revolving Loan or fails
to make a payment to the Issuing Bank pursuant to Section 2.9(b) hereof
as, when and to the full extent required by the provisions of this
Agreement, and such Bank shall be deemed a Delinquent Bank until such time
as such delinquency is satisfied.
"Dollars" and "$" means lawful money of the United States.
"Environmental Audit" means a review for the purpose of
determining whether the Company and each Subsidiary complies with
Environmental Laws and whether there exists any condition or circumstance
which requires or will require a cleanup, removal or other remedial action
under Environmental Laws on the part of the Company or any Subsidiary
including, but not limited to, some or all of the following:
(a) On site inspection including review of site geology,
hydrogeology, demography, land use and population.
(b) Taking and analyzing soil borings and installing
ground water monitoring wells and analyzing samples taken from such wells.
(c) Reviewing plant permits, compliance records and
regulatory correspondence and interviewing enforcement staff at regulatory
agencies.
(d) Reviewing the operations, procedures and documentation
of the Company and each Subsidiary.
(e) Interviewing past and present employees of the Company
and each Subsidiary.
"Environmental Laws" means all federal, state and local
laws including statutes, regulations, ordinances, codes, rules and other
governmental restrictions and requirements relating to the discharge of
air pollutants, water pollutants or process waste water or otherwise
relating to the environment or hazardous substances or toxic wastes
including, but not limited to, the Federal Solid Waste Disposal Act, the
Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
regulations of the Environmental Protection Agency, regulations of the
Nuclear Regulatory Agency and regulations of any state department of
natural resources or state environmental protection agency now or at any
time hereafter in effect.
"ERISA" means, at any date, the Employee Retirement Income
Security Act of 1974, and the regulations thereunder, all as the same
shall be in effect at such date.
"Event of Default" means the occurrence of any of the
events described in Section 7.1 hereof.
"Extensions of Credit" means, with respect to a Bank, its
Revolving Loan Commitment, Revolving Loans, Letter of Credit Commitment
and Letter of Credit Exposure.
"Facility" means the aggregate of the Revolving Loan
Commitments and the Letter of Credit Commitments.
"Federal Funds Rate" means, for any day, an interest rate
per annum equal to the weighted average of the rates on overnight, Federal
funds transactions conducted by brokers in Federal funds, as published for
such day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by it. In the
case of a day which is not a Business Day, the Federal Funds Rate for such
day shall be the Federal Funds Rate for the preceding Business Day.
"Fixed Rate Loan" means a CD Rate Loan or a Libor Rate
Loan.
"Funded Debt" means Indebtedness which matures more than
one year from, or is directly or indirectly renewable or extendible at the
option of the debtor to a date more than one year from the date of
creation, including the current maturities thereof but excluding deferred
income taxes.
"GAAP" means generally accepted accounting principles
currently in effect in the United States as they may be changed or
supplemented from time to time.
"Government Contracts" means contracts between the Company
and the United States government under which the Company will manufacture
goods for the United States government.
"Guaranty" means any agreement, undertaking or arrangement
pursuant to which the Company or any Subsidiary guarantees, endorses or
otherwise becomes or is contingently liable for an obligation of any other
person or entity or any other liability which would be classified as
contingent in accordance with GAAP.
"Indebtedness" means (a) all items which, in accordance
with GAAP, would be classified as liabilities on the consolidated balance
sheet of the Company and its Consolidated Subsidiaries, including all
Capitalized Leases, and (b) indebtedness secured by any mortgage, lien,
pledge or security interest on property of the Company or a Consolidated
Subsidiary even though it has not assumed or otherwise become liable for
the payment thereof.
"Indenture" means Indenture of Trust dated as of August 1,
1989 between Cherokee County, South Carolina and Citizens and Southern
Trust Company (Georgia), National Association (now known as NationsBank of
Georgia, N.A.) pursuant to which the Cherokee Co. Industrial Revenue Bonds
were issued.
"Issuing Bank" means the Bank appointed by the Company,
which shall be one of the Banks and which shall have accepted such
appointment, which issues or will issue a Letter of Credit.
"Letter of Credit" means a letter of credit issued by the
Issuing Bank at the request of the Company pursuant to Section 2.9 hereof
and "Letters of Credit" means all such letters of credit, including
without limitation the Cherokee Co. IRB Letter of Credit.
"Letter of Credit Commitment" means, as to each Bank, such
Bank's Percentage of the aggregate amount of the Letter of Credit
Commitments. The aggregate amount of the Letter of Credit Commitments is
$45,000,000 less the amount of the aggregate outstanding principal
balances of the Notes, and is subject to reduction from time to time
pursuant Section 2.5 hereof. The amount of the Letter of Credit Exposure
plus the aggregate outstanding balances of the Notes may not exceed
$45,000,000. Each Bank's Revolving Loan Commitment shall be reduced by an
amount equal to such Bank's Percentage of the Letter of Credit Exposure.
"Letter of Credit Exposure" means, at any time, the sum of
(a) the aggregate amount then available for drawing under all outstanding
Letters of Credit and (b) the Reimbursement Obligations.
"Libor Margin" means 1%.
"Libor Rate" means, for any Loan Period for any Libor Rate
Loan, the per annum rate of interest determined by the Agent to be the
arithmetic average (rounded upward, if necessary to the nearest 1/16 of
1%) of the offered rates for deposits in Dollars for the applicable Loan
Period commencing on the applicable Borrowing Date which appear on the
Reuters Screen LIBO Page (or such other page on which the appropriate
information may be displayed), on the electronic communications terminals
in the Agent's money center, as of 11 a.m., London time, two Business Days
preceding the applicable Borrowing Date, except as provided below. If
fewer than two offered rates appear for the applicable Loan Period or if
the appropriate screen is not accessible, the applicable rate will be
determined on the basis of the rates at which deposits in Dollars are
offered by the Reference Banks at approximately 11 a.m., London time, two
Business Days preceding the applicable Borrowing Date to prime banks in
the London interbank market for the applicable Loan Period and in an
amount equal to the principal balance of the applicable Libor Rate Loan.
The Agent will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the applicable rate will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as
requested, the applicable rate will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Agent, at
approximately 11 a.m., New York City time, two Business Days preceding the
applicable Borrowing Date for loans in Dollars to leading European banks
for the applicable Loan Period and in an amount equal to the principal
balance of the applicable Libor Rate Loan.
"Libor Rate Loan" means any Revolving Loan which bears
interest at or by reference to the Adjusted Libor Rate.
"Libor Reserve Percentage" means, with respect to Libor
Rate Loans for each Loan Period, the stated maximum rate of all reserve
requirements (including all basic, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other
scheduled changes in reserve requirements during such Loan Period) that is
specified on the first day of such Loan Period by the Board of Governors
of the Federal Reserve System for determining the maximum reserve
requirement with respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of such Board of Governors)
applicable to the class of banks of which the Agent is a member.
"Loan Documents" means this Agreement, the Notes, all
Letters of Credit, all applications for Letters of Credit and all
reimbursement agreements between the Company and the Issuing Bank, and
"Loan Document" means any of the Loan Documents.
"Loan Period" means:
(a) with respect to each Fixed Rate Loan, the period
commencing on the applicable Borrowing Date and ending 1, 2, 3, 4 or 6
months thereafter in the case of a Libor Rate Loan, and 30, 60, 90, 120 or
180 days thereafter in the case of a CD Rate Loan, as specified by the
Company in the related notice of borrowing pursuant to Section 2.2 hereof,
and with respect to a Reference Rate Loan converted to a Fixed Rate Loan,
or in the case of one Type of Fixed Rate Loan converted to another Type of
Fixed Rate Loan, or in the case of a continuation of a Fixed Rate Loan for
an additional Loan Period, the period commencing on the date of such
conversion or continuation and ending 1, 2, 3, 4 or 6 months thereafter in
the case of a conversion to or continuation of a Libor Rate Loan, and 30,
60, 90, 120 or 180 days thereafter in the case of a conversion to or
continuation of a CD Rate Loan, as specified by the Company in the related
notice pursuant to Section 2.3 hereof, provided that:
(i) any Loan Period which would otherwise end on
a day which is not a Business Day shall be extended to the next succeeding
Business Day unless in the case of a LIBOR Rate Loan such Business Day
falls in another calendar month, in which case such Loan Period shall end
on the next preceding Business Day;
(ii) any Loan Period which begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in a calendar month at the end of such Loan
Period) shall, subject to clause (iii) below, end on the last Business Day
of a calendar month; and
(iii) any Loan Period which would otherwise end
after the Maturity Date shall end on the Maturity Date.
(b) with respect to each Reference Rate Loan, the period
commencing on the Borrowing Date of such Reference Rate Loan, or in the
case of a Fixed Rate Loan converted to a Reference Rate Loan, the period
commencing on the date of such conversion and ending on the Maturity Date
or date of repayment of such Reference Rate Loan or date of conversion of
all or part of such Reference Rate Loan to a Fixed Rate Loan.
"Majority Banks" means the Banks whose aggregate Percentage
is greater than 50%.
"Matched Fund" means to actually fund and maintain a CD
Rate Loan or Libor Rate Loan during the applicable Loan Period through the
purchase in the applicable market of deposits having a maturity
corresponding to the last day of such Loan Period.
"Maturity Date" means February 20, 1998 or such earlier
date on which (a) the Agent declares the Notes to be immediately due and
payable pursuant to Section 7.2 hereof, or (b) the Company permanently
reduces the Revolving Loan Commitments to zero pursuant to Section 2.5(a)
hereof.
"Multiemployer Plan" means any pension benefit plan subject
to Title IV of ERISA as defined in Section 4001(a)(3) of ERISA, to which
the Company, any of its Subsidiaries or any member of the Controlled Group
is required to contribute on behalf of its employees.
"NationsBank" means NationsBank, N.A. (Carolinas), as a
Bank under this Agreement, and as initial Issuing Bank of the Cherokee Co.
IRB Letter of Credit hereunder.
"Net Income" means the excess of:
(a) all revenues and income derived from operations in the
ordinary course of business (including extraordinary gains and gains upon
the disposition of investments and fixed assets), over
(b) all expenses and other proper charges against income
(including payment or provision for all applicable income and other taxes,
and including extraordinary losses and losses upon the disposition of
investments and fixed assets);
all as determined in accordance with GAAP, applied on a consistent basis
to the Company and its Consolidated Subsidiaries.
"Note" means a promissory note of the Company in the form
of Exhibit A attached hereto, appropriately completed, payable to the
order of a Bank in an amount equal to such Bank's Revolving Loan
Commitment, such Note to evidence Revolving Loans made by a Bank to the
Company, and "Notes" means all such promissory notes.
"Percentage" means, for each Bank, the percentage, set
forth opposite its signature hereto.
"Permitted Liens" means (a) liens, charges or encumbrances
listed on Schedule 1 attached hereto, provided that the indebtedness
secured thereby shall not be increased; (b) liens for taxes, assessments
or governmental charges not delinquent or being contested in good faith by
appropriate proceedings diligently conducted by the Company or any
Subsidiary for which adequate reserves are established and maintained in
accordance with GAAP; (c) construction, mechanics, or other statutory lien
claims not delinquent; (d) purchase money security interests or liens on
any property acquired after the date hereof to be used by the Company or a
Subsidiary in the normal course of its business, and created or incurred
simultaneously with the acquisition of such property, if such security
interest or lien is limited to the property so acquired, the Indebtedness
secured by such security interest or lien does not exceed the purchase
price of such property and the aggregate Indebtedness secured by all
security interests and liens on all such property does not exceed
$5,000,000 at any time outstanding for the Company and all Consolidated
Subsidiaries; (e) liens or deposits in connection with worker's
compensation or other insurance or to secure the performance of bids,
trade contracts (other than for borrowed money), leases, public or
statutory obligations, surety or appeal bonds or other obligations of like
nature incurred in the ordinary course of business; (f) liens in favor of
the Agent for the benefit of the Banks; (g) liens in favor of the United
States government on goods being manufactured for the United States
government and on other property (as defined in the applicable Government
Contract) required to be delivered to the United States government under
such Government Contract to secure unliquidated progress payments on such
Government Contracts; and (h) easements, restrictions, minor title
irregularities and similar matters which have no material adverse effect
upon the ownership or use of its property by the Company or any
Consolidated Subsidiary; (i) liens created under the Custody, Pledge and
Security Agreement dated as of August 1, 1989, as amended, modified or
supplemented from time to time, and (j) liens arising out of any lease
(whether or not recorded as a Capitalized Lease) if such lien is limited
to the property leased thereunder and secures only the amounts to be paid
thereunder.
"Plan" means any pension benefit plan subject to Title IV
of ERISA, including any Multiemployer Plan, maintained by the Company, any
of its Subsidiaries or any member of the Controlled Group or any such Plan
to which the Company, any of its Subsidiaries or any member of the
Controlled Group is required to contribute on behalf of its employees.
"Pre-tax Loss" means Net Income before the payment of or
provision for all applicable income taxes, all as determined in accordance
with GAAP, applied on a consistent basis to the Company and its
Consolidated Subsidiaries.
"Reference Banks" means four major banks in the London
interbank market, as selected by the Agent.
"Reference Rate" means the rate of interest announced by
the Agent from time to time as its reference or prime rate for interest
rate determinations. The Reference Rate may not be the lowest interest
rate charged by the Agent.
"Reference Rate Loan" means any Revolving Loan which bears
interest at or by reference to the Reference Rate.
"Regulatory Change" means any change enacted or issued
after the date of this Agreement of any (or the adoption after the date of
this Agreement of any new) federal or state law, regulation,
interpretation, direction, policy or guideline, or any court decision,
which affects (or, in the case of a court decision would, if the decision
were applicable to any Bank, affect) the treatment of any Extensions of
Credit of such Bank.
"Reimbursement Obligations" means, at any time, the
aggregate amount or drafts honored under Letters of Credit for which the
Agent has not been paid pursuant to Section 2.9(c) hereof.
"Reportable Event" means a reportable event as that term is
defined in ERISA.
"Required Banks" means the Banks whose aggregate Percentage
is greater than 66 2/3%.
"Restricted Payments" means dividends or other
distributions by the Company or any Subsidiary based upon the stock of the
Company or any Subsidiary (except dividends payable to the Company and
dividends payable solely in stock of the Company) and purchases,
redemptions and other acquisitions, direct or indirect, by the Company or
any Subsidiary, of stock of the Company or any Subsidiary.
"Revolving Loan" means a loan made by the Banks to the
Company pursuant to Section 2.1 hereof.
"Revolving Loan Commitment" means, as to a Bank, the
obligation of such Bank to make its pro rata share of Revolving Loans to
the Company. The aggregate amount of the Revolving Loan Commitments is
$45,000,000 less the amount of the Letter of Credit Exposure, and is
subject to reduction from time to time pursuant to Section 2.5 hereof.
The aggregate outstanding principal balances of the Notes plus the Letter
of Credit Exposure may not exceed $45,000,000. The Revolving Loan
Commitment of each Bank is such Bank's Percentage of the aggregate of the
Revolving Loan Commitments.
"Special Bank Event" means the delivery by the Agent or the
Issuing Bank for the Cherokee Co. IRB Letter of Credit to the Company and
the Trustee of an opinion of counsel (selected by the Agent and reasonably
acceptable to the Company) recognized to have expertise in banking or
securities law matters to the effect that, on the basis of a change after
the date of issuance of the Cherokee Co. IRB Letter of Credit by a court
of competent jurisdiction or other governmental authority, the maintenance
of the Cherokee Co. IRB Letter of Credit by the Issuing Bank thereof, the
execution of the Pledge and Security Agreement in favor of the Issuing
Bank of the Cherokee Co. IRB Letter of Credit, the acceptance by the
Issuing Bank of the collateral thereunder or any other transaction
contemplated by this Agreement is, or will be, a violation of the laws,
rules and regulations applicable to the Issuing Bank, or requires or will
require the Issuing Bank to register as a securities dealer (or in any
similar capacity) if not otherwise so registered.
"Subsidiary" means as of a particular date any corporation
more than 50% of whose outstanding stock having ordinary voting power for
the election of directors shall at the time be owned or controlled by the
Company or by one or more of its Subsidiaries.
"Tangible Net Worth" means the total of all assets which,
under GAAP, would appear on the consolidated balance sheet of the Company
and its Consolidated Subsidiaries, less the sum of the following:
(a) the book amount of all such assets which would be
treated as intangibles under GAAP, including, without limitation, all such
items as goodwill, noncompete agreements, trademarks, trademark rights,
trade names, trade name rights, brands, copyrights, patents, patent
rights, licenses, deferred charges and unamortized debt discount and
expense;
(b) any net write-up in the book value of any such assets
resulting from a revaluation thereof subsequent to the date of the most
recent financial statement referred to in Section 3.3 hereof;
(c) all reserves, including reserves for depreciation,
obsolescence, depletion, insurance and inventory valuation, but excluding
contingency reserves not allocated for any particular purpose and not
deducted from assets;
(d) the amount, if any, at which any shares of stock of
the Company or any Subsidiary appear on the asset side of such
consolidated balance sheet;
(e) all liabilities of the Company and its Consolidated
Subsidiaries shown on such consolidated balance sheet; and
(f) all investments in foreign Affiliates and
unconsolidated domestic Affiliates.
"Trustee" means NationsBank of Georgia, N.A. (formerly
known as Citizens and Southern Trust Company) as trustee under the
Indenture and any successor trustee under the Indenture.
"Type" means each type of loan, i.e., a Reference Rate
Loan, a CD Rate Loan or a Libor Rate Loan.
1.2 Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined.
Where the character or amount of any asset or liability or item of income
or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP except where such
principles are inconsistent with the specific provisions of this
Agreement. The words "hereof," "herein," and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
terms defined in other sections of this Agreement shall have the meanings
set forth therein.
Section 2. The Credit Facility; Fees
2.1 Revolving Loans. Each Bank will make its pro rata
share of each Revolving Loan to the Company, subject to the terms and
conditions hereof, in an amount equal to such Bank's Percentage of the
amount of the Revolving Loan requested by the Company on the applicable
Borrowing Date, up to the maximum amount of such Bank's Revolving Loan
Commitment, at any time outstanding during the period from the date hereof
to the Maturity Date. Within such maximum amount, Revolving Loans may be
made, repaid and made again. The aggregate amount of Revolving Loans made
on each Borrowing Date shall be in a minimum amount of $500,000 and in
integral multiples of $500,000 above such minimum in the case of a
Reference Rate Loan, except for a Reference Rate Loan made pursuant to
Section 2.9(c) hereof, and in a minimum amount of $1,000,000 and in
integral multiples of $1,000,000 above such Minimum in the case of a Fixed
Rate Loan. The Revolving Loans made by a Bank shall be evidenced by a
Note payable to the order of such Bank, payable on the Maturity Date.
Although each Note shall be expressed to be payable in the amount of the
payee Bank's initial Revolving Loan Commitment, the Company shall be
obligated to pay only the amount of Revolving Loans actually disbursed to
or for the account of the Company by the payee Bank, together with
interest on the unpaid balance of the sums so disbursed, which remain
outstanding from time to time as shown on the records of the payee Bank
absent manifest error.
2.2 Borrowing Procedure for Revolving Loans.
(a) The Company shall request Revolving Loans by
written notice, or by telephonic notice confirmed in writing mailed the
same day (which notice shall be irrevocable), to the Agent not later than
10:30 a.m., Milwaukee time, on the proposed Borrowing Date in the case of
a Reference Rate Loan, by 10:30 a.m., Milwaukee time, three Business Days
prior to the proposed Borrowing Date in the case of a Libor Rate Loan, or
by 10:30 a.m., Milwaukee time, one Business Day prior to the proposed
Borrowing Date in the case of a CD Rate Loan. In the event of any
inconsistency between the telephonic notice and the written confirmation
thereof, the telephonic notice shall control. Each such request shall be
effective upon receipt by the Agent and shall specify (i) the amount of
the requested Revolving Loan, (ii) the proposed Borrowing Date, (iii) the
Type of Revolving Loan and (iv) in the case of a Fixed Rate Loan, the Loan
Period therefor. Each such request for an advance shall constitute a
certification by the Company that the borrowing conditions specified in
Sections 4.2(b) and 4.2(c) hereof will be satisfied on the proposed
Borrowing Date. The Agent will promptly notify the Banks of the requested
Revolving Loan. On or before 1 p.m., Milwaukee time, on the Borrowing
Date each Bank shall, except as otherwise provided in Sections 2.12(b) or
(c) hereof, deposit its Percentage of the requested Revolving Loan with
the Agent in immediately available funds. Upon fulfillment of the
applicable borrowing conditions, the Agent shall deposit the Revolving
Loan, except as provided in Section 2.11(a) hereof with respect to
Reference Rate Loans made pursuant to Section 2.9(c) hereof, in the
Company's account maintained with the Agent or as the Company may
otherwise direct in writing. All advances of all Types of Revolving Loans
shall be pro rata among the Banks according to each Bank's Percentage of
such Revolving Loans.
(b) Unless the Agent shall have been notified by
telephone, confirmed promptly thereafter in writing, by a Bank not later
than 1 p.m., Milwaukee time, on a Borrowing Date that such Bank will not
make available to the Agent such Bank's Percentage of the requested
Revolving Loan, the Agent may assume that such Bank has made such amount
available to the Agent and, in reliance upon such assumption, make
available to the Company on such Borrowing Date a corresponding amount.
If and to the extent that such Bank, without giving such notice, shall not
have so made such amount available to the Agent, other than in accordance
with Sections 2.12(b) or (c) hereof, such Bank and the Company severally
agree to repay the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date the Agent made
such amount available to the Company to the date such amount is repaid to
the Agent, at (i) in the case of the Company, the interest rate specified
in Section 2.6(a) hereof and (ii) in the case of such Bank, the Federal
Funds Rate for each of the first three days (or fraction thereof) after
the date of demand and the interest rate specified in Section 2.6(a)
hereof for each day (or fraction thereof) thereafter.
(c) The failure of any Bank to make its pro rata
share of a Revolving Loan shall not relieve any other Bank of its
obligation hereunder to make its pro rata share of a Revolving Loan on the
applicable Borrowing Date, but no Bank shall be responsible for the
failure of any other Bank to make the Revolving Loan to be made by such
other Bank on the applicable Borrowing Date.
2.3 Continuation and Conversion Procedure.
(a) The Company may elect from time to time, subject
to the terms and conditions of this Agreement, to convert all or a portion
of the outstanding Reference Rate Loans to Fixed Rate Loans, or to convert
a Type of Fixed Rate Loan to another Type of Fixed Rate Loan (in each
case, in a minimum amount of $1,000,000 and an integral multiple of
$1,000,000 above such minimum) or to convert all or a portion of a Fixed
Rate Loan to a Reference Rate Loan; provided that any conversion of a
Fixed Rate Loan shall occur on the last day of the applicable Loan Period.
(b) A Reference Rate Loan shall continue as a
Reference Rate Loan unless and until converted to a Fixed Rate Loan. At
the end of the applicable Loan Period for a Fixed Rate Loan, such Fixed
Rate Loan shall automatically be converted into a Reference Rate Loan
unless the Company shall have given the Agent notice in accordance with
Section 2.3(c) hereof requesting that, at the end of such Loan Period, all
or a portion of such Fixed Rate Loan be converted to another Type of Fixed
Rate Loan or continued as a Fixed Rate Loan of the same Type.
(c) The Company shall give the Agent irrevocable
notice (a Conversion/Continuation Notice) of each conversion of a
Revolving Loan or continuation of a Fixed Rate Loan not later than 10:30
a.m., Milwaukee time, on the date of the requested conversion, in the case
of a conversion to a Reference Rate Loan, or, in the case of a conversion
to or a continuation of a Libor Rate Loan, three Business Days prior to
the date of the requested conversion or continuation, or, in the case of a
conversion to or continuation of a CD Rate Loan, one Business Day prior to
the date of the requested conversion or continuation, specifying (i) the
requested date (which shall be a Business Day) of such conversion or
continuation, (ii) the amount and Type of Revolving Loan to be converted
or continued and (iii) the amount and Type of the Revolving Loan into
which such Revolving Loan is to be converted or continued, and in the case
of a conversion to or continuation of a Fixed Rate Loan, the duration of
the Loan Period applicable thereto.
(d) Notwithstanding anything to the contrary
contained in this Section, no Revolving Loan may be converted into or
continued as a Fixed Rate Loan when any Default or Event of Default has
occurred and is continuing.
2.4 Fees.
(a) Commitment Fee. As consideration for each Bank's
making its pro rata share of the Facility available, the Company will pay
to the Agent, for the account of the Banks, on the last Business Day of
each fiscal quarter of the Company commencing with the quarter ending
March 31, 1995, and on the Maturity Date, a commitment fee equal to one-
eighth of 1% of the daily average unused amount of the Facility during the
preceding quarter or other applicable period; provided that for purposes
of computing the commitment fee due on March 31, 1995, the applicable
period shall be the date of this Agreement through March 31, 1995.
Commitment fees shall be calculated for the actual number of days elapsed
on the basis of a 360-day year. The unused amount of the Facility at any
time shall be the amount of the Facility, less the sum of (i) the
aggregate amount then outstanding under all of the Notes, and (ii) the
Letter of Credit Exposure.
(b) Agent's Fee. The Company agrees to pay to the
Agent, for the sole benefit of the Agent, an Agent's fee in such amounts,
at such times, and upon the terms and conditions as set forth in that
certain letter-form agreement, dated the date hereof, between the Company
and the Agent, as the same may be amended, modified or supplemented from
time to time.
(c) Letter of Credit Commission. On the Borrowing
Date of each Letter of Credit and to the extent such Letter of Credit is
renewed, on each renewal date thereof, the Company agrees to pay to the
Issuing Bank, for the ratable benefit of the Banks, a commission in an
amount equal to 3/4 of 1% of the face amount of each such Letter of
Credit.
(d) Issuing Bank Fees. The Company agrees to pay to
the Issuing Banks, for their own account, in connection with the issuance
and maintenance of the Letters of Credit hereunder, such fees as may be
agreed upon by the Company and Issuing Bank whether by way of letter
agreement or otherwise.
2.5 Reduction of Facility. The Company may, upon one
Business Day's prior written notice to the Agent, permanently reduce the
aggregate amount of the Facility; provided that no such reduction shall
reduce the aggregate amount of the Facility to an amount less than the
aggregate unpaid principal balance of the Notes, plus the Letter of Credit
Exposure, on the effective date of such reduction. Each reduction in the
Facility shall be in a minimum amount of $1,000,000 and in integral
multiples of $1,000,000 above such minimum. Each reduction in the
Facility shall ratably reduce each Bank's Revolving Loan Commitment and
Letter of Credit Commitment.
2.6 Interest Rate.
(a) The unpaid principal balance of the Revolving
Loans outstanding from time to time shall bear interest for the period
commencing on the Borrowing Date of such Revolving Loan until such
Revolving Loan is paid in full. Each Reference Rate Loan shall bear
interest at the Reference Rate, each CD Rate Loan shall bear interest at
the applicable CD Rate, and each Libor Rate Loan shall bear interest at
the applicable Adjusted Libor Rate. In the case of a Reference Rate Loan,
accrued interest shall be due on the last Business Day of each month,
commencing March 31, 1995, and on the Maturity Date. In the case of a
Fixed Rate Loan, accrued interest shall be due on the last day of the
applicable Loan Period unless the Loan Period is greater than 3 months, in
the case of a Libor Rate Loan, or 90 days, in the case of a CD Rate Loan,
in which case accrued interest shall be due on the first day of each
month, in the case of a Libor Rate Loan, or every 30 days, in the case of
a CD Rate Loan, following the beginning of the applicable Loan Period and
on the last day of such Loan Period.
(b) Notwithstanding the provisions of Section 2.6(a)
above, after 15 days' notice from the Agent to the Company of the
occurrence and during the continuance of an Event of Default, other than
an Event of Default described in Section 7.1 (a) hereof, the unpaid
principal balance of each Note shall bear interest at the Default Rate.
Upon the occurrence and during the continuance of an Event of Default
described in Section 7.1(a) hereof, the unpaid principal balance of each
Note shall bear interest at the Default Rate. On and after the Maturity
Date, the unpaid principal balance of the Notes and all accrued interest
thereon shall bear interest at the Default Rate until paid.
(c) Interest shall be calculated for the actual
number of days elapsed on the basis of a 360-day year.
2.7 Payments. Except as otherwise provided in this
Agreement, all payments of principal and interest on the Notes, the
Reimbursement Obligations and all fees due hereunder shall be made at the
office of the Agent, for the account of the Banks, in immediately
available funds not later than 11 a.m., Milwaukee time, on the date due;
funds received after that time shall be deemed to have been received on
the next Business Day. The Agent may charge the Company's Account No.
111501414 at the Agent for any payment due under the Notes, the
Reimbursement Obligations or any fee or expense payable hereunder, on or
after the date due, but the inadequacy of such deposit shall not impair or
affect the Company's obligation to pay such interest, which is absolute
and unconditional. The Agent shall forward to each Bank, promptly after
receipt, such Bank's share of such payments received by the Agent.
Whenever any payment to be made shall otherwise be due on a day which is
not a Business Day, such payment shall be made on the next succeeding
Business Day, except that if such payment is in connection with a Libor
Rate Loan, such payment shall be made on the next preceding Business Day,
and such extension or reduction of time shall be included in computing
interest and fees, if any, in connection with such payment.
2.8 Prepayments. Reference Rate Loans may be prepaid, in
whole or in part, at any time without premium or penalty. Each Fixed Rate
Loan is payable at the end of the applicable Loan Period and may not be
prepaid. Any prepayment of a Reference Rate Loan shall be made in
accordance with the provisions of Section 2.7 hereof. Each prepayment
shall be in a minimum amount of $500,000 and in integral multiples of
$500,000 above such minimum.
2.9 Letters of Credit.
(a) Issuance. The Issuing Bank will issue Letters of
Credit which it may lawfully issue, in Dollars, for the account of the
Company, subject to the terms and conditions hereof, at any time during
the period from the Closing Date to the Maturity Date; provided that the
amount available for drawing under all Letters of Credit, plus the Letter
of Credit Exposure as of the applicable Borrowing Date, shall not exceed
the aggregate Letter of Credit Commitments and, provided further, that no
Letter of Credit shall have an initial expiry date later than the Maturity
Date, except that (i) the Cherokee Co. IRB Letter of Credit and (ii)
Letters of Credit in an aggregate face amount not exceeding $5,000,000 at
any time outstanding may have an initial expiry date not later than 12
months after the Maturity Date. By 12 p.m., Milwaukee time, at least one
Business Day prior to the proposed Borrowing Date of a Letter of Credit,
the Company shall deliver to the Issuing Bank a duly executed application
and agreement for such Letter of Credit, in form and content satisfactory
to the Issuing Bank; provided, however, one Business Day's notice will not
be required if a properly completed, duly executed application and
agreement and one of the forms of letters of credit, in such form and
content as is satisfactory to the Issuing Bank, is delivered to the
Issuing Bank not later than 10:30 a.m., Milwaukee time, on the proposed
Borrowing Date. No Letter of Credit shall be issued hereunder unless on
the proposed Borrowing Date all of the conditions precedent specified in
Section 4.2 hereof shall have been satisfied as fully as if the issuance
of such Letter of Credit were a Revolving Loan, but each Letter of Credit,
which was issued by one of the Banks prior to the date hereof, and which
is outstanding on the date hereof, shall be, for the purposes of this
Agreement, deemed to have been issued under the terms and conditions of
this Agreement (except no further fee or commission for the issuance
thereof shall be payable hereunder), but shall remain subject to the
application and agreement with the Issuing Bank for each such outstanding
Letter of Credit. The Issuing Bank shall promptly upon the issuance of
each Letter of Credit notify each Bank of the type and amount of the
Letter of Credit, and the beneficiary and expiration date of each such
Letter of Credit.
(b) Participations. Effective upon the issuance of
each Letter of Credit, the Issuing Bank sells to the other Banks and the
other Banks purchase from the Issuing Bank an undivided fractional
interest in the liability of the Issuing Bank represented by such Letter
of Credit and the obligations of the Company with respect thereto (except
for the amounts owing to the Issuing Bank pursuant to Section 2.9(d)
hereof) as evidenced by the Loan Documents. The undivided fractional
interest acquired by each Bank shall equal such Bank's Percentage. Upon
receipt of a draft presented under a Letter of Credit, the Issuing Bank
shall notify the Company, the Agent and the Banks of the amount of such
draft and the date on which it will honor such draft. On the Business Day
following the date any draft under a Letter of Credit is honored by the
Issuing Bank, unless the Company has received a Reference Rate Loan for
the amount of such draft or has timely paid to the Agent the amount of
such draft pursuant to Section 2.9(c) hereof, each Bank shall pay to the
Issuing Bank an amount equal to its Percentage of the amount of such
draft. If the Company requests a Reference Rate Loan pursuant to Section
2.9(c) hereof, each Bank shall make its Percentage of such Reference Rate
Loan available to the Agent in accordance with the provisions of Section
2.2(b) hereof.
(c) Reimbursement Obligation. The notice from the
Issuing Bank, pursuant to Section 2.9(b) hereof, to the Company, the Agent
and the Banks, of its intent to honor a draft presented under a Letter of
Credit, shall constitute a request by the Company pursuant to Section
2.2(a) hereof for a Reference Rate Loan equal to the amount of the draft
to be honored, to be made on the date the Issuing Bank honors the draft,
and shall constitute a certification by the Company that the borrowing
conditions specified in Sections 4.2(b) and 4.2(c) hereof will be
satisfied on the proposed Borrowing Date; provided, however, if the
Company can not satisfy the borrowing conditions specified in Sections
4.2(b) and 4.2(c) hereof, it shall promptly so notify the Agent and the
Banks. If the Company cannot satisfy the borrowing conditions specified
in Sections 4.2(b) and 4.2(c) hereof or if the amount of such requested
Reference Rate Loan, together with the aggregate amount of all Revolving
Loans then outstanding, exceeds the aggregate Revolving Loan Commitments
of the Banks, the Company agrees to pay to the Agent the amount of the
draft honored by the Issuing Bank, on the date such draft is honored, with
interest (based on actual days elapsed and a 360-day year) upon such
amount at the Default Rate from the date such draft is paid by the Issuing
Bank to the date when the Company pays the amount of the draft in full.
The obligation of the Company to pay to the Agent the amount of any
payment made by the Issuing Bank under any Letter of Credit shall be
absolute, unconditional and irrevocable and shall remain in full force and
effect until all amounts owed by the Company to the Banks hereunder and
under any Loan Document shall have been paid in full and such obligation
of the Company shall not be affected, modified or impaired upon the
happening, of any event, including, without limitation, any of the
following, whether or not with notice to, or the consent of, the Company:
(i) any lack of validity or enforceability of
any Letter of Credit or any Loan Document;
(ii) any amendment, modification, waiver,
consent, or any substitution, exchange or release of or failure to perfect
any interest in collateral or security, with respect to any Loan Document;
(iii) the existence of any claim, setoff, defense
or other right which the Company may have at any time against any
beneficiary or any transferee of any Letter of Credit (or any persons for
whom any such beneficiary or any such transferee may be acting);
(iv) any draft or other statement or document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(v) payment by the Issuing Bank to the
beneficiary under any Letter of Credit against presentation of documents
which do not strictly comply with the terms of the Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to such Letter of Credit; and
(vi) any failure, omission, delay or lack on the
part of the Issuing Bank or any party to any Loan Document to enforce,
assert or exercise any right, power or remedy conferred upon the Issuing
Bank or any such other party;
provided in each case that the Company shall be obligated to pay such
amount only if the draft and other documents presented reasonably appear
to comply with the terms of such Letter of Credit.
(d) Issuance and Negotiation Fees and Expenses. The
Company shall pay to the Issuing Bank, on demand, the issuance and
negotiation fees of the Issuing Bank which the Company and the Issuing
Bank have agreed upon and all out-of-pocket fees and expenses paid or
incurred by the Issuing Bank in connection with the issuance, amendment or
administration of each Letter of Credit and the honoring of drafts
presented thereunder.
(e) Cash Collateral. If on the Maturity Date any
Letter of Credit (including the Cherokee Co. IRB Letter of Credit) remains
outstanding, the Company shall either make arrangements satisfactory to
the Required Banks for the assumption of liabilities created by any such
issued and unexpired Letter of Credit or, in the absence of such
satisfactory arrangements, the Company shall deliver to the Agent, for the
benefit of the Banks, Cash Collateral in an aggregate principal amount
equal to 110% of the Letter of Credit Exposure. The unapplied balance of
such Cash Collateral shall be paid by the Agent to the Banks to reimburse
the Banks for any amounts paid by them to the Issuing Bank for drafts
honored by the Issuing Bank under the unexpired Letters of Credit and any
excess shall be returned to the Company on and to the extent the Letters
of Credit expire without draw.
(f) Cherokee Co. IRB Letter of Credit. The Cherokee
Co. IRB Letter of Credit was issued for an initial term of one year and
may be renewed or extended (upon the written request of the Company) at
the option of the Required Banks for a period ending not later than 12
months after the Maturity Date.
2.10 Setoff. Each Bank shall have the right, upon a
declaration of the Agent pursuant to Section 7.2(b) hereof, to apply to
the payment of the Note held by such Bank (whether or not then due) and
such Bank's Percentage of the Reimbursement Obligations, any and all
balances, credits, deposits, accounts or monies of the Company then or
thereafter maintained with such Bank. Each Bank agrees to notify the
Company and the Agent after any such setoff and application made by such
Bank; provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application.
2.11 Pro Rata Treatment; Sharing of Payments.
(a) Except as otherwise provided in this Agreement,
upon receipt by the Agent of payments of principal, interest,
Reimbursement Obligations, fees and expenses, the Agent shall promptly
distribute to each Bank or holder of a Note the amount of such payment
received by the Agent for the ratable account of that Bank or holder. The
proceeds of any Reference Rate Loan made pursuant to Section 2.9(c)
hereof, shall be distributed by the Agent to the Issuing Bank prior to 3
p.m., Milwaukee time, on the applicable Borrowing Date. Any payment to
the Agent received by 11 a.m., Milwaukee time, for the ratable account of
a Bank or holder of a Note shall constitute a payment by the Company to
such Bank or holder of the amount so paid to the Agent, and any Notes or
portions thereof or Reimbursement Obligations so paid shall not be
considered outstanding for any purpose after the date of such payment to
the Agent. If any Bank shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of setoff or otherwise) in
excess of its pro rata share of payments then or therewith obtained by all
Banks, such Bank shall immediately purchase, without recourse and for
cash, from the other Banks, such participations in the Notes and Letter of
Credit Exposure of such other Banks so that each Bank shall thereafter
have a percentage interest in all of such obligations equal to such Bank's
Percentage; provided, however, that if any payment so received shall be
recovered in whole or in part from such purchasing Bank, the purchase
shall be rescinded and the purchase price restored to the extent of any
such recovery, but without interest. The Company agrees that any Bank so
purchasing a participation from another Bank pursuant to this Section may,
to the fullest extent permitted by law, exercise all of its rights of
payment (including its right of setoff) with respect to such participation
as if such Bank were the direct creditor of the Company in the amount of
such participation.
(b) A Delinquent Bank shall be deemed to have
assigned any and all payments due to it from the Company to the
nondelinquent Banks for application to, and reduction of, their respective
pro rata shares of all outstanding Revolving Loans and Letters of Credit.
The Delinquent Bank hereby authorizes the Agent to distribute such
payments to the nondelinquent Banks in proportion to their respective pro
rata shares of all outstanding Revolving Loans and Letters of Credit. A
Delinquent Bank shall be deemed to have satisfied in full a delinquency
when and if, as a result of application of the assigned payment to the
nondelinquent Banks, the Banks' respective pro rata shares of all
outstanding Revolving Loans and Letter of Credit Exposure shall return to
those in effect immediately prior to such delinquency.
2.12 Special Provisions.
(a) If any Regulatory Change,
(i) shall subject any Bank to any tax, duty or
other charge with respect to any of its Extensions of Credit, or shall
change the basis of taxation of payments to any Bank of the principal of
or interest on its Extensions of Credit, or any other amounts due under
this Agreement in respect of its Extensions of Credit, or its obligation
to make Extensions of Credit (except for changes in the rate of tax on the
overall net income of such Bank);
(ii) shall impose, modify or make applicable any
reserve (including, without limitation any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates on Extensions of Credit),
special deposit or similar requirement against assets of, deposits with or
for the account of, or credit extended by, any Bank; or
(iii) shall impose on any Bank any other condition
affecting its Extensions of Credit;
and the result of any of the foregoing is to increase the cost to (or in
the case of Regulation D or any other analogous law, rule or regulation,
to impose a cost on) such Bank of making or maintaining any Extensions of
Credit or to reduce the amount of any sum received or receivable by such
Bank under any Loan Document, then after 15 days' notice from such Bank
(which notice shall be sent to the Agent and the Company and shall be
accompanied by a statement setting forth the basis of such notice), the
Company shall pay directly to such Bank, on demand, such additional amount
or amounts as will compensate such Bank for such increased cost or such
reduction incurred on or after the date of the giving of such notice to
the Agent and the Company.
(b) Basis for Determining Interest Rate Inadequate or
Unfair. If with respect to the Loan Period for any Fixed Rate Loan:
(i) the Agent determines in good faith (which
determination shall be binding and conclusive on all parties) that by
reason of circumstances affecting the London interbank market adequate and
reasonable means do not exist for ascertaining the applicable Libor Rate;
or
(ii) the Agent reasonably determines (which
determination shall be binding and conclusive on all parties) that the CD
Rate or the Adjusted Libor Rate will not adequately and fairly reflect the
cost of maintaining or funding such Fixed Rate Loan for such Loan Period,
or that the making or funding of CD Rate Loans or Adjusted Libor Rate
Loans has become impracticable as a result of an event occurring after the
date of this Agreement which in the opinion of the Agent materially
affects such Fixed Rate Loan;
then, (a) the Agent shall promptly notify the other parties thereof, and
(b) so long as such circumstances shall continue, no Bank shall be under
any obligation to make the Type of Fixed Rate Loan so affected.
(c) Changes in Law Rendering Certain Loans Unlawful. In
the event that any Regulatory Change should make it (or, in the good faith
judgment of a Bank, should raise substantial questions as to whether it
is) unlawful for a Bank to make, maintain or fund a Type of Fixed Rate
Loan, then (i) such Bank shall promptly notify each of the other parties
hereto, (ii) the obligation of all Banks to make such Type of Fixed Rate
Loan shall, upon the effectiveness of such event, be suspended for the
duration of such unlawfulness, and (iii) upon such notice, any outstanding
Revolving Loan of the Type made unlawful to maintain shall automatically
convert to a Reference Rate Loan.
(d) Funding Losses. The Company hereby agrees that upon
demand by any Bank (which demand shall be sent to the Agent and the
Company and shall be accompanied by a statement setting forth the basis
for the calculations of the amount being claimed) the Company will
indemnify such Bank against any net loss or expense which such Bank may
sustain or incur (including, without limitation, any net loss or expense
incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by such Bank to fund or maintain Fixed Rate Loans), as
reasonably determined by such Bank, as a result of (i) any payment,
prepayment or conversion of any Fixed Rate Loan of such Bank on a date
other than the last day of a Loan Period for such Loan whether or not
required by any other provision of this Agreement, or (ii) any failure of
the Company to borrow any loans on a date specified therefor in a notice
of borrowing pursuant to this Agreement. All notices of borrowing to the
Agent pursuant to this Agreement with respect to Fixed Rate Loans shall be
deemed to be irrevocable.
(e) Discretion of Banks as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Bank
shall be entitled to fund and maintain its funding of all or any part of
its Revolving Loans in any manner it sees fit.
(f) Capital Adequacy. If any Regulatory Change affects
the treatment of any Extensions of Credit of a Bank as an asset or other
item included for the purpose of calculating the appropriate amount of
capital to be maintained by such Bank or any corporation controlling such
Bank and has the effect of reducing the rate of return on such Bank's or
such corporation's capital as a consequence of the loans or commitments of
such Bank hereunder to a level below that which such Bank or such
corporation could have achieved but for such Regulatory Change (taking
into account such Bank's or such corporation's policies with respect to
capital adequacy) by an amount deemed in good faith by such Bank to be
material, then after 15 days' notice from such Bank to the Company and the
Agent of such Regulatory Change, the Company shall pay to such Bank, on
demand, such additional amount or amounts as will compensate such Bank or
such corporation, as the case may be, for such reduction incurred on or
after the date of the giving of such notice to the Agent and the Company.
Such Bank shall submit, to the Agent and the Company, a statement as to
the amount of such compensation, prepared in good faith and in reasonable
detail.
(g) Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Bank pursuant to Sections 2.12(a),
(b), (c), (d) and (f) hereof shall be conclusive absent manifest error.
The provisions of Section 2.12(a), (d) and (f) hereof shall survive the
obligation of the Banks to extend credit under this Agreement.
Section 3. Representations and Warranties
3. Representations and Warranties. In order to induce the
Banks to extend credit hereunder, the Company represents and warrants to
the Banks:
3.1 Organization; Subsidiaries; Corporate Power. The
Company is a corporation validly existing under the laws of the State of
Wisconsin and (a) has, during its most recently completed report year,
filed the required annual report, (b) is not the subject of a proceeding
to cause its administrative dissolution nor do grounds exist for such
action, (c) is not subject to a filing with respect to a judicial decree
of dissolution, and (d) has not adopted articles of dissolution. The
Company is not required to qualify as a foreign corporation in any state,
other than in those states in which the Company is qualified as a foreign
corporation to do business, where the failure to so qualify would have a
material adverse effect on the Company. The Company has no Subsidiaries
other than Oshkosh Truck Foreign Sales Corp., Inc. and ORDIRA, Inc. The
Company has the corporate power to own its properties and carry on its
business as currently being conducted.
3.2 Authorization and Binding Effect. The execution and
delivery of the Loan Documents to which it is a party, and the performance
by the Company of its obligations thereunder, are within its corporate
power, have been duly authorized by proper corporate action on the part of
the Company, are not in violation of any existing law, rule or regulation
of any governmental agency or authority, any order or decision of any
court, the Articles of Incorporation or By-Laws of the Company or the
terms of any agreement, restriction or undertaking to which the Company is
a party or by which it is bound, and do not require the approval or
consent of the shareholders of the Company, any governmental body, agency
or authority or any other person or entity. The Loan Documents to which
the Company is a party, when executed and delivered, will constitute the
valid and binding obligations of the Company enforceable in accordance
with their terms, except as limited by bankruptcy, insolvency or similar
laws of general application affecting the enforcement of creditors' rights
and except to the extent that general principles of equity might affect
the enforcement of such Loan Documents.
3.3 Financial Statements. The Company has furnished to
the Banks (a) the consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of September 30, 1994, and related statements
of income and retained earnings and cash flows for the year ended on that
date, certified by Ernst & Young, and (b) the unaudited consolidated
balance sheet of the Company and its Consolidated Subsidiaries as of
December 31, 1994 and related statements of income and retained earnings
and cash flows for the period ended on such date, prepared by the Company.
Such financial statements were prepared in accordance with GAAP
consistently applied throughout the periods involved, are correct and
complete and fairly present the consolidated financial condition of the
Company and such Subsidiaries as of such dates and the results of their
operations for the periods ended on such dates, subject, in the case of
the unaudited interim statements, to normal year-end adjustments. There
has been no material adverse change in the condition or prospects of the
Company and its Consolidated Subsidiaries taken as a whole, financial or
otherwise, since December 31, 1994.
3.4 Litigation. Except for the matters described on
Schedule 3.4, there is no litigation or administrative proceeding pending
or, to the knowledge of the Company, threatened against or affecting the
Company or the properties of the Company which, to the knowledge of the
Company can be reasonably expected to result in a liability of the
Company, net of insurance proceeds and financial reserves, in excess of
$500,000.
3.5 Restricted Payments. The Company has not, since the
date of the most recent financial statements referred to in Section 3.3
hereof, made any Restricted Payments except for dividends on common stock
in the amount of $1,078,000 paid on or about February 15, 1995.
3.6 Indebtedness; No Default. The Company has no
outstanding Indebtedness or Guaranties, except those permitted under
Sections 6.2 and 6.3 hereof. There exists no default nor has any act or
omission occurred which, with the giving of notice or the passage of time,
would constitute a default under the provisions of any instrument
evidencing such Indebtedness or Guaranty or any agreement relating
thereto, under which the Company's liability exceeds $500,000.
3.7 Ownership of Properties; Liens and Encumbrances. The
Company has good and marketable title to all property, real and personal,
reflected on the most recent financial statement of the Company furnished
to the Banks, and all property purported to have been acquired since the
date of such financial statement, except property sold or otherwise
disposed of in the ordinary course of business subsequent to such date;
and all such property is free of any lien, security interest, mortgage,
encumbrance or charge of any kind or any agreement not to grant a security
interest, mortgage or lien, except Permitted Liens. All owned and leased
buildings and equipment of the Company are in good operating condition,
repair and working order and, to the Company's knowledge, conform to all
applicable laws, ordinances and regulations.
3.8 Tax Returns Filed. Except as specifically disclosed
in Schedule 3.4, the Company has filed when due all federal and state
income and other tax returns which are required to be filed. The Company
has paid or made provision for all taxes shown on said returns and on all
assessments received by it to the extent that such taxes have become due
except any such taxes which are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP have been established. The Company has no knowledge of any
liabilities which may be asserted against it upon audit of its federal or
state tax returns.
3.9 Margin Stock. The Company will not use, directly or
indirectly, any part of the proceeds of any Extensions of Credit for the
purpose of purchasing or carrying or to extend credit to others for the
purpose of purchasing or carrying, any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve system, or
any amendments thereto. The Company is not engaged principally, or as one
of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock.
3.10 Investment Company. The Company is not an "investment
company" or a company controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
3.11 ERISA Liabilities. The Company has no knowledge of
the occurrence of any event with respect to any Plan which could
reasonably be expected to result in a material liability of the Company or
any member of the Controlled Group to any Plan, the Internal Revenue
Service or the Pension Benefit Guaranty Corporation, other than the
payment of contributions in the normal course or premiums (but not a late
payment charge) pursuant to Section 4007 of ERISA. With respect to any
Plan there is no (a) accumulated funding deficiency within the meaning of
Section 412(a) of the Code; (b) nondeductible contribution to any Plan
within the meaning of Section 4972 of the Code; (c) excess contribution
within the meaning of Section 4979(c) of the Code which would result in
tax under Section 4979(a) of the Code; (d) prohibited transaction within
the meaning of ERISA section 406 which is not exempt under ERISA Section
408; (e) failure to make required contributions to any Multiemployer Plan;
or (f) withdrawal or partial withdrawal from any Multiemployer Plan within
the meaning of ERISA Sections 4203 and 4205.
3.12 No Burdensome Agreements. The Company is not a party
to or is bound by any agreement, instrument or undertaking, or subject to
any other restriction (a) which materially adversely affects or in the
future could reasonably be expected to so affect the property, financial
condition or business operations of the Company, or (b) under or pursuant
to which the Company is or will be required to place (or under which any
other person may place) a lien upon any of its properties securing
Indebtedness either upon demand or upon the happening of a condition, with
or without such demand.
3.13 Trademarks, Etc. The Company possesses adequate
trademarks, trade names, copyrights, patents, permits, service marks and
licenses, or rights thereto, for the present and planned future conduct of
its business substantially as now conducted, without any known conflict
with the rights of others which might result in a material adverse effect
on the Company.
3.14 Dump Sites. With respect to the period during which
the Company owned or occupied its real estate, and to the Company's
knowledge after reasonable investigation, with respect to the time before
the Company owned or occupied its real estate, except as described on
Schedule 3.4, no person or entity has caused or permitted materials to be
stored, deposited, treated, recycled or disposed of on, under or at any
real estate owned or occupied by the Company, which materials, if known to
be present, would require cleanup, removal or some other remedial action
under Environmental Laws.
3.15 Tanks. Except as described on Schedule 3.4, there are
not now, nor, to the Company's knowledge after reasonable investigation,
have there ever been tanks or other facilities on, under, or at any real
estate owned or occupied by the Company which contained materials which,
if known to be present in soils or ground water, would require cleanup,
removal or some other remedial action under Environmental Laws.
3.16 Other Environmental Conditions. Except as described
on Schedule 3.4, to the Company's knowledge after reasonable investigation
there are no conditions existing currently or likely to exist during the
term of this Agreement which would subject the Company to damages,
penalties, injunctive relief or cleanup costs under any Environmental Laws
or which require or are likely to require a cleanup, removal, remedial
action or other response pursuant to Environmental Laws by the Company
which would have a material adverse effect on the financial condition or
operations of the Company.
3.17 Changes in Laws. To the Company's knowledge there are
no proposed or pending changes in Environmental Laws that would adversely
affect the Company or any Consolidated Subsidiary.
3.18 Environmental Judgments, Decrees and Orders. Except
as described on Schedule 3.4, the Company is not subject to any judgment,
decree, order or citation related to or arising out of Environmental Laws
or has been named as a potentially responsible party by a governmental
body or agency in a matter arising under any Environmental Laws.
3.19 Environmental Permits and Licenses. Except as
disclosed on Schedule 3.4, the Company has all permits, licenses and
approvals required under Environmental Laws.
3.20 Accuracy of Information. All information furnished by
the Company to the Banks is correct and complete in all material respects
as of the date furnished and does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make such
information not misleading.
Section 4. Conditions for Borrowing
4. Conditions for Borrowing. The Banks' obligations to make
any loan and the Issuing Bank's obligation to issue any Letter of Credit
is subject to the satisfaction, on or before the following Borrowing
Dates, of the following conditions:
4.1 On or Before the Closing Date. The Agent shall have
received the following, all in form, detail and content satisfactory to
the Agent:
(a) Notes. A Note payable to the order of each Bank,
duly executed by the Company.
(b) Certified Articles of Incorporation. A copy for
each Bank of the Articles of Incorporation of the Company, certified as of
a recent date by the Wisconsin Secretary of State.
(c) Certificate of Status. A certificate of status
or certificates of good standing with respect to the Company issued as of
a recent date by the Wisconsin Secretary of State and the Secretary of
State of each state in which the Company is qualified to transact business
as a foreign corporation.
(d) Closing Certificate. Copies for each Bank,
certified by the Assistant Secretary of the Company to be correct and
complete and in full force and effect on the Closing Date, of (i) the By-
Laws of the Company; (ii) resolutions of the Board of Directors of the
Company authorizing the execution and delivery of the Loan Documents to
which the Company is a party; and (iii) a statement containing the names
and titles of the officer or officers of the Company authorized to sign
such Loan Documents, together with true signatures of such officers.
(e) Personal Property Searches. Searches of the
appropriate public offices demonstrating that no security interest on the
personal property of the Company (other than fixtures) is of record
affecting the Company or its properties except those which are acceptable
to the Banks.
(f) No Default Certificate. The representations and
warranties contained in Section 3 hereof shall be true and correct on and
as of the Closing Date; there shall exist on the Closing Date no Default
or Event of Default, and the Agent shall have received a certificate for
each Bank to those effects, signed by the Vice President and Chief
Financial Officer of the Company.
(g) Opinion of Counsel. An opinion from Foley &
Lardner, counsel to the Company, in the form of Exhibit B attached hereto
addressed to the Agent and the Banks.
(h) Proceedings Satisfactory. Such other documents
as the Agent or the Banks may reasonably request; and all proceedings
taken in connection with the transactions contemplated by this Agreement,
and all instruments, authorizations and other documents applicable
thereto, shall be satisfactory to the Agent and the Banks.
4.2 On or Before Each Subsequent Borrowing Date
(a) Borrowing Procedure. The Company shall have
complied with the borrowing procedure specified in Section 2.2 hereof and
the requirements for the issuance of Letters of Credit specified in
Section 2.9 hereof, if applicable.
(b) Representations and Warranties True and Correct.
The representations and warranties contained in Section 3 hereof shall be
true and correct on and as of the relevant Borrowing Date except (i) that
the representations and warranties contained in Section 3.3 hereof shall
apply to the most recent financial statements delivered pursuant to
Sections 5.1 and 5.2 hereof and (ii) for changes permitted by this
Agreement.
(c) No Default. There shall exist on that Borrowing
Date no Default or Event of Default.
(d) Proceedings and Documentation. The Agent shall
have received such instruments and other documents as it or the Banks may
reasonably request in connection with the making of such Extension of
Credit, and all such instruments and documents shall be in form and
content reasonably satisfactory to the Agent and in the case of Letters of
Credit, to the Issuing Bank and the Agent.
Section 5. Affirmative Covenants
5. Affirmative Covenants. The Company covenants that it will,
until all of the Revolving Loan Commitments and the Letter of Credit
Commitments have terminated or expired, all Letters of Credit have expired
(or the Company has delivered the Cash Collateral required under Section
2.9(e) hereof) and all obligations hereunder and under the Loan Documents
of the Company to the Agent and the Banks, have been paid in full:
5.1 Annual Financial Statement. Furnish to the Agent
within 90 days after the end of each fiscal year of the Company a copy for
each Bank of a balance sheet of the Company as of the close of such fiscal
year and related statements of income, retained earnings and cash flows
for such year, setting forth in each case in comparative form
corresponding figures from the preceding annual audit, prepared in
accordance with GAAP applied on a consistent basis, audited by a
nationally recognized firm of independent certified public accountants
selected by the Company, and accompanied by an unqualified opinion thereon
by such accountants to the effect that such financial statements present
fairly, in all material respects, the financial position of the Company
and all Consolidated Subsidiaries as of the end of such fiscal year, and
the results of their operations and their cash flows for such fiscal year,
in accordance with GAAP, and that such audit was conducted in accordance
with generally accepted auditing practices. Each such annual statement
shall be accompanied by a written statement from the accountants stating
whether or not the Company is in compliance with the financial covenants
contained in Section 6 hereof and certifying that in making the
examination necessary for their certification of such financial statement,
they obtained no knowledge of any Default or Event of Default or, if such
accountants shall have obtained knowledge of any Default or Event of
Default, they shall disclose in such statement the Default or Event of
Default. Each such annual statement shall be accompanied by a certificate
of an authorized financial officer of the Company containing the
calculations demonstrating the Company's compliance or noncompliance with
the financial covenants contained in Section 6 hereof. The Company will
furnish to the Agent within 90 days after the end of each fiscal year of
the Company a copy for each Bank of a statement of income, including
statements of revenues and expenses for each of the Company's business
units and corporate charges. The Company will furnish to the Agent within
60 days after the end of each fiscal year of the Company a copy for each
Bank of a preliminary income statement. All such financial statements,
and the financial statements referred to in Section 5.2 hereof, except as
provided herein, shall be finished in consolidated form for the Company
and all Consolidated Subsidiaries which it may at the time have.
5.2 Interim Financial Statements. Furnish to the Agent
within 45 days after the end of each of the first three quarters of each
fiscal year of the Company a copy for each Bank of a balance sheet of the
Company and its Consolidated Subsidiaries as of the end of each such
quarter and related statements of income (including a statement of
revenues and expenses for each of the Company's business units and
corporate charges), retained earnings and cash flows for the period from
the beginning of the fiscal year to the end of such quarter, prepared in
the manner set forth in Section 5.1 hereof for the annual statements,
certified to be accurate and complete by an authorized financial officer
of the Company, subject to audit and normal year-end adjustments, and
accompanied by the certificate of such officer (i) to the effect that
there exists no Default or Event of Default or, if any Default or Event of
Default exists, specifying the nature thereof, the period of existence
thereof and what action the Company proposes to take with respect thereto,
and (ii) containing the calculations demonstrating the Company's
compliance or noncompliance with the financial covenants contained in
Section 6 hereof.
5.3 Other Financial Information. Furnish to the Agent,
(a) contemporaneously with the filing or mailing thereof, copies for each
Bank of all material of a financial nature filed with the Securities
Exchange Commission or sent to the shareholders of the Company, (b) prior
to the end of the first fiscal quarter of each fiscal year of the Company,
budgets and financial projections, prepared by the Company for such fiscal
year, and (c) such other financial information as any Bank may from time
to time reasonably request.
5.4 Books and Records. Keep and cause each Subsidiary to
keep proper, complete and accurate books of record and account.
5.5 Inspections. Permit representatives of the Agent or
any Bank to visit and inspect any of the properties and examine and copy
any of the books and records of the Company or any Subsidiary at any
reasonable time and at reasonable intervals.
5.6 Insurance. Maintain and cause each Subsidiary to
maintain insurance coverage as may be required by law but in any event not
less than insurance coverage in the forms, amounts and with companies,
which would be carried by prudent management in connection with similar
properties and businesses. Without limiting the foregoing, the Company
will and will cause each Subsidiary to (a) keep all its physical property
insured against fire and extended coverage risks in amounts and with
deductibles not more than those generally maintained by businesses engaged
in similar activities in similar geographic areas; (b) maintain all such
worker's compensation and similar insurance as may be required by law; and
(c) maintain, in amounts and with deductibles not more than those
generally maintained by prudent management of businesses engaged in
similar activities in similar geographic areas, general public liability
insurance against claims for bodily injury, death or property damage,
occurring on, in or about the properties of the Company or such
Subsidiary, business interruption insurance and product liability
insurance.
5.7 Condition of Property. Keep and cause each Subsidiary
to keep its properties (whether owned or leased) in good operating
condition, repair and working order.
5.8 Payment of Taxes. Pay and discharge, and cause each
Subsidiary to pay and discharge, all taxes, assessments and governmental
charges upon it or against its properties prior to the date on which
penalties are attached thereto, unless and to the extent only that the
same shall be contested in good faith and by appropriate proceedings
diligently conducted by the Company or the appropriate Subsidiary and
appropriate reserves with respect thereto are established and maintained
in accordance with GAAP.
5.9 Maintain Existence, Rights and Licenses. Do and,
except as permitted under Section 6.5 hereof, cause each Subsidiary to do
all things necessary to (a) maintain its corporate existence in good
standing in its state of incorporation and in any other state where the
ownership of property or the conduct of business make qualification
necessary and where the failure to so qualify would have a material
adverse effect upon its business, operations or financial condition and
(b) preserve and keep in full force and effect its legal and contractual
rights and licenses necessary to continue its business.
5.10 Compliance with Law. Comply and cause each
Subsidiary to comply with all applicable laws, regulations and ordinances,
including all applicable Environmental Laws, the failure to comply with
which would have a material adverse affect on the Company and its
Consolidated Subsidiaries taken as a whole.
5.11 ERISA Certificate. Comply and cause each Subsidiary
to comply with all applicable requirements of ERISA for each Plan and
furnish to the Agent, as soon as possible and in any event within 30 days
after the Company shall have obtained knowledge that a Reportable Event
has occurred with respect to any Plan, a certificate of an officer of the
Company setting forth the details as to such Reportable Event and the
action which the Company proposes to take with respect thereto, and a copy
of each notice of a Reportable Event sent to the Pension Benefit Guaranty
corporation by the Company and, with respect to a Multiemployer Plan,
furnish to the Agent as soon as possible after the Company receives notice
or obtains knowledge that the Company or any member of the Controlled
Group may be subject to withdrawal liability, or required to post a bond
to avoid such liability, to a Multiemployer Plan, a certificate of an
officer of the Company setting forth the details as to such event and the
actions which the Company plans to take with respect thereto.
5.12 Compliance with Other Loan Documents. Timely comply
with all of its obligations under the other Loan Documents.
5.13 Required Notices. Furnish to the Agent (a)
immediately upon becoming aware of any Default or Event of Default, a
written notice specifying the nature and period of existence thereof and
what action the Company is taking or proposes to take with respect
thereto; and (b) immediately upon becoming aware that the holder of any
other Indebtedness issued or assumed by the Company or any Subsidiary, or
the lessor under any lease as to which the Company or any Subsidiary is
the lessee, has given notice or has taken any action with respect to a
claimed default thereunder, or under any agreement under which any such
Indebtedness was issued or secured, a written notice specifying the notice
given or action taken, the nature of the claimed default and what action
the Company is taking or proposes to take with respect thereto; (c)
immediately upon receipt, copies of any correspondence, notice, pleading,
citation, indictment, complaint, order, decree or other document from any
source asserting or alleging a circumstance or condition which requires or
may reasonably be expected to require a financial contribution by the
Company or any Consolidated Subsidiary exceeding $1,000,000 or a cleanup,
removal, remedial action or other response by or on the part of the
Company or any Consolidated Subsidiary under Environmental Laws which may
reasonably be expected to cost the Company or any Consolidated Subsidiary
in excess of $1,000,000 or which seeks damages or civil, criminal or
punitive penalties from the Company or any Consolidated Subsidiary for an
alleged violation of Environmental Laws in excess of $1,000,000; (d)
written notice of any condition or event which would make any warranty
contained in Section 3 hereof inaccurate, as soon as the Company becomes
aware of such condition or event; (e) immediately following its
occurrence, written notice of any change in the status, and any results of
the matter referred to in Section 6.11 hereof; (f) prior to any agreement
to pay or payment by the Company or any Consolidated Subsidiary arising
out of the matter referred to in Section 6.11 hereof, other than legal and
accounting fees, written notice of the reasons for and the amount of any
such payment; (g) immediately upon obtaining knowledge thereof, written
notice of any material adverse change in or default under or intended
termination of, or receipt of any stop work order which the Company
reasonably believes may result in a termination of, any Government
Contract where such termination would result in a loss of revenue in
excess of $20,000,000.
5.14 Compliance with all Contracts. Comply and cause each
Consolidated Subsidiary to comply, with the provisions of the Company's
existing contracts and all contracts entered subsequent to the date of
this Agreement, the termination or cancellation of which would have a
material adverse effect upon the Company and its Consolidated Subsidiaries
taken as a whole.
5.15 Notice of Material Adverse Changes. Furnish promptly
to the Agent written notice of (a) any change of the Company's officers or
members of its Board of Directors and (b) any material adverse change in
the business or condition of the Company and its Consolidated Subsidiaries
taken as a whole.
5.16 Special Bank Event. Within 90 days after the
occurrence of a Special Bank Event, (i) replace the Cherokee Co. IRB
Letter of Credit with the letter of credit of an issuer who is not subject
to a Special Bank Event as a result of issuing the Cherokee co. IRB Letter
of Credit, (ii) cause the redemption of all of the Cherokee Co. Industrial
Revenue Bonds in accordance with the terms of the Indenture, or (iii)
cause the Cherokee Co. IRB Letter of Credit to be surrendered for
cancellation.
Section 6. Negative Covenants
6. Negative Covenants. The Company covenants that, without
the prior written consent of the Majority Banks, it will not, and will not
permit any Subsidiary to, until all Revolving Loan Commitments and the
Letter of Credit Commitments have terminated or expired, all Letters of
Credit have expired (or the Company has delivered the Cash Collateral
required under Section 2.9(e) hereof) and all obligations hereunder and
under the Loan Documents of the Company to the Agent and the Banks, have
been paid in full:
6.1 Restricted Payments. Make any Restricted Payments,
provided that so long as no Default or Event of Default exists or will
occur as a result of one of the following Restricted Payments, the Company
may (a) purchase, redeem or otherwise acquire the stock of the Company,
during the period commencing September 30, 1994 and ending on the Maturity
Date or March 31, 1996, whichever is earlier, in an amount not exceeding,
in the aggregate, $25,000,000, and (b) make other Restricted Payments,
during the period commencing on September 30, 1994 and ending on the
Maturity Date, not exceeding, in the aggregate, $4,000,000 plus 40% of Net
Income (or, if Net Income is a negative number, then reduced by 100% of
such negative Net Income) for the period commencing October 1, 1994 to the
end of the fiscal quarter immediately preceding the making of such
Restricted Payment.
6.2 Limitations on Indebtedness. Create, incur, assume or
permit to exist any Indebtedness except (a) Indebtedness owed to the Banks
under this Agreement; (b) Indebtedness secured by Permitted Liens; (c)
Indebtedness for borrowed funds not to exceed $2,000,000, in the
aggregate, at any time outstanding; (d) Indebtedness permitted under
Section 6.6 hereof; (e) other current Indebtedness not for borrowed funds
or the deferred purchase price of property; (f) deferred taxes; (g)
unfunded obligations with respect to Plans but only to the extent they are
permitted to remain unfunded under applicable law; (h) wages or other
compensation due to employees and agents for services actually performed;
(i) Indebtedness arising out of foreign exchange contracts not to exceed
$2,500,000, in the aggregate, at any time outstanding; (j) Indebtedness
evidenced by industrial development revenue bonds due August 1, 2019, as
shown on the Company's December 31, 1994 financial statements delivered to
the Agent; and (k) Indebtedness, the payment of which is fully
subordinated, in a manner satisfactory to the Banks, to the prior payment
of the Notes and the Company's other obligations under this Agreement and
the Loan Documents.
6.3 Limitations on Guaranties. Create, incur, assume or
permit to exist any Guaranties except for (a) the endorsement of
negotiable or nonnegotiable instruments for collection in the ordinary
course of business, (b) Guaranties in favor of the Banks, (c) that certain
Steeltech Manufacturing, Inc./Lease Investment Partnership I Guaranty in
the amount of $3,100,000, (d) Guaranties of the obligations of the
Company's customers under third-party wholesale/retail finance
arrangements, consistent with past practices of the Company; (e)
Guaranties of the obligations of the Company's vendors, or suppliers to
such vendors, to enable such vendors or suppliers to purchase goods or
parts to be processed and sold to the Company; provided, however, the
aggregate liability of the Company under such Guaranties, together with
the aggregate amount of outstanding advances permitted under Section
6.6(j) hereof, shall not exceed $1,000,000, in the aggregate, at any time
outstanding; and (f) Guaranties, other than the foregoing Guaranties,
under which the liability of the Company shall not exceed $5,000,000, in
the aggregate, at any time outstanding.
6.4 Limitations on Liens and Encumbrances. Create, assume
or permit to exist any mortgage, security interest, lien or charge of any
kind, including any restriction against mortgages, security interests,
liens or charges upon any of its property or assets, whether now owned or
hereafter acquired, except Permitted Liens.
6.5 Limitations on Mergers, Etc. Merge or consolidate
with or into any other corporation or entity or sell, lease, transfer or
otherwise dispose of in a single transaction or a series of transactions,
all or a substantial part of its assets (other than sales made in the
ordinary course of business and the sale of stock of any Subsidiary),
except that any Subsidiary may merge into, or transfer all or a
substantial part of its assets to, the Company.
6.6 Limitations on Acquisitions, Advances and Investments.
Acquire any other business or partnership or joint venture interest either
by a stock or asset purchase or make any loans, advances or extensions of
credit to, or any investments in, any person or entity except (a) the
purchase of United States government bonds and obligations and Standard &
Poors A rated municipal bonds and obligations, each with a maturity of not
more than one year; (b) extensions of credit to customers in the usual
course of business of the Company or any Subsidiary; (c) the purchase of
certificates of deposit from financial institutions with capital and
surplus of $250,000,000 or more and Standard & Poors A1P2 rated commercial
paper, each having a maturity not exceeding one year; (d) existing
advances to wholly-owned Subsidiaries of the Company and existing advances
by any Subsidiary to the Company or to another Subsidiary; (e) deposits in
deposit accounts at banks; (f) investments in bank repurchase agreements
for the government securities permitted in subsection (a) from financial
institutions with capital and surplus of $250,000,000 or more; (g) loans
and advances to employees and agents in the ordinary course of business
for travel and entertainment expenses and similar items; (h) existing and
future investments of the Company in Steeltech Manufacturing, Inc. and
Lease Investment Partnership I, not to exceed an aggregate amount of
$1,100,000; (i) investments in wholly-owned Subsidiaries of the Company in
an amount not to exceed $1,000,000; (j) advances to the Company's vendors,
or suppliers to such vendors, to enable such vendors or suppliers to
purchase goods or parts to be processed and sold to the Company; provided,
however, the aggregate of such advances, and the liability of the Company
under Guaranties permitted under Section 6.3(e) hereof, shall not exceed
$1,000,000 at any time outstanding; (k) investments in Midwest O.P.
Holdings, Corp., not to exceed an aggregate amount of $3,500,000; (l)
investments, loans, advances or extensions of credit (including accounts
receivable) to Chasises Y Autopartes Oshmex S.A. de C.V., a Mexico
corporation, not to exceed an aggregate amount of $12,500,000; (m) new
strategic investments, not to exceed an aggregate amount of $1,000,000 in
each fiscal year; and (n) acquisitions of other businesses or partnership
or joint venture interests in an amount not to exceed $15,000,000 during
the term of this Agreement.
6.7 Current Ratio. Permit the Current Ratio to be less
than 1.75 to 1 at the end of any fiscal quarter of the Company.
6.8 Indebtedness to Tangible Net Worth Ratio. Permit the
ratio of Indebtedness to Tangible Net Worth to be greater than 1.5 to 1
at the end of any fiscal quarter of the Company.
6.9 Debt Service Coverage Ratio. Permit the Debt Service
Coverage Ratio to be less than 3 to 1 at the end of any fiscal quarter of
the Company.
6.10 Transactions with Affiliates. Enter into or be a
party to any transaction with any Affiliate except (a) as otherwise
provided herein or in the ordinary course of business and upon fair and
reasonable terms which are no less favorable than a comparable arm's
length transaction with an entity which is not an Affiliate and (b) the
payment of reasonable compensation and customary benefits to the Company's
officers and directors for services rendered.
6.11 Litigation Payment. Make any payment as a result of
the grand jury investigation now pending in the United States District
Court for the Eastern District of Wisconsin in excess of $2,500,000.
6.12 Cherokee Co. Industrial Revenue Bonds. Enter into or
consent to any material amendment of any of the Basic Documents without
the prior written consent of the Issuing Bank for the Cherokee Co. IRB
Letter of Credit and the Majority Banks. The Company will not, and will
not permit any Affiliate to have any Cherokee Co. Industrial Revenue Bond
(including the principal amount thereof and interest accrued thereon)
legally or beneficially owned by any of them to be purchased, or redeemed
or otherwise paid, directly or indirectly, by any drawing on the Cherokee
Co. IRB Letter of Credit, and the Company agrees not to cause any optional
redemption of the Cherokee Co. Industrial Revenue Bonds pursuant to
Sections 2.06(a) or 2.07(a)(ii) of the Indenture, unless (i) the Majority
Banks shall have given their prior written consent, or (ii) the Company
shall provide cash collateral in advance of the draw in an amount at least
as great as the amount of the draw.
Section 7. Events of Default; Remedies
7.1 Events of Default. The occurrence of any of the
following shall constitute an Event of Default:
(a) Failure to Pay Note. The Company fails to pay
(i) principal on any Note when the same becomes due and payable, whether
at a stated payment date, or a date fixed by the Company for prepayment or
by acceleration, (ii) the Reimbursement Obligations on the date such
Reimbursement Obligations arose, or (iii) interest or any fee payable
hereunder, when the same becomes payable and such failure to pay such
interest or fee continues uncured for a period of five days.
(b) Falsity of Representations and Warranties. Any
representation or warranty made in any Loan Document or in any certificate
issued pursuant thereto is false in any material respect on the date as of
which made or as of which the same is to be effective.
(c) Breach of Certain Covenants and Provisions. The
Company fails to comply with any term, covenant or agreement contained in
Sections 5.4, 5.7 or 5.10 hereof or in Sections 9.2 or 9.3 hereof and such
failure continues for a period of 15 days after the Agent, at the request
of the Majority Banks, has given written notice thereof to the Company.
(d) Breach of Other Covenants. The Company fails to
comply with any term, covenant or agreement contained in any other
subsection of Section 5 or in Section 6 hereof.
(e) Breach of Other Provisions. The Company fails to
comply with any other agreement contained herein or in any other Loan
Document and such default continues for a period of 30 days after the
Agent, at the request of the Majority Banks, has given written notice
thereof to the Company.
(f) Default Under Other Agreements. The Company
fails to pay when due any other Indebtedness issued or assumed by the
Company in an aggregate amount of $5,000,000 or more or fails to comply
with the terms of any agreement under which such Indebtedness was created
and such default continues beyond the period of grace, if any, therein
provided.
(g) Entry of Judgments. A judgment is entered
against the Company or any Subsidiary which, together with all unsatisfied
judgments entered against the Company and all Subsidiaries, exceeds the
sum of $1,000,000, and such judgment is neither satisfied nor stayed
within 60 days after the entry thereof.
(h) ERISA Liability. Any event in relation to any
Plan which the Majority Banks reasonably determine in good faith could
reasonably be expected to result in any of the occurrences set forth in
Section 3.11 hereof.
(i) Insolvency, Failure to Pay Debts or Appointment
of Receiver. The Company or any Subsidiary becomes insolvent or the
subject of state insolvency proceedings, fails generally to pay its debts
as they become due or makes an assignment for the benefit of creditors; or
a receiver, trustee, custodian or other similar official is appointed for,
or takes possession of any substantial part of the property of, the
Company or any Subsidiary.
(j) Cancellation of Government Contracts. The
termination, other than by the United States government for its
convenience (as provided for in 48 C.F.R. Part 49) of any Government
Contracts where such termination would result, with any other such
termination, in a loss of revenue in excess of $50,000,000 in any fiscal
year of the Company.
(k) Event of Default Under Basic Documents. The
Company shall default in the due performance or observance of any other
term, covenant or agreement contained in any of the other Basic Documents
(subject to applicable grace or cure periods, if any, sometimes herein
referred to as a "Cherokee Co. IRB Default").
(l) Subject of United States Bankruptcy Proceedings.
The taking of corporate action by the Company or any Subsidiary to
authorize such organization to become the subject of proceedings under the
United States Bankruptcy Code; or the execution by the Company or any
Subsidiary of a petition to become a debtor under the United States
Bankruptcy Code; or the filing of an involuntary petition against the
Company or any Subsidiary under the United States Bankruptcy Code which
remains undismissed for a period of 60 days; or the entry of an order for
relief under the United States Bankruptcy Code against the Company or any
Subsidiary.
7.2 Remedies. Upon the occurrence and continuance of any
of the events described in Sections 7.1(a) through 7.1(k) hereof
inclusive, the Agent shall, at the direction of the Majority Banks, at the
same or different times, take any or all of the following actions:
(a) Declare the Revolving Loan Commitments and the
Letter of Credit Commitments to be terminated, whereupon the Banks'
Revolving Loan Commitments and the Letter of Credit Commitments shall
immediately terminate; or
(b) Declare the Notes, and all accrued interest
thereon, and an amount equal to the then existing Letter of Credit
Exposure to be immediately due and payable, whereupon the Notes, the
Letter of Credit Exposure and all accrued interest thereon shall be
immediately due and payable without presentment, demand, protest or notice
of any kind, all of which are expressly waived by the Company.
(c) The Issuing Bank may, at the request and
direction of the Majority Banks, notify the Trustee of the occurrence of
an Event of Default hereunder and thereby require the Trustee to declare
the principal amount of the Cherokee Co. Industrial Revenue Bonds and
interest accrued thereon to be due and payable immediately, all in
accordance with the terms of the Indenture, and, upon said declaration,
such principal and interest shall become and be immediately due and
payable. In addition the Issuing Bank, at the request and direction of
the Majority Banks, may exercise any other rights and remedies available
under any Basic Document, any other agreement or at law or in equity. If
the Event of Default is the failure by the Company to reimburse the
Issuing Bank on a timely basis for an "Interest Drawing" (as defined in
the Cherokee Co. IRB Letter of Credit), the Issuing Bank may, no later
than the tenth Business Day following such drawing, deliver to the Trustee
notice that the Cherokee Co. IRB Letter of Credit will not be reinstated.
Promptly following the making of such declaration, the
Agent shall give notice thereof to the Company and each Bank but the
failure to give such notice shall not impair any of the effects of such
declaration. Upon the occurrence of any of the events described in
Section 7.1(l) hereof, the Revolving Loan Commitments and the Letter of
Credit Commitments shall forthwith terminate and all the Notes and an
amount equal to the then existing Letter of Credit Exposure, together with
accrued interest thereon, shall be immediately due and payable without
presentment, demand, protest or notice of any kind, all of which are
expressly waived by the Company.
Section 8. The Agent
8.1 Appointment and Duties of Agent. The Banks hereby
appoint Firstar Bank Milwaukee, N.A., subject to the terms and conditions
of this Section 8, as the Agent for the Banks under and for purposes of
this Agreement and the other Loan Documents. Each of the Banks hereby
irrevocably authorizes and directs the Agent to take such action on its
behalf and to exercise such powers hereunder as are delegated to the Agent
herein, together with such powers as are reasonably incidental thereto, in
connection with the administration of and enforcement of any rights or
remedies with respect to this Agreement and the other Loan Documents. The
Agent shall use reasonable diligence to examine the face of each document
received by it hereunder to determine whether such document, on its face,
appears to be what it purports to be. However, the Agent shall not be
under any duty to examine into or pass upon the validity or genuineness of
any documents received by it hereunder and the Agent shall be entitled to
assume that any of the same which appears regular on its face is genuine
and valid and what it purports to be.
8.2 Discretion and Liability of the Agent. Subject to
Sections 8.3 and 8.5 hereof and in accordance with prudent banking
practice, the Agent shall be entitled to use its discretion with respect
to exercising or refraining from exercising any rights which may be vested
in it by, or with respect to, taking or refraining from taking any action
or actions which it may be able to take under or in respect of this
Agreement and the other Loan Documents. Neither the Agent nor any of its
directors, officers, employees, agents or representatives shall be liable
for any action taken or not taken by them hereunder or under any other
Loan Document unless such action or failure to act results from his, her
or its gross negligence or willful misconduct.
8.3 Event of Default. The Agent shall be entitled to
assume that no Default or Event of Default has occurred and is continuing
unless the Agent has actual knowledge of such facts or has received notice
from a Bank in writing that such Bank considers that a Default or Event of
Default has occurred and is continuing and which specifies the nature
thereof.
If the Agent shall acquire actual knowledge of or receive
notice from a Bank that a Default or Event of Default has occurred, the
Agent shall, by telephonic notice confirmed in writing, promptly notify
the Banks and the Company of such Default or Event of Default.
8.4 Consultation. The Agent in good faith may consult
with legal counsel or an accountant selected by it and shall be entitled
to fully rely in good faith upon any opinion of such counsel or accountant
in connection with any action taken or not taken by the Agent in
accordance with such opinion.
8.5 Communications To and From the Agent. Upon any
occasion requiring or permitting an approval, consent, waiver, election or
other action on the part of the Banks, unless action by the Agent alone is
expressly permitted hereunder, action shall be taken by the Agent for and
on behalf or for the benefit of the Banks upon the direction of the
Majority Banks. The Company may rely upon any communication from the
Agent hereunder and need not inquire into the propriety of or
authorization for such communication. Upon receipt by the Agent from the
Company or any Bank of any communication calling for an action on the part
of the Banks, the Agent will, in turn, promptly inform the other Banks in
writing of the nature of such communication. The Agent shall promptly
forward to each of the Banks all financial statements, notices and other
information received by it from the Company under Sections 5.1, 5.2, 5.3,
5.11, 5.13 and 5.15.
8.6 Limitations of Agency. Notwithstanding anything in
this Agreement or any of the other Loan Documents, express or implied, it
is agreed by the parties hereto that the Agent will act hereunder and
under the other Loan Documents, solely for the Banks and only to the
extent specifically set forth herein and will, under no circumstances, be
considered to be a fiduciary of any nature whatsoever in respect of any
other person. The relationship between the Agent and the Banks is that of
agent and principal only and the Agent shall not be deemed to be trustee
or fiduciary for any Bank. The Agent may generally engage in any kind of
banking or trust business with the Company as if it were not the Agent.
8.7 No Representation or Warranty. No Bank (including the
Agent) makes to any other Bank any representation or warranty, express or
implied, or assumes any responsibility with respect to the execution,
validity or enforceability of this Agreement or the other Loan Documents.
8.8 Bank Credit Decision. Each Bank acknowledges that it
has, independent of and without reliance upon any other Bank (including
the Agent) or any information provided by any other Bank (including the
Agent) and based upon the financial statements of the Company and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independent of and without reliance upon any
other Bank (including the Agent) and based upon such documents and
information as it shall deem appropriate at that time, continue to make
its own credit decision in taking or not taking action under this
Agreement and any other Loan Documents.
8.9 Indemnity. Each Bank hereby indemnifies (which
indemnity shall survive any termination of this Agreement) the Agent, pro
rata according to such Bank's Percentage, from and against any and all
liabilities, obligations, losses, damages, claims, costs, or expenses of
any kind or nature whatsoever which may at any time be imposed on,
incurred by, or asserted against, the Agent in any way related to or
arising out of this Agreement or the other Loan Documents, including
reasonable attorneys' fees, and as to which the Agent is not reimbursed by
the Company; provided, however, that no Bank shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
claims, costs or expenses which are 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 Loan Document, or to prosecute or
defend any suit in respect of the transactions contemplated hereby, unless
it is indemnified hereunder to its satisfaction. If any indemnity in
favor of the Agent shall be or become, in the Agent's good faith
determination, inadequate, the Agent may call for additional
indemnification from the Banks and cease to do the acts indemnified
against hereunder until such additional indemnity is given.
8.10 Resignation or Removal of Agent; Successor Agent. The
Agent may resign as such at any time upon at least 30 days' prior notice
to the Company and all Banks. The Agent may be removed at any time by the
Majority Banks upon at least 30 days' prior notice by the Majority Banks
to the Company and the Agent but only for cause consisting of its gross
negligence or willful misconduct or following a declaration of insolvency
by appropriate regulators. If the Agent at any time shall resign or be
removed, the Majority Banks, with the prior written approval of the
Company (which approval shall not be unreasonably withheld, and shall not
be required upon the occurrence and during the continuance of an Event of
Default), may appoint another Bank as a successor Agent which shall
thereupon become the Agent hereunder. If no successor Agent shall have
been so appointed by the Majority Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent has given notice of
resignation, then the retiring Agent may, with the prior written approval
of the Company (which approval shall not be unreasonably withheld, and
shall not be required upon the occurrence and during the continuance of an
Event of Default) and on behalf of the Banks, appoint the successor Agent,
which shall be one of the Banks. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, such successor Agent shall be
entitled to receive from the retiring Agent such documents of transfer and
such assignments as such successor Agent may reasonably request, and shall
thereupon succeed to and become vested with all rights, powers, privileges
and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations as Agent under this Agreement.
The successor Agent shall be entitled to negotiate its own fee structure
with the Company, but in any event shall be entitled to receive as
compensation an amount not less than the amount the retiring Agent would
have been entitled to receive.
Section 9. Miscellaneous
9.1 Survival of Representations and Warranties. The
Company's representations and warranties contained in Section 3 hereof
shall survive closing and execution and delivery of the Notes.
9.2 Indemnification. The Company agrees to defend,
indemnify and hold harmless the Agent, the Banks and their respective
directors, officers, employees and agents from and against any and all
loss, cost, expense or liability (including reasonable attorneys' fees)
incurred in connection with any and all claims or proceedings (whether
brought by a private party or governmental agency) as a result of, or
arising out of or relating to:
(a) bodily injury, property damage, abatement or
remediation, environmental damage or impairment or any other injury or
damage resulting from or relating to any hazardous or toxic substance or
contaminated material (as determined under Environmental Laws) located on
or migrating into, from or through property previously, now or hereafter
owned or occupied by the Company, which the Agent or any Bank may incur
due to the making of the loans provided for in Section 2 or otherwise;
(b) any transaction financed or to be financed, in
whole or in part, directly or indirectly, with the proceeds of any
Extension of Credit;
(c) the entering into, performance of and exercise of
its rights pursuant to this Agreement (other than a dispute between the
Banks) or any other Loan Document by the Agent and the Banks.
This indemnity will survive the repayment of the Notes and
reimbursement for amounts drawn under the Letters of Credit.
Notwithstanding the foregoing, the Company shall not be liable under this
section to any of the foregoing indemnities for any loss, cost, expense or
liability incurred by any such indemnitees which is caused by (a) a breach
by such indemnitee of any of his, her or its obligations under this
Agreement, or (b) the gross negligence or willful misconduct of such
indemnitee.
9.3 Expenses. The Company agrees, whether or not the
transaction hereby contemplated shall be consummated, to pay on demand (a)
all out-of-pocket expenses incurred by the Agent in connection with the
negotiation, preparation, execution, administration, amendment or
enforcement of this Agreement and the other Loan Documents, including
attorneys' fees and expenses, (b) out-of-pocket expenses, including
attorneys' fees, incurred by a Bank in connection with the negotiation,
preparation and execution of this Agreement, not to exceed $2,500.00 for
each Bank, and reasonable expenses, including attorneys' fees, in
connection with any future amendments or modifications hereto, (c) any
taxes (including any interest and penalties relating thereto) payable by
any Bank (other than taxes based upon such Bank's net income) on or with
respect to the transactions contemplated by this Agreement (the Company
hereby agreeing to indemnify each Bank with respect thereto) and (d) all
out-of-pocket expenses, including attorneys' fees and expenses, incurred
by the Agent or any Bank in connection with any litigation, proceeding or
dispute in any way related to the Agent's and the Banks' relationships
with the Company arising hereunder or under any future amendment or
modification hereto (other than a dispute between the Banks); provided
that the expenses of the Agent or any Bank described in subclause (d)
shall not include those incurred in connection with any litigation,
proceeding or dispute in which the Agent or such Bank was finally
determined to have breached its obligations under this Agreement, or to
have been guilty of gross negligence or willful misconduct. The
obligations of the Company under this section will survive payment of the
Notes and Reimbursement Obligations.
9.4 Notices. Except as otherwise provided in Section 2.2
hereof, all notices provided for herein shall be in writing and shall be
(a) hand-delivered; (b) sent by express mail; or (c) sent by facsimile
transmission and confirmed in writing provided to the recipient in a
manner described in (a) or (b), and, addressed, if to the Agent or a Bank,
to it at the address set forth below its signature, and if to the Company,
to it at P.O. Box 2566, Oshkosh, Wisconsin, 54903-2566 Facsimile No. 414-
233-9459, or to such other address with respect to any party as such party
shall notify the others in writing; such notices shall be deemed given
when delivered or mailed or so transmitted.
9.5 Participations. The Company agrees that each Bank
may, at its option, sell to another financial institution or institutions,
directly or indirectly controlling, controlled by or under common control
with such Bank, all or part of its interests in the Note payable to such
Bank and, in connection with each such sale, and thereafter, disclose to
the purchaser or prospective purchaser of each such interest financial and
other information concerning the Company. The Bank shall promptly notify
the Company of any such sale. The Company agrees that if amounts
outstanding under this Agreement or any Note 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 such purchaser shall be deemed to
have, to the extent permitted by applicable law, the right of setoff in
respect of its participating interest in amounts owing under this
Agreement and such Note to the same extent as if the amount of its
participating interest were owed directly to it. The Company further
agrees that each such purchaser shall be entitled to the benefits of
Section 2.12 with respect to its participation in the selling Bank's
Revolving Loan Commitment; provided that no such purchaser shall be
entitled to receive any greater amount pursuant to that section than the
Bank would have been entitled to receive if no such sale had occurred.
9.6 Titles. The titles of sections in this Agreement are
for convenience only and do not limit or construe the meaning of any
section.
9.7 Parties Bound; Waiver. The provisions of this
Agreement shall inure to the benefit of and be binding upon any successor
of any of the parties hereto and shall extend and be available to any
holder of a Note; provided that the parties' rights under this Agreement
are not assignable. No delay on the part of any holder of a Note in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof, and no single or partial exercise of any right, power or
privilege hereunder shall preclude other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and
remedies herein specified are cumulative and not exclusive of any rights
or remedies which the holder of a Note would otherwise have.
9.8 Governing Law. This Agreement is being delivered in
and shall be deemed to be a contract governed by the laws of the State of
Wisconsin and shall be interpreted and enforced in accordance with the
laws of that state without regard to the principles of conflicts of laws.
9.9 Submission to Jurisdiction; Service of Process. As a
material inducement to the Agent and the Banks to enter into this
Agreement:
THE COMPANY AGREES THAT ALL ACTIONS OR PROCEEDINGS IN
ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT ONLY IN COURTS OF THE STATE OF WISCONSIN LOCATED
IN MILWAUKEE OR THE FEDERAL COURT FOR THE EASTERN DISTRICT OF WISCONSIN
AND THE COMPANY CONSENTS TO THE JURISDICTION OF SUCH COURTS. THE COMPANY
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
COURT AND ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO CLAIM THAT ANY SUCH
ACTION OR PROCEEDING IS IN AN INCONVENIENT COURT.
9.10 Entire Agreement. This Agreement and the other Loan
Documents shall constitute the entire agreement of the parties pertaining
to the subject matter hereof and supersede all prior or contemporaneous
agreements and understandings of the parties in connection therewith.
9.11 Amendments. No provision of this Agreement or the
other Loan Documents may be amended, modified, supplemented, changed,
waived, discharged or terminated unless the consent of the Required Banks
and the Company is obtained in writing; provided, however, that no such
amendment, modification or waiver which would:
(a) modify any requirement hereunder that any
particular action be taken by all the Banks or by the Majority Banks or by
the Required Banks shall be effective unless consented to by each Bank;
(b) modify this Section 9.11, change the definition
of "Required Banks," or of "Majority Banks," increase any Revolving Loan
Commitment, Letter of Credit Commitment or the Percentage of any Bank, or
reduce any interest or fees payable hereunder, shall be effective unless
consented to by each Bank;
(c) extend the scheduled due date for the payment of
principal or interest on any Note (or reduce the principal amount of or
rate of interest on any Note) shall be made without the consent of the
holder of such Note;
(d) extend the time for reimbursement by the Company
of the Reimbursement Obligations, or reduce the interest rate payable
thereon, shall be made without the consent of each Bank; or
(e) adversely affect the interest, rights, or
obligations of the Agent as the Agent shall be made without the consent of
the Agent.
9.12 Counterparts. This Agreement and any amendment
hereof may be executed in several counterparts, each of which shall be
executed by the Agent and the Company and be deemed to be an original and
all of which together shall constitute one instrument. This Agreement
shall become effective when counterparts hereof executed on behalf of the
Company, the Agent and each Bank shall have been received by the Agent and
notice thereof shall have been given by the Agent to the Company and each
Bank.
9.13 Waiver of Jury Trial. THE COMPANY, THE AGENT AND THE
BANKS HEREBY KNOWINGLY AND VOLUNTARILY WAIVE THE RIGHT EACH OF THEM MAY
HAVE TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM BASED ON OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ANY OTHER ACTION OF ANY PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE AGENT AND THE BANKS TO ENTER INTO THIS
AGREEMENT.
9.14 Limitation of Liability. THE COMPANY, THE AGENT AND
THE BANKS HEREBY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER
FROM THE OTHER PARTY ANY EXEMPLARY OR PUNITIVE DAMAGES AND, IN THE CASE OF
DAMAGES ARISING FROM THE ISSUANCE OR FAILURE TO ISSUE ANY LETTER OF CREDIT
OR THE HONORING OR FAILURE TO HONOR ANY DRAFT PRESENTED UNDER ANY LETTER
OF CREDIT, ANY CONSEQUENTIAL DAMAGES.
* * * * *
OSHKOSH TRUCK CORPORATION
By:
Fred S. Schulte, Vice President and
Chief Financial Officer
Percentage
33.3334 FIRSTAR BANK MILWAUKEE, N.A.,
as Agent and a Bank
By:
Stephen E. Carlton, Assistant Vice
President
Address: 777 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Stephen E. Carlton
Facsimile No.: (414) 765-5062
22.2222 BANK ONE, MILWAUKEE, NATIONAL
ASSOCIATION
By:
Anthony F. Maggiore, Vice President
Address: 111 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Anthony F. Maggiore
Facsimile No.: (414) 765-2176
<PAGE>
22.2222 NATIONSBANK, N.A. (CAROLINAS)
By:
Michael Zehfuss, Vice President
Address: 233 South Wacker Drive
Suite #2800
Chicago, Illinois 60606
Attn: Michael S. Zehfuss
Facsimile No.: (312) 234-5601
22.2222 HARRIS TRUST AND SAVINGS BANK
By:
George Dluhy, Vice President
Address: 111 W. Monroe Street
Second Floor West
Chicago, IL 60603
Attn: George Dluhy
Facsimile No.: (312) 461-2591
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF OSHKOSH TRUCK CORPORATION FOR THE
QUARTER ENDED APRIL 1, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> APR-01-1995
<CASH> 381
<SECURITIES> 0
<RECEIVABLES> 74,715
<ALLOWANCES> 712
<INVENTORY> 71,284
<CURRENT-ASSETS> 158,615
<PP&E> 116,384
<DEPRECIATION> 66,974
<TOTAL-ASSETS> 227,835
<CURRENT-LIABILITIES> 79,450
<BONDS> 11,200
<COMMON> 90
0
0
<OTHER-SE> 120,870
<TOTAL-LIABILITY-AND-EQUITY> 227,835
<SALES> 129,274
<TOTAL-REVENUES> 129,274
<CGS> 112,350
<TOTAL-COSTS> 112,350
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 92
<INTEREST-EXPENSE> 495
<INCOME-PRETAX> 2,511
<INCOME-TAX> 1,172
<INCOME-CONTINUING> 1,339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,339
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
</TABLE>
