SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 18, 1996
OSHKOSH TRUCK CORPORATION
------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 0-13886 39-0520270
------------------ ------------------ ------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
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
----------------------
NOT APPLICABLE
-------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 2 Acquisition or Disposition of Assets
On September 18, 1996, Oshkosh Truck Corporation (Oshkosh) acquired
all of the issued and outstanding stock of Pierce Manufacturing Inc.
(Pierce) pursuant to a Stock Purchase Agreement dated August 7, 1996. The
previous shareholders included The Northwestern Mutual Life Insurance
Company and affiliates which controlled 51.4% of the outstanding stock and
the remainder was owned or controlled by the senior management and
directors of Pierce. The transaction encompassed all of the assets,
liabilities and the ongoing business of Pierce.
Pierce is a leading U.S. fire truck manufacturer and offers a broad
array of specialty fire apparatus including custom and commercial pumpers,
aerial units, and rescue trucks. Oshkosh intends to continue to operate
Pierce as a fire truck manufacturer. A total of 1,200 employees are
located at Pierce's facilities near Appleton, Wisconsin. Pierce will
continue to operate under its own name as a wholly owned subsidiary of
Oshkosh.
The purchase price, established by a competitive bid process set by
the sellers, totaled $158 million, payable in cash at the date of the
closing of September 18, 1996. As of the date of the acquisition, Pierce
had cash of approximately $4 million and no outstanding debt.
No material relationship exists between the shareholders of Seller
and shareholders of the Registrant or any of their affiliates, any
director or officer of Seller and the Registrant or any associate of any
such director or officer.
The acquisition was financed by a $200 million bank credit facility
syndicated by Firstar Bank Milwaukee, N.A., as agent. The facility
consists of a $150 million term loan and a $50 million revolving credit
facility for the continuing working capital requirements of Oshkosh.
- Item 7 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The financial statements of Pierce Manufacturing Inc. are included as
follows:
- As of October 31, 1995 and 1994 and for the years ended
October 31, 1995, 1994 and 1993.
- Report of Independent Public Accountants
- Consolidated Statements of Income
- Consolidated Balance Sheets
- Consolidated Statements of Shareholders' Equity
- Consolidated Statements of Cash Flows
- Notes to Consolidated Financial Statements
- As of July 31, 1996 and 1995 and for the nine month periods
ended July 31, 1996 and 1995.
- Consolidated Statements of Income
- Consolidated Balance Sheets
- Consolidated Statements of Cash Flow
- Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information
It is anticipated that Pro Forma Financial Statements for the periods
specified in Rules 11-01 and 11-02 of Regulation S-X will be filed
not later than 60 days after the date this report on Form 8-K must be
filed.
(c) Exhibits
Reference number per
item 601 of Regulation
S-K
-------------
2.1 Stock Purchase Agreement by and among Pierce Manufacturing
Inc., the shareholders of Pierce Manufacturing Inc., and
Oshkosh Truck Corporation dated August 7, 1996.
2.2 First Amendment to Stock Purchase Agreement by and among
Pierce Manufacturing Inc., the shareholders of Pierce
Manufacturing Inc., and Oshkosh Truck Corporation dated
September 18, 1996.
4 Credit Agreement dated as of September 18, 1996 among
Oshkosh Truck Corporation, and certain lenders with Firstar
Bank Milwaukee, N.A., as Agent.
23 Consent of Arthur Andersen LLP
<PAGE>
PIERCE MANUFACTURING INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 1995, 1994 AND 1993
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Pierce Manufacturing Inc.:
We have audited the accompanying consolidated balance sheets of Pierce
Manufacturing Inc. (a Wisconsin corporation) and subsidiaries as of
October 31, 1995 and 1994, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the three years in
the period ended October 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Pierce
Manufacturing Inc. and subsidiaries as of October 31, 1995 and 1994, and
the results of their operations and their cash flows for each of the three
years in the period ended October 31, 1995, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
December 8, 1995.
<PAGE>
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
1995 1994 1993
SALES $179,998,000 $168,521,000 $172,212,000
COST OF SALES 152,343,000 146,032,000 144,796,000
----------- ----------- -----------
Gross profit 27,655,000 22,489,000 27,416,000
SELLING AND ADMINISTRATIVE
EXPENSES 15,356,000 14,764,000 14,288,000
----------- ----------- -----------
Income from operations 12,299,000 7,725,000 13,128,000
OTHER (INCOME) EXPENSE:
Interest expense 1,753,000 2,666,000 3,018,000
Interest income (336,000) (150,000) (417,000)
Other income, net (7,000) (2,000) (3,000)
----------- ----------- -----------
Other expense, net 1,410,000 2,514,000 2,598,000
----------- ----------- -----------
Income before taxes and
extraordinary item 10,889,000 5,211,000 10,530,000
PROVISION FOR INCOME TAXES 4,201,000 2,075,000 4,189,000
----------- ----------- ------------
Income before
extraordinary item 6,688,000 3,136,000 6,341,000
EXTRAORDINARY ITEM:
Early extinguishment of
debt (less related income
tax benefit of $241,000) 377,000 - -
---------- ----------- -----------
Net income $6,311,000 $3,136,000 $6,341,000
========= ========= =========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
PIERCE MANUFACTURING INC.
CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 1995 AND 1994
1995 1994
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,987,000 $1,669,000
Accounts receivable, less allowance for
doubtful accounts of $363,000 and
$324,000, respectively 7,747,000 14,064,000
Inventories 27,966,000 27,758,000
Prepaid expenses and advances 969,000 646,000
Income taxes receivable 201,000 -
Future tax benefits 493,000 878,000
---------- ----------
Total current assets 39,363,000 45,015,000
PROPERTY, PLANT AND EQUIPMENT:
Land 1,674,000 1,674,000
Buildings 13,660,000 13,584,000
Machinery and equipment 23,001,000 21,634,000
---------- ----------
38,335,000 36,892,000
Less- Accumulated depreciation (17,757,000) (14,969,000)
----------- -----------
Net property, plant and equipment 20,578,000 21,923,000
GOODWILL 4,467,000 4,731,000
OTHER ASSETS 1,305,000 1,078,000
---------- ----------
$65,713,000 $72,747,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $8,957,000 $8,090,000
Advances from customers 25,294,000 21,456,000
Payroll-related obligations 5,137,000 4,494,000
Accrued warranty expense 1,936,000 3,453,000
Accrued liabilities 1,424,000 1,558,000
Income taxes payable - 40,000
---------- ----------
Total current liabilities 42,748,000 39,091,000
LONG-TERM DEBT - 16,902,000
DEFERRED INCOME TAXES 2,021,000 1,938,000
SHAREHOLDERS' EQUITY:
Common stock ($.05 par value, 442,000
shares authorized, 408,852 and 410,806
shares issued and outstanding,
respectively) 21,000 21,000
Additional paid-in capital 9,564,000 9,620,000
Retained earnings 11,359,000 5,175,000
----------- -----------
Total shareholders' equity 20,944,000 14,816,000
---------- ----------
$65,713,000 $72,747,000
========== ==========
The accompanying notes to consolidated financial statements are
an integral part of these balance sheets.
<PAGE>
<TABLE>
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
<CAPTION>
Additional Paid-
in Capital Total
Common Stock Common Retained Shareholders'
Shares Amount Stock Warrants Earnings Equity
<S> <C> <C> <C> <C> <C> <C>
BALANCE, October 31, 1992 258,181 $13,000 $4,238,000 $1,522,000 $18,481,000 $24,254,000
Issuance of common stock 3,908 - 150,000 - - 150,000
Exercise of warrants 150,671 8,000 5,281,000 (1,522,000) - 3,767,000
Net income - - - - 6,341,000 6,341,000
Dividends declared - - - - (22,650,000) (22,650,000)
-------- -------- --------- --------- ---------- ----------
BALANCE, October 31, 1993 412,760 21,000 9,669,000 - 2,172,000 11,862,000
Repurchase of common stock (1,954) - (49,000) - (133,000) (182,000)
Net income - - - - 3,136,000 3,136,000
-------- --------- ---------- --------- --------- -----------
BALANCE, October 31, 1994 410,806 21,000 9,620,000 - 5,175,000 14,816,000
Repurchase of common stock (1,954) - (56,000) - (127,000) (183,000)
Net income - - - - 6,311,000 6,311,000
--------- ---------- ----------- --------- ---------- ----------
BALANCE, October 31, 1995 408,852 $21,000 $9,564,000 $ - $11,359,000 $20,944,000
========= ========= ========== ========= ========== ==========
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these statements.
<PAGE>
<TABLE>
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $6,311,000 $3,136,000 $6,341,000
Adjustments to reconcile net income to
net cash provided by operating
activities-
Depreciation and amortization-
Property, plant and equipment 2,866,000 3,409,000 2,847,000
Goodwill and other 682,000 492,000 473,000
Loss on disposal of property, plant
and equipment - 35,000 -
Deferred income taxes 467,000 (773,000) (347,000)
Changes in assets and liabilities-
Accounts receivable 6,317,000 (6,844,000) 982,000
Inventories (208,000) (855,000) 3,965,000
Prepaid expenses and advances (323,000) (199,000) (153,000)
Accounts payable 867,000 (197,000) 2,410,000
Advances from customers 3,838,000 4,868,000 (9,365,000)
Accrued liabilities (962,000) 2,385,000 -
Other (530,000) (1,439,000) (45,000)
----------- ----------- -----------
Net cash provided by operating
activities 19,325,000 4,018,000 7,108,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,524,000) (2,104,000) (7,484,000)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (17,300,000) (4,400,000) (8,800,000)
Borrowings of long-term debt - 2,700,000 8,800,000
Repurchase of common stock (183,000) (182,000) -
Proceeds from exercise of warrants - - 3,767,000
Proceeds from issuance of common stock - - 150,000
Payment of dividend - - (22,650,000)
----------- ---------- ------------
Net cash used by financing
activities (17,483,000) (1,882,000) (18,733,000)
----------- ----------- ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 318,000 32,000 (19,109,000)
CASH AND CASH EQUIVALENTS, beginning of
year 1,669,000 1,637,000 20,746,000
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end
of year $1,987,000 $1,669,000 $1,637,000
========= ========= =========
SUPPLEMENTAL DISCLOSURES:
Cash payments for-
Interest $745,000 $1,922,000 $2,179,000
Income taxes 3,775,000 4,023,000 4,227,000
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
<PAGE>
PIERCE MANUFACTURING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
(1) Nature of Business-
Pierce Manufacturing Inc. (the "Company") designs and manufactures
fire and emergency vehicles for sale primarily to municipalities
throughout the United States.
(2) Summary of Significant Accounting Policies-
(a) Principles of consolidation-
The consolidated financial statements as of October 31, 1995,
1994 and 1993, include the accounts of the Company, Dover
Technologies, Inc. (an inactive marketing corporation) and Pierce
Manufacturing International Inc. (a foreign sales corporation).
All intercompany transactions have been eliminated in
consolidation.
(b) Cash and cash equivalents-
The Company considers cash and cash equivalents to be all cash
and short-term investments with original maturities of 90 days or
less.
(c) Property, plant and equipment-
Property, plant and equipment are stated at cost. Additions and
improvements which extend the useful life of property and
equipment since the date of acquisition are capitalized at their
cost while repair and maintenance costs are expensed. When items
of property or equipment are sold or retired, the related cost
and accumulated depreciation are removed from the accounts and
any gain or loss is included in results of operations.
Depreciation for financial reporting purposes is made on a
straight-line basis over the following estimated useful lives:
Buildings 30 years
Machinery and equipment 7 years
Depreciation expense included in the consolidated statements of
income was $2,866,000, $3,409,000 and $2,847,000 for the years
ended October 31, 1995, 1994 and 1993, respectively.
(d) Goodwill-
Goodwill is amortized using the straight-line method over 25
years.
(e) Product warranty-
The Company provides for the estimated cost of warranty work
related to specific shipments. Amounts expensed related to
continuing operations in 1995, 1994 and 1993 were $1,508,000,
$3,702,000 and $1,878,000, respectively.
(f) Customer advances-
Customer advances represent amounts received from customers in
advance of the completion of the truck. Certain of these
advances bear interest to the customer. Interest rates on the
advances are variable based on current lending rates. Interest
expense included in the consolidated statements of income was
$737,000, $518,000 and $409,000 for the years ended October 31,
1995, 1994 and 1993, respectively.
(g) Postretirement benefits other than pensions-
The Company does not provide health, life insurance or any
related benefits to its retirees.
(h) Advertising costs-
All advertising costs are generally expensed when incurred.
Advertising expense included in the consolidated statements of
income was $357,000, $318,000 and $418,000 for the years ended
October 31, 1995, 1994 and 1993, respectively.
(i) Income taxes-
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Under this method, deferred income taxes are provided
for temporary differences in the financial reporting and income
tax bases of certain assets and liabilities at the tax rate
expected to be in effect when the temporary differences reverse.
(j) Use of estimates-
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
(k) Reclassifications-
Certain reclassifications of prior year amounts have been made in
order to conform to the current year presentation.
(3) Inventories-
Inventories are carried at the lower of cost or market. Cost is
determined principally on the last-in, first-out (LIFO) method.
Inventories consisted of the following:
October 31,
1995 1994
Current cost-
Raw materials $6,057,000 $6,615,000
Fabricated parts 769,000 1,101,000
Work-in-process and finished goods 24,730,000 23,317,000
---------- ----------
31,556,000 31,033,000
Excess of current cost over LIFO cost (3,590,000) (3,275,000)
---------- ----------
Net inventories $27,966,000 $27,758,000
========== ==========
(4) Long-Term Debt-
Long-term debt consists of the following:
October 31,
1995 1994
Revolving Credit Agreement, interest
at prime plus .25% $ - $2,700,000
Unsecured Senior Note payable to a
bank, interest at 6.47%, paid August
30, 1995 - 4,400,000
Unsecured Senior Subordinated Note,
interest at 12%, less unamortized
original discount of $398,000 at
October 31, 1994, paid March 20,
1995 - 9,802,000
---------- ----------
Total $ - $16,902,000
========== ==========
On March 20, 1995, the Company paid the outstanding balance of the
Unsecured Senior Subordinated Note which was due in equal amounts of
$5,100,000 on August 31, 1996 and 1997. In connection with the early
retirement of this debt, the Company recognized an extraordinary
charge of $377,000 (net of tax) which included accelerated
amortization of original issue discount and a premium paid to the
lender for the early payment of principal.
The Company has a $15,000,000 Revolving Credit Agreement (the
"Agreement") with a bank, which expires on January 31, 1998.
Borrowings under the Agreement bear interest at the prime rate plus
.25% (9.0% at October 31, 1995). As shown above, there were no
borrowings under the Agreement at October 31, 1995. There are no
compensating balance requirements.
The terms of the Agreement require the Company, among other things,
to maintain certain financial ratios and balances, primarily net
worth and current ratio. In addition, this Agreement includes
covenants restricting further indebtedness, capital expenditures and
the payment of dividends. The Company has met all of the
requirements of the Agreement, as of October 31, 1995.
(5) Employee Benefit Plans-
The Company sponsors a defined benefit pension plan covering
substantially all employees. Employee benefits are based upon years
of credited service. Pension expense for 1995, 1994 and 1993 is
comprised of the following:
1995 1994 1993
Service cost $163,000 $163,000 $165,000
Interest cost 186,000 161,000 133,000
Actual return on plan assets (362,000) (77,000) (132,000)
Net amortization and deferral 160,000 (105,000) (19,000)
-------- -------- --------
Net pension expense $147,000 $142,000 $147,000
======== ======== ========
The following table sets forth the funded status of the Company's
pension plan and the amount recognized in the Company's consolidated
balance sheets as of October 31:
1995 1994
Projected benefit obligation:
Vested benefits $(2,702,000) $(2,351,000)
Nonvested benefits (25,000) (57,000)
---------- ----------
Projected benefit obligation (2,727,000) (2,408,000)
Plan assets at fair value 3,120,000 2,531,000
--------- ---------
Plan assets in excess of projected
benefit obligation 393,000 123,000
Unrecognized prior service cost 210,000 223,000
Unrecognized net losses 705,000 811,000
Unrecognized transition asset (377,000) (414,000)
-------- --------
Prepaid pension asset $931,000 $743,000
======= =======
Assumptions used in determining the funded status of the pension plan
for the 1995, 1994 and 1993 plan years were:
1995 1994 1993
Discount rate 7.75% 7.75% 7.75%
Long-term rate of return 7.75% 7.75% 8.00%
The Company makes a contribution to the qualified plan each year, at
least equal to the minimum required contribution as defined by the
Employee Retirement Income Security Act of 1974. The unrecognized
net asset arising from the transition to Financial Accounting
Standards Board Statement No. 87, is being amortized through 2003.
Plan assets consist primarily of common trust funds.
The Company makes a discretionary profit sharing payment to
substantially all employees each year. The Company recorded a
provision of $458,000, $350,000 and $615,000 in 1995, 1994 and 1993,
respectively.
The Company also sponsors a retirement savings plan in which all
employees may voluntarily elect to participate. Under this plan, the
Company matches a portion of the amounts contributed by employees.
The Company recorded expense related to this plan of $325,000,
$315,000 and $298,000 in 1995, 1994 and 1993, respectively.
(6) Income Taxes-
The provision for income taxes consisted of the following for the
years ended October 31, 1995, 1994 and 1993:
1995 1994 1993
Current:
Federal $3,003,000 $2,265,000 $3,596,000
State 731,000 583,000 940,000
--------- ---------
3,734,000 2,848,000 4,536,000
Deferred 467,000 (773,000) (347,000)
--------- --------- ---------
Total income tax
provision $4,201,000 $2,075,000 $4,189,000
========= ========= =========
The reasons for the differences between the income tax provision and
the amount computed by applying the Federal statutory income tax rate
to the book net income before taxes are as follows:
1995 1994 1993
Tax provision at Federal $3,702,000 $1,772,000 $3,580,000
statutory rate
State income taxes net of 462,000 381,000 620,000
Federal taxes
Other 37,000 (78,000) (11,000)
--------- --------- ---------
$4,201,000 $2,075,000 $4,189,000
========= ========= =========
Net current future tax benefits arise primarily from accrued
liabilities which are not currently deductible for income tax
purposes. The net current future tax benefits at October 31, 1995
and 1994, are comprised of the following:
1995 1994
Current deferred taxes-
Inventory valuation $(804,000) $(967,000)
Warranty claims 755,000 1,347,000
Accrued vacation 660,000 764,000
Pension adjustment (363,000) (290,000)
Accrued health claims (171,000) (92,000)
Other 416,000 116,000
------- -------
Net future tax benefits $493,000 $878,000
======= =======
Net noncurrent deferred income tax liabilities arise primarily from
differences in the bases of property, plant and equipment. The net
deferred tax liabilities at October 31, 1995 and 1994, are comprised
of the following:
1995 1994
Noncurrent deferred taxes-
Depreciation $(2,071,000) $(2,006,000)
Other 50,000 68,000
---------- ----------
Net noncurrent deferred tax
liabilities $(2,021,000) $(1,938,000)
========== ==========
The Company did not record any valuation allowances against deferred
tax assets at October 31, 1995 or 1994.
(7) Commitments and Contingencies-
The Company has guaranteed certain customers' debt obligations under
deferred payment contracts and lease purchase agreements. The
Company is contingently liable for $6,155,000 and $6,617,000 as of
October 31, 1995 and 1994, respectively, under these guarantees.
Under the terms of a Shareholders' agreement, after the expiration of
the ten-year period commencing on September 16, 1987, each management
shareholder has the right from time to time, solely at his option, to
require the Company to purchase all or any portion of his shares,
subject to specific terms in the agreement. The purchase price will
be equal to the value per share as determined pursuant to an
appraisal conducted in accordance with the appraisal procedures set
forth in the agreement on April 30 of the fiscal year in which such
notice was delivered. Under the same agreement, management and
nonmanagement shareholders have the right to transfer all or a
portion of their stock in accordance with specific terms of the
agreement.
(8) Stock Appreciation Rights Plan-
The Company sponsors the Pierce Manufacturing Inc. Stock Appreciation
Rights Plan. Key executives of the Company, as determined by the
Compensation Committee of the Board, are eligible to receive
appreciation rights at the beginning of each performance cycle. At
the end of the performance cycle, participants will receive an award
for each right granted in the form of cash equal to the difference in
the formula value of one share of common stock at the end of the
performance cycle and the formula value of one share of common stock
at the beginning of the performance cycle. Each performance cycle is
five years.
At October 31, 1995, the following rights were outstanding:
Number of
Award Date Rights Award Price
November 1, 1993 1,344 $27.50
November 1, 1994 1,638 $50.39
The formula value of one share of common stock at October 31, 1995 is
$121.33. At October 31, 1995, the Company had $119,000 reserved
related to the outstanding rights.
(9) Related Party Transactions-
On December 4, 1992, the holder of the original Unsecured Senior Note
and the Unsecured Subordinated Note (the "Holder") exercised the
detachable warrants related to the issuance of the Unsecured Senior
Subordinated Note. The warrants were exercised on 150,671 shares at
$25 per share. As of October 31, 1995, 1994 and 1993, respectively,
the Holder and its subsidiary together own 210,671 shares, or
approximately 51% of the common stock of the Company. In fiscal
1993, subsequent to the exercise of the warrants, a dividend totaling
$22,650,000 was declared and paid to all common shareholders. No
dividends were paid during fiscal 1995 or 1994. During fiscal 1995,
1994 and 1993, the Company incurred $473,000, $1,224,000 and
$1,224,000 of interest expense related to the Unsecured Senior
Subordinated Note payable to the Holder.
<PAGE>
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIODS ENDED JULY 31, 1996 AND 1995
(Unaudited)
Nine Months Ended July 31,
1996 1995
SALES $144,276,000 $129,303,000
COST OF SALES 121,102,000 110,379,000
----------- -----------
Gross profit 23,174,000 18,924,000
SELLING AND ADMINISTRATIVE
EXPENSES 17,343,000 11,640,000
----------- -----------
Income from operations 5,831,000 7,284,000
OTHER (INCOME) EXPENSE:
Interest expense 865,000 1,352,000
Interest income (549,000) (189,000)
Other expense 289,000 11,000
----------- -----------
Other expense, net 605,000 1,174,000
----------- -----------
Income before taxes and extraordinary
item 5,226,000 6,110,000
PROVISION FOR INCOME TAXES 2,091,000 2,548,000
----------- -----------
Income before extraordinary item 3,135,000 3,562,000
EXTRAORDINARY ITEM:
Early extinguishment of debt (less
related income tax benefit of $241,000) - 377,000
Net income $ 3,135,000 $ 3,185,000
=========== ===========
The accompanying notes are an integral part of these statements.
<PAGE>
PIERCE MANUFACTURING INC.
CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 1996 AND OCTOBER 31, 1995
ASSETS (Unaudited)
JULY 31, OCTOBER 31,
CURRENT ASSETS: 1996 1995
Cash and cash equivalents $ 8,657,000 $ 1,987,000
Accounts receivable, net 8,708,000 7,747,000
Inventories 31,253,000 27,966,000
Other current assets 4,248,000 1,663,000
---------- ----------
Total current assets 52,866,000 39,363,000
PROPERTY, PLANT AND EQUIPMENT,
NET 19,754,000 20,578,000
GOODWILL 4,269,000 4,467,000
OTHER ASSETS 1,063,000 1,305,000
---------- ----------
$77,952,000 $65,713,000
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,367,000 $ 8,957,000
Advances from customers 28,130,000 25,294,000
Payroll-related obligations 10,464,000 5,137,000
Accrued liabilities 3,744,000 3,360,000
---------- ----------
Total current liabilities 51,705,000 42,748,000
DEFERRED INCOME TAXES 2,021,000 2,021,000
SHAREHOLDERS' EQUITY
Common stock issued at $.05
par value 21,000 21,000
Additional paid in capital 9,711,000 9,564,000
Retained earnings 14,494,000 11,359,000
---------- ----------
Total shareholders' equity 24,226,000 20,944,000
---------- ----------
$77,952,000 $65,713,000
========== ==========
The accompanying notes are an integral part of these balance sheets.
<PAGE>
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED JULY 31, 1996 AND 1995
(Unaudited)
Nine Months Ended July 31,
1996 1995
NET CASH PROVIDED BY OPERATING ACTIVITIES $7,954,000 $12,189,000
NET CASH FLOWS USED IN INVESTING
ACTIVITIES:
Capital expenditures (1,431,000) (1,407,000)
NET CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES:
Principal payments of long term debt - (11,229,000)
Repurchase of common stock - (183,000)
Proceeds from issuance of common stock 147,000 -
----------- -----------
Net cash provided by (used in) financing
activities 147,000 (11,412,000)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 6,670,000 (630,000)
CASH AND CASH EQUIVALENTS at beginning
of period 1,987,000 1,669,000
--------- ----------
CASH AND CASH EQUIVALENTS at end of
period $8,657,000 $ 1,039,000
========= ==========
The accompanying notes are an integral part of these statements.
<PAGE>
PIERCE MANUFACTURING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE NINE MONTH PERIODS ENDED JULY 31, 1996 AND 1995
(1) General-
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission, and reflect all adjustments necessary
to present a fair statement of the results for the periods reported,
subject to normal year-end audit adjustments, none of which is material.
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 such
rules and regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in conjunction
with the audited financial statements as of October 31, 1995, 1994 and
1993, and the notes thereto included elsewhere in this Filing.
(2) Inventories-
The components of inventories at as of July 31, 1996, are as follows:
Current cost-
Raw materials $6,463,000
Fabricated parts 847,000
Work-in-process and finished goods 27,687,000
-----------
34,997,000
Excess current cost over LIFO cost (3,744,000)
----------
Net inventories $31,253,000
==========
(3) Selling and Administrative Expenses-
Selling and Administrative Expenses for the nine month period ended July
31, 1996 include provisions for retention bonuses of $4,014,000 and stock
appreciation rights of $1,038,000 recorded in anticipation of the sale to
Oshkosh Truck Corporation discussed in Note (4) below.
(4) Subsequent Event-
On September 18, 1996, all of the Company's outstanding common stock was
acquired by Oshkosh Truck Corporation for $158 million in cash.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: October 2, 1996
OSHKOSH TRUCK CORPORATION
By: R. Eugene Goodson
----------------------------------
R. Eugene Goodson
Chairman and Chief Executive Officer
By: Charles L. Szews
----------------------------------
Charles L. Szews
Vice President and Chief Financial
Officer
<PAGE>
Exhibit Index
Exhibit No. Description
2.1 Stock Purchase Agreement by and among Pierce Manufacturing
Inc., the shareholders of Pierce Manufacturing Inc., and
Oshkosh Truck Corporation dated August 7, 1996.
2.2 First Amendment to Stock Purchase Agreement by and among
Pierce Manufacturing Inc., the shareholders of Pierce
Manufacturing Inc., and Oshkosh Truck Corporation dated
September 18, 1996.
4 Credit Agreement dated as of September 18, 1996 among
Oshkosh Truck Corporation, and certain lenders with Firstar
Bank Milwaukee, N.A., as Agent.
23 Consent of Arthur Andersen LLP
STOCK PURCHASE AGREEMENT
dated August 7, 1996, among
PIERCE MANUFACTURING INC.,
THE SHAREHOLDERS OF PIERCE MANUFACTURING INC.,
and
OSHKOSH TRUCK CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - Purchase and Sale of Stock . . . . . . . . . . . . . . . 1
1.1. Purchase of Stock . . . . . . . . . . . . . . . . . . . . 1
1.2. Purchase Price; Payment . . . . . . . . . . . . . . . . . 1
ARTICLE II - Conditions Precedent to Closing . . . . . . . . . . . . 2
2.1. Conditions Precedent to the Buyer's Obligation . . . . . . 2
2.2. Conditions Precedent to the Company's and the Sellers'
Obligation . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III - Closing . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1. Time and Place of Closing . . . . . . . . . . . . . . . . 5
3.2. Deliveries of the Buyer . . . . . . . . . . . . . . . . . 5
3.3. Deliveries of the Company and the Sellers . . . . . . . . 6
ARTICLE IV - Warranties and Representations of the Sellers . . . . . 7
4.1. Individual Warranties and Representations of the Sellers . 7
4.1.1. Title to Shares . . . . . . . . . . . . . . . . . 7
4.1.2. Authority . . . . . . . . . . . . . . . . . . . . 7
4.1.3. Stockholder Agreements . . . . . . . . . . . . . 9
4.2. Warranties and Representations of the Company . . . . . . 10
4.2.1. Organization and Standing . . . . . . . . . . . . 10
4.2.2. Capitalization . . . . . . . . . . . . . . . . . 10
4.2.3. Authorization; No Violations . . . . . . . . . . 11
4.2.4. Litigation and Compliance with Laws . . . . . . . 12
4.2.5. Subsidiaries, Investments . . . . . . . . . . . . 13
4.2.6. Ownership and Use of Tangible Assets . . . . . . 13
4.2.7. Patents, Trademarks, and Other Intellectual
Property. . . . . . . . . . . . . . . . . . . . . 15
4.2.8. Financial Statements . . . . . . . . . . . . . . 15
4.2.9. Conduct Out of Ordinary Course . . . . . . . . . 16
4.2.10. Taxes . . . . . . . . . . . . . . . . . . . . . . 17
4.2.11. Contracts and Other Agreements . . . . . . . . . 18
4.2.12. Product Warranty and Product Liability . . . . . 20
4.2.13. Employee Benefit Matters . . . . . . . . . . . . 20
4.2.14. Labor Practices . . . . . . . . . . . . . . . . . 22
4.2.15. Brokers; Agents . . . . . . . . . . . . . . . . . 22
4.2.16. Permits and Licenses . . . . . . . . . . . . . . 22
4.2.17. Major Customers . . . . . . . . . . . . . . . . . 23
4.2.18. Dealers and Other Agents . . . . . . . . . . . . 23
4.2.19. Material Suppliers of Inventories . . . . . . . . 24
4.2.20. Insurance . . . . . . . . . . . . . . . . . . . . 24
4.2.21. Environmental Matters . . . . . . . . . . . . . . 25
4.2.22. Bank Accounts . . . . . . . . . . . . . . . . . . 27
4.2.23. Inventory . . . . . . . . . . . . . . . . . . . . 27
4.2.24. Accounts Receivable . . . . . . . . . . . . . . . 27
4.3. Warranties Survive Closing . . . . . . . . . . . . . . . . 27
4.4. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE V - Warranties and Representations of the Buyer . . . . . . . 28
5.1. Warranties and Representations . . . . . . . . . . . . . . 28
5.1.1. Authority . . . . . . . . . . . . . . . . . . . . 28
5.1.2. Investment Representations . . . . . . . . . . . 29
5.1.3. Brokers; Agents . . . . . . . . . . . . . . . . . 30
5.1.4. Guarantees . . . . . . . . . . . . . . . . . . . 30
5.2. Warranties Survive Closing . . . . . . . . . . . . . . . . 30
ARTICLE VI - Covenants . . . . . . . . . . . . . . . . . . . . . . . 30
6.1. Covenants of the Company. . . . . . . . . . . . . . . 30
6.1.1. Access . . . . . . . . . . . . . . . . . . . . . 30
6.1.2. Records . . . . . . . . . . . . . . . . . . . . . 31
6.1.3. Conduct of the Business of the Company and its
Subsidiaries . . . . . . . . . . . . . . . . . . 31
6.1.4. Title Insurance . . . . . . . . . . . . . . . . . 33
6.1.5. Surveys . . . . . . . . . . . . . . . . . . . . . 33
6.1.6. Tax Matters . . . . . . . . . . . . . . . . . . . 34
6.1.7. Bonuses . . . . . . . . . . . . . . . . . . . . . 34
6.2. Covenants of the Sellers . . . . . . . . . . . . . . . . . 34
6.2.1. Solicitation . . . . . . . . . . . . . . . . . . 34
6.2.2. Stock Transfer . . . . . . . . . . . . . . . . . 34
6.2.3. Delivery of Documents . . . . . . . . . . . . . . 34
6.3. Mutual Covenants . . . . . . . . . . . . . . . . . . . . . 35
6.3.1. Cooperation . . . . . . . . . . . . . . . . . . . 35
6.3.2. Records . . . . . . . . . . . . . . . . . . . . . 35
6.3.3. Publicity . . . . . . . . . . . . . . . . . . . . 35
6.3.4. Execution of Additional Documents . . . . . . . . 36
6.3.5. Reasonable Efforts . . . . . . . . . . . . . . . 36
6.4. Covenants of the Buyer . . . . . . . . . . . . . . . . . . 36
6.4.1. Severance Payments . . . . . . . . . . . . . . . 36
6.4.2. Incentive Compensation Plan . . . . . . . . . . . 36
6.4.3. Other Benefits . . . . . . . . . . . . . . . . . 37
ARTICLE VII - Disclosure Schedule . . . . . . . . . . . . . . . . . . 37
7.1. General . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.2. Updates to Disclosure Schedule . . . . . . . . . . . . . . 37
ARTICLE VIII - Non-Disclosure . . . . . . . . . . . . . . . . . . . . 38
8.1. Non-Disclosure of Confidential Information . . . . . . . . 38
8.2. Enforcement . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IX - Indemnification . . . . . . . . . . . . . . . . . . . . 39
9.1. Indemnification of the Buyer . . . . . . . . . . . . . . . 39
9.2. Indemnification of the Sellers . . . . . . . . . . . . . . 40
9.3. Procedure Relative to Indemnification . . . . . . . . . . 40
9.4. Effect of Taxes, Other Benefits and Insurance . . . . . . 42
9.5. Limits on Indemnification Claims . . . . . . . . . . . . . 42
9.5.1. Basket . . . . . . . . . . . . . . . . . . . . . 42
9.5.2. Maximum Amount of Indemnification . . . . . . . . 42
9.6. Sole Remedy; Termination . . . . . . . . . . . . . . . . . 43
9.7. No Indemnification for Known Breaches of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X - Termination . . . . . . . . . . . . . . . . . . . . . . . 44
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . 44
10.2. Effect of Termination . . . . . . . . . . . . . . . . . . 44
ARTICLE XI - Miscellaneous . . . . . . . . . . . . . . . . . . . . . 45
11.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.3. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 46
11.4. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 46
11.5. Binding Effect . . . . . . . . . . . . . . . . . . . . . . 47
11.6. Paragraph Headings . . . . . . . . . . . . . . . . . . . . 47
11.7. Severability . . . . . . . . . . . . . . . . . . . . . . . 47
11.8. Applicable Law . . . . . . . . . . . . . . . . . . . . . . 47
11.9. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 47
11.10. Passage of Title . . . . . . . . . . . . . . . . . . . . . 47
11.11. Use of Terms . . . . . . . . . . . . . . . . . . . . . . . 47
LIST OF SCHEDULES AND EXHIBITS*
Schedule 1 Schedule of Stock Ownership/Payment of Purchase Price
Schedule 2 Disclosure Schedule
Exhibit 6.1.7 Bonus Plan
Exhibit 6.3.3 Form of Announcement and Press Release Regarding Sale
of the Company
Exhibit 6.4.1 Management Employees With Six Month Severance
Exhibit 6.4.2 Incentive Compensation Plan
* Such schedules and exhibits are not filed herewith. Oshkosh Truck
Corporation agrees to furnish supplementally a copy of any such omitted
schedule or exhibit to the Commission upon request.
<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of August 7, 1996, by
and among PIERCE MANUFACTURING INC., a Wisconsin corporation (the
"Company"), all of the SHAREHOLDERS OF THE COMPANY, each of which is
listed on Schedule 1 attached hereto (individually a "Seller";
collectively, the "Sellers") and OSHKOSH TRUCK CORPORATION, a Wisconsin
corporation (the "Buyer").
BACKGROUND
The Sellers own collectively all of the issued and outstanding
shares of Five Cent ($.05) par value Common Stock (the "Common Stock") of
the Company. The Sellers desire to sell to the Buyer, and the Buyer
desires to purchase from the Sellers, all of the issued and outstanding
shares of Common Stock, upon the terms and conditions set forth herein.
NOW, THEREFORE, the Buyer, the Sellers and the Company, in
consideration of the mutual promises hereinafter set forth, do hereby
promise and agree as follows:
ARTICLE I
Purchase and Sale of Stock
1.1. Purchase of Stock. Subject to the terms and conditions set
forth in this Agreement, the Sellers shall sell to the Buyer, and the
Buyer shall purchase from the Sellers at the Closing (as hereinafter
defined), all of the issued and outstanding shares of capital stock of the
Company, consisting of Four Hundred Ten Thousand Seventy-Nine (410,079)
shares of Common Stock (collectively, the "Subject Shares"). The number
and percentage of the Subject Shares to be transferred by each Seller
shall be as set forth opposite such Seller's name on Schedule 1 attached
hereto.
1.2. Purchase Price; Payment. The purchase price for the Subject
Shares (the "Purchase Price") shall be Three Hundred Ninety-Two and
6,073/10,000 Dollars ($392.6073) per share for an aggregate amount of One
Hundred Sixty-One Million Dollars ($161,000,000.00); provided, however,
that the aggregate Purchase Price shall not change based on the issuance
by the Company of shares pursuant to options, stock appreciation rights or
other commitments which increase the number of Subject Shares prior to the
Closing and provided, further, that the aggregate Purchase Price and the
resulting proportionate per share amount shall be reduced by the aggregate
After Tax Bonus Amount (as defined in Paragraph 6.1.7). At the Closing,
the Buyer shall pay the Purchase Price by wire transfer of immediately
available funds to the Sellers in the amounts and per the wire transfer
instructions set forth on Schedule 1 attached hereto.
ARTICLE II
Conditions Precedent to Closing
2.1. Conditions Precedent to the Buyer's Obligation. The
obligation of the Buyer to consummate the transactions contemplated herein
is subject to the satisfaction as of the Closing of each of the following
conditions:
(a) Each of the representations and warranties of the Sellers
made in this Agreement and the statements contained in the Disclosure
Schedule and Attachments thereto shall be true and correct in all
material respects when made and on and as of the Closing Date (as
hereinafter defined), as though made on and as of the Closing Date,
except as amended by the Sellers prior to the Closing as provided in
Article VII, below or by the terms of this Agreement or consented to in
writing by the Buyer; the Company and the Sellers shall have performed
in all material respects the respective covenants, agreements or
obligations of the Company and the Sellers contained in this Agreement
required to be performed on or prior to the Closing Date; and the
Company and the Sellers shall have delivered to the Buyer a certificate
dated as of the Closing Date and signed by the President on behalf of
the Company, and by the Sellers confirming the foregoing. The
statements in such certificate shall be a warranty of the Sellers for
purposes of this Agreement, which warranty shall be subject to the
provisions of Paragraphs 4.3 and 4.4, below.
(b) The Company or its ultimate parent entity, as the case
may be, shall have filed, if required by law, proper pre-merger
notification forms with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department of
Justice (the "DOJ") under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder (the "HSR Act"), and the waiting period following the filing
of proper pre-merger notification forms by the Buyer (or its ultimate
parent entity) and the Company (or its ultimate parent entity) shall
have expired, whether pursuant to early termination or by passage of
time.
(c) All material consents, licenses, permits, authorizations
or approvals from, filings with and notifications to any federal, state,
local or other governmental or regulatory body required to be made or
obtained by the Company and the Sellers in connection with the
consummation of the transactions contemplated by this Agreement or
necessary to operate the Company which are specifically noted in the
Disclosure Schedule (as hereinafter defined) shall have been made or
obtained including, without limitation, requirements under the HSR Act
as contemplated by Paragraph 2.1(b), above. All material approvals,
consents and waivers of third parties required to be obtained by the
Company and the Sellers (as specifically noted in the Disclosure Sched-
ule in connection with the consummation of such transactions) shall have
been obtained.
(d) No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect as of the Closing
which restrains or prohibits the consummation of the transactions
contemplated by this Agreement nor shall any action, suit or proceeding
requesting such an injunction or order have been commenced or threatened
by a party other than the Buyer.
(e) The Company and the Sellers shall have delivered to the
Buyer the documents, certificates, agreements and instruments required
under Paragraph 3.3, below.
(f) The Buyer shall have obtained good and valid title
insurance policies or, in final form, irrevocable title insurance
commitments serving as the title insurance policies, dated as of the
Closing Date, conforming to the specifications set forth in Paragraph
6.1.4 hereof, and surveys conforming to the specifications set forth in
Paragraph 6.1.5 hereof.
(g) Since the date of the Interim Balance Sheet (as defined
in Paragraph 4.2.8) no event or circumstance shall have occurred or be
in effect which has or is reasonably likely to have a Material Adverse
Effect (as defined in Paragraph 4.2.3); provided, however, that for
purposes of this clause (g), any change in management or other employees
of the Company will not be deemed to have or be reasonably likely to
result in a Material Adverse Effect.
In the event that any of the foregoing conditions to the Closing
shall not have been satisfied prior to October 31, 1996, the Buyer may
elect to (i) terminate this Agreement without liability to the Buyer,
provided that any such termination shall be without prejudice to any
claims by the Buyer for intentional breach of this Agreement by the
Company or the Sellers; or (ii) waive all such unsatisfied conditions and
consummate the transactions contemplated herein despite such failure.
2.2. Conditions Precedent to the Company's and the Sellers'
Obligation. The obligation of the Company and the Sellers to consummate
the transactions contemplated herein is subject to the satisfaction as of
the Closing of each of the following conditions:
(a) Each of the representations and warranties of the Buyer
made in this Agreement shall be true and correct in all material
respects when made and on and as of the Closing Date, as though made on
and as of the Closing Date; the Buyer shall have performed in all
material respects the covenants, agreements and obligations of the Buyer
contained in this Agreement required to be performed on or prior to the
Closing; and the Buyer shall have delivered to the Sellers a certificate
dated as of the Closing Date and signed by an authorized officer of the
Buyer confirming the foregoing. The statements made in such certificate
shall be a warranty of the Buyer for purposes of this Agreement, which
warranty shall be subject to the provisions of Paragraph 5.2, below.
(b) The Buyer shall have caused its ultimate parent entity to
file, if required by law, proper pre-merger notification forms with the
FTC and the DOJ under the HSR Act, and the waiting period following the
filing of proper pre-merger notification forms by the Buyer and the
Company (or its ultimate parent entity) shall have expired, whether
pursuant to early termination or by passage of time.
(c) All consents, licenses, permits, authorizations,
approvals from, filings with and notifications to any federal, state,
local or other governmental or regulatory body required to be made or
obtained by the Buyer in connection with the consummation of the
transactions contemplated by this Agreement shall have been made or
obtained including, without limitation, requirements under the HSR Act
as contemplated by Paragraph 2.2(b), above. All consents of third
parties required to be obtained by the Buyer in connection with the
consummation of such transactions shall have been obtained.
(d) All management and employee bonuses for the current year
through the date of the Closing and projected to year-end shall have
been paid and all stock appreciation rights and other similar benefits
as described on the Disclosure Schedule shall have been or be paid at or
prior to Closing as if fully vested on Closing and the bonuses referred
to in Paragraph 6.1.7 shall have been paid at or simultaneously with the
Closing.
(e) All guarantees of Company obligations by any Seller to
United States Fidelity and Guaranty Company ("USF&G") shall be released
as of Closing.
(f) No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect as of the Closing
which restrains or prohibits the consummation of the transactions
contemplated under this Agreement nor shall any action, suit or
proceeding requesting such an injunction or order have been commenced or
threatened by a party other than Sellers or the Company.
(g) The Buyer shall have delivered to the Sellers the
documents, certificates, agreements and instruments required under
Paragraph 3.2, below.
In the event that any of the foregoing conditions to the Closing
shall not have been satisfied prior to October 31, 1996, the Sellers may
elect to (i) terminate this Agreement without liability to the Sellers,
provided that any such termination shall be without prejudice to any
claims by the Company or the Sellers for intentional breach of this
Agreement by the Buyer; or (ii) waive any such unsatisfied conditions and
consummate the transactions contemplated herein despite such failure.
ARTICLE III
Closing
3.1. Time and Place of Closing. The closing of the purchase and
sale contemplated herein (the "Closing") shall be held at the offices of
Godfrey & Kahn, S.C., in Appleton, Wisconsin, at 10:00 AM local time, on
September 16, 1996, or at such other time or place as the Company, the
Sellers and the Buyer shall mutually agree. The date on which the Closing
shall occur is hereinafter referred to as the "Closing Date."
3.2. Deliveries of the Buyer. At the Closing, the Buyer shall
deliver to the Sellers the following:
(a) The payment of the Purchase Price in the manner specified
in Paragraph 1.2, above.
(b) A certificate from the Secretary of the Buyer, in a form
reasonably satisfactory to the Sellers and their counsel, setting forth
the resolutions of the Board of Directors of the Buyer authorizing the
execution of this Agreement, all agreements, documents and instruments
to be executed by the Buyer in connection herewith (the "Buyer Ancillary
Documents") and the taking of any and all actions deemed necessary or
advisable to consummate the transactions contemplated herein or therein.
(c) The certificate of the Buyer required to be delivered
pursuant to Paragraph 2.2(a), above.
3.3. Deliveries of the Company and the Sellers. At the Closing,
the Company and the Sellers shall deliver to the Buyer the following:
(a) Certificates representing the Subject Shares, duly
endorsed in blank or accompanied by stock powers duly executed in blank
by the Sellers.
(b) The certificate of the Company and the Sellers required
to be delivered pursuant to Paragraph 2.1(a), above.
(c) Resignations of the President of the Company in his
capacity as a statutory officer and of all of the directors of the
Company and each person who is a trustee, custodian, or authorized
signatory under any employee benefit plan, bank account, depository
account or safe deposit box of the Company, effective as of the Closing,
as designated by the Buyer.
(d) Constructive possession of the complete books and records
relating to the business of the Company including, without limitation,
minute books, stock ledgers, all keys or articles required for access
thereto and the combinations for all safes, vaults and other places of
safekeeping or storage of the Company.
(e) A certificate of each of the Sellers, in a form
reasonably satisfactory to the Buyer and its counsel, certifying that
such Seller is not a "foreign person" within the meaning of Section 1445
of the Internal Revenue Code of 1986, as amended (the "Code").
(f) Documentary evidence reasonably satisfactory to the Buyer
and its counsel as to the termination of the Stockholder Agreements (as
hereinafter defined).
(g) A certificate of the Secretary of the Company, in a form
reasonably satisfactory to the Buyer and its counsel, setting forth the
resolutions of the Board of Directors of the Company authorizing the
execution of this Agreement and all agreements, documents and
instruments to be delivered by the Company or any of the Sellers
hereunder (collectively the "Seller Ancillary Documents") which will be
executed by the Company in connection herewith and the taking by the
Company of any and all actions deemed necessary or advisable to
consummate the transactions contemplated herein or therein.
ARTICLE IV
Warranties and Representations of the Sellers
4.1. Individual Warranties and Representations of the Sellers.
Except as set forth in the disclosure schedule attached hereto as Schedule
2 (hereinafter the "Disclosure Schedule") each of the Sellers hereby
individually, but only with respect to the Subject Shares owned by such
Seller and the authority of such Seller to consummate the transactions
contemplated hereby, warrants and represents to the Buyer, which
warranties and representations shall survive the Closing for the period
set forth in Paragraph 4.3, below, and shall be subject to the provisions
of Paragraph 4.4, below, as follows:
4.1.1. Title to Shares. Such Seller is the record owner of and
has good, valid and marketable title to the respective number of the
Subject Shares set forth opposite his, her or its name on Schedule 1
attached hereto, and at the Closing will deliver to the Buyer good, valid
and marketable title to such shares free and clear of all liens, security
interests, claims, options, charges, pledges and encumbrances of any kind
whatsoever, except as otherwise provided herein or in the Stockholder
Agreements (as hereinafter defined) or in Section 180.0622(2)(b) of the
Wisconsin Statutes and the cases decided thereunder.
4.1.2. Authority.
(a) Such Seller has full right, power, legal capacity and
authority to sell, transfer and deliver to the Buyer the full legal and
beneficial ownership in the portion of Subject Shares to be sold by such
Seller pursuant to this Agreement and to consummate the transactions
contemplated herein and in any of the Seller Ancillary Documents to
which such Seller is a party.
(b) If such Seller is a corporation, partnership or limited
liability company, such Seller is duly organized and validly existing
under the laws of its jurisdiction of organization, has the corporate or
other appropriate power and authority to enter into this Agreement and
the Seller Ancillary Agreements to which such Seller is a party and to
consummate the transactions contemplated hereby and thereby, and the
execution and delivery of this Agreement and the Seller Ancillary Docu-
ments to which such Seller is a party and the consummation of the
transactions contemplated hereby and thereby by such Seller have been
approved by all necessary action on behalf of such Seller.
(c) If such Seller is a trust or a charitable foundation (a
"Trust"): (i) the trustees or other fiduciaries thereof who have signed
this Agreement (and any relevant Seller Ancillary Document) on behalf of
such Trust are the duly appointed trustees, fiduciaries or other repre-
sentatives of such Trust and they have not resigned or been removed or
replaced from such positions as of the date hereof; (ii) no beneficiary
or other remainderman of such Trust has heretofore in any way assigned,
transferred, or encumbered, or permitted the assignment, transfer or
other encumbrance of the Subject Shares held by such Trust; (iii) the
execution and delivery of this Agreement and any relevant Seller
Ancillary Document by such trustees or fiduciaries and the performance
by such trustees or fiduciaries of their obligations hereunder and
thereinafter have been duly and validly authorized and approved by all
actions required under applicable law relating to such Trust and under
the terms of the relevant instruments governing such Trust; and (iv)
such trustees and other fiduciaries have full power and authority under
the terms of the applicable instruments governing such Trust and under
any document relating to or applicable to such Trust to execute and
deliver this Agreement and any relevant Seller Ancillary Document on
behalf of such Trust and to perform their respective obligations
hereunder.
(d) This Agreement has been duly and validly executed and
delivered by such Seller and is the legal, valid and binding obligation
of such Seller enforceable in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization and other laws generally affect-
ing the rights of creditors and general principles of equity and
applicable federal or state laws which may affect the availability of
equitable remedies. No action, consent or approval by or filing with
any federal, state, municipal, foreign or other court or governmental or
administrative body or agency or any other regulatory or self-regulatory
body is required in connection with the execution and delivery by such
Seller of this Agreement or the Seller Ancillary Documents to the extent
such Seller is a party thereto or the consummation by such Seller of the
transactions contemplated hereby and thereby other than the pre-merger
notification with the FTC and the DOJ under the HSR Act, except for any
action, consent or approval, with respect to which a failure to obtain
would not reasonably be expected to impair in any material respect the
performance by such Seller of such Seller's obligations hereunder. No
claim, action, suit, proceeding, arbitration, investigation or inquiry
before any federal, state, municipal, foreign or other court or
governmental or administrative body or agency, any securities or
commodities exchange or any private arbitration tribunal is now pending
or, to the knowledge of such Seller, threatened, against or relating to
such Seller which would have a material adverse effect on the ability of
such Seller to consummate the sale of the Subject Shares or the other
transactions contemplated by this Agreement or the Seller Ancillary
Documents. Neither the execution and delivery by such Seller of this
Agreement or any Seller Ancillary Document to which such Seller is a
party, nor the consummation of the transactions contemplated hereby and
thereby, will breach, violate or constitute an event of default (or an
event which with the lapse of time or the giving of notice or both would
constitute an event of default) under, give rise to any right of
termination, cancellation, modification or acceleration under, or
require any consent or the giving of any notice under, any contract or
instrument to which such Seller is a party or by which any of such
Seller's Subject Shares may be bound, except as provided in the
Stockholder Agreements and except for such breaches, violations or
defaults which would not reasonably be expected to impair in any
material respect the performance by such Seller of such Seller's
obligations hereunder.
4.1.3. Stockholder Agreements. Except for this Agreement, the
Seller Ancillary Documents, that certain Shareholders Agreement dated
September 16, 1987, amended most recently on April 19, 1996 and July 1,
1996 (the "Shareholders Agreement"), that certain Directors Stock
Subscription Agreement dated May 26, 1993, amended most recently on April
19, 1996 (the "Directors Stock Subscription Agreement"), and that certain
Key Employee Stock Subscription Agreement dated May 25, 1993, amended most
recently on April 19, 1996 (the "Key Employee Stock Subscription Agree-
ments," and with the Shareholders Agreement and the Directors Stock
Subscription Agreement being collectively referred to as "the Stockholder
Agreements"), there are no voting trust agreements, powers of attorney,
proxies or any other contracts, agreements, arrangements, commitments,
plans or understandings, written or oral, restricting or otherwise
relating to the voting, dividend rights or disposition of that portion of
the Subject Shares owned by such Seller or otherwise granting any person
any right in respect of that portion of the Subject Shares owned by such
Seller and no restrictions on the transfer of such portion of the Subject
Shares presently exist.
4.2. Warranties and Representations of the Company. Except as set
forth in the Disclosure Schedule, the Company hereby warrants and
represents to the Buyer, which warranties and representations shall
survive the Closing for the period set forth in Paragraph 4.3, below, and
shall be subject to the provisions of Paragraph 4.4, below, as follows:
4.2.1. Organization and Standing. The Company is a corporation
duly organized and validly existing under the laws of the State of
Wisconsin. Each corporation, partnership, joint venture or other
business entity in which the Company maintains a majority voting interest
(each, a "Subsidiary"; collectively, the "Subsidiaries") is set forth in
the Disclosure Schedule and is a corporation duly organized and validly
existing under the laws of its state or other jurisdiction of
incorporation. The Company has the power and authority to own or lease
its properties and to carry on all business activities which it now
conducts. The Disclosure Schedule contains a true, complete and correct
list of all states in which the Company and each Subsidiary is qualified
to do business as a foreign corporation. The stock certificate, transfer
books and minute books of the Company and each Subsidiary (a copy of which
has been made available for inspection by the Buyer and its representa-
tives) are materially true and complete. The Articles of Incorporation
and By-Laws or other constituent documents of the Company and each
Subsidiary (true and complete copies of which have been provided to the
Buyer) are true, complete and correct and are in full force and effect
without amendment or modification.
4.2.2. Capitalization. The entire duly authorized capital stock
of the Company consists of Four Hundred Forty-Two Thousand (442,000)
shares of Common Stock, of which Four Hundred Ten Thousand Seventy-Nine
(410,079) shares are currently issued and outstanding. All of the Subject
Shares are fully paid and nonassessable, except as provided in Section
180.0622 of the Wisconsin Statutes and cases decided thereunder. The
Subject Shares have not been issued in violation of, and are not subject
to, any preemptive or subscription rights other than as provided in the
Stockholder Agreements. Other than the Stockholder Agreements and the
items described in the Disclosure Schedule, there are no outstanding
warrants, options, agreements, subscriptions, convertible or exchangeable
securities or other commitments or rights pursuant to which the Company is
or may become obligated to issue, sell, purchase, return or redeem any
shares of capital stock or other securities of the Company. All of the
Subject Shares have been issued in material compliance with all applicable
federal and state securities laws or in accordance with exemptions
therefrom. The Subject Shares constitute all of the issued and
outstanding shares of capital stock of the Company of whatever class,
series or designation. Schedule 1 hereto contains a complete and correct
list of all holders of any class of capital stock or other securities of
the Company.
4.2.3. Authorization; No Violations.
(a) The Company has full corporate power and authority to
execute, deliver and perform this Agreement and the other documents and
instruments to be executed and delivered by the Company pursuant hereto.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have
been duly approved by the Board of Directors of the Company, and no
other corporate action on the part of the Company is necessary to
authorize and approve the Company's execution and delivery of this
Agreement or its consummation of the transactions contemplated hereby.
This Agreement has been, and when executed and delivered by the Company,
the other documents and instruments to be executed and delivered by the
Company will be, duly executed and delivered by the Company, and
constitutes, or will constitute valid and legally binding agreements of
the Company enforceable in accordance with its terms, except that the
enforceability of this Agreement may be limited by bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization and other
laws generally affecting the rights of creditors and general principles
of equity and applicable federal or state laws which may affect the
availability of equitable remedies.
(b) Except for the requirements of the HSR Act, or except as
otherwise disclosed in the Disclosure Schedule, the execution, delivery
and performance of this Agreement by the Company and the consummation of
the transactions contemplated hereby will not: (i) violate or conflict
with any provision of the Articles of Incorporation, By-Laws or other
constituent documents of the Company or any Subsidiary, (ii) breach,
violate or (whether immediately or with the lapse of time or the giving
of notice or both) constitute an event of default under or an event
which would give rise to any right of termination, cancellation,
modification, acceleration or foreclosure under, or require any consent
of or the giving of any notice to any third party under, any note, bond,
indenture, credit facility, mortgage, security agreement, lease,
license, franchise, permit or other agreement, instrument or obligation
to which the Company or any Subsidiary is a party, or by which the
Company or any Subsidiary, or any of their respective material prop-
erties or assets may be bound, or give rise to the creation of any
pledge, lien, claim, charge, security interest or other encumbrance upon
the properties or assets of the Company or any Subsidiary, or give rise
to the creation of any pledge, lien, claim, charge, security interest or
other encumbrance on the Subject Shares except in each case for any
matter which would not have a Material Adverse Effect (the term
"Material Adverse Effect" when used in this Agreement shall mean having
such effect as described in the context of the reference either (i)
individually or (ii) in the aggregate when such individual events or
circumstances are based on or arise from or are related to the same or
substantially similar underlying facts which would have a material
adverse effect on the business, properties or financial condition of the
Company and its Subsidiaries taken as a whole), (iii) violate or
conflict with any law, statute, rule, regulation, ordinance, code,
judgement, order, writ, injunction, decree, determination, award or
other requirement of any court or of any governmental body or agency
thereof applicable to the Company or any Subsidiary or by which any of
their respective properties or assets may be bound, except for any
violation or conflict which would not have a Material Adverse Effect, or
(iv) require any registration or filing by the Company, any Subsidiary
or any of the Sellers with, or any permit, license, exemption, consent,
authorization or approval of, or the giving of any notice by the
Company, any Subsidiary, or any of the Sellers to, any governmental or
regulatory body, agency or authority, except where the failure to make
such registration or filing or obtain such permit, license, exemption,
consent, authorization or approval, or to give such notice would not
have a Material Adverse Effect.
4.2.4. Litigation and Compliance with Laws. Except as described
in the Disclosure Schedule, there is no litigation, proceeding (including,
without limitation, arbitral proceedings) or other legal or administrative
proceeding pending or, to the knowledge of the Company (as hereinafter
defined in Paragraph 4.4), threatened against the Company or any Sub-
sidiary. There are no such suits, actions, proceedings or claims pending,
or, to the knowledge of the Company, threatened, challenging the validity
or propriety of, or otherwise relating to or involving, this Agreement or
the transactions contemplated hereby. There is no judgement, order, writ,
injunction, decree or award (whether issued by a court, an arbitrator, a
governmental body or agency thereof or otherwise) to which the Company or
any Subsidiary is party, or involving the properties, assets or business
of the Company or any Subsidiary, which is unsatisfied or which requires
continuing compliance therewith by the Company or any Subsidiary. Except
with respect to Taxes (as defined and covered in Paragraph 4.2.10, below),
ERISA (as defined and covered in Paragraph 4.2.13, below), and
Environmental Laws (as defined and covered in Paragraph 4.2.21, below),
neither the Company nor any Subsidiary has received any written notice
that the Company or any Subsidiary has not complied in all material
respects with all applicable foreign and domestic laws, statutes,
ordinances, codes, rules, regulations, judgements, orders, writs or
decrees of any federal, state, local or foreign court or governmental or
regulatory body or agency thereof to which the Company or any Subsidiary
may be subject or which are applicable to the operations, businesses or
assets of the Company or any Subsidiary.
4.2.5. Subsidiaries, Investments. The Disclosure Schedule
contains a list of all of the Company's ownership or investment interests
in any Subsidiary. Except as set forth in the Disclosure Schedule, all of
the issued and outstanding shares of capital stock (or other equity
interests) of each Subsidiary are owned beneficially and of record by the
Company or by a Subsidiary (as indicated in the Disclosure Schedule), in
each case free and clear of all liens, security interests, claims,
charges, pledges and encumbrances of any kind whatsoever.
4.2.6. Ownership and Use of Tangible Assets.
(a) The Company and its Subsidiaries have good, valid and
marketable title to or lease pursuant to a lease described in the
Disclosure Schedule (if required to be set forth therein) all tangible
personal property and assets which are material to the operation of the
businesses of the Company and its Subsidiaries as they are currently
conducted free and clear of all encumbrances except those which would
not have a Material Adverse Effect on the Company's or its Subsidiaries'
ability to use or enjoy beneficial ownership and except as set forth in
the Disclosure Schedule.
(b) The Disclosure Schedule contains a complete list and
description of all real property owned by the Company and its
Subsidiaries (the "Owned Real Property"), in each case indicating the
entity owning such property. The Disclosure Schedule also contains a
complete list and description of all real property leased by the Company
and its Subsidiaries (collectively, the "Leased Real Property"), in each
case indicating the entity leasing such property and the persons or
entities from whom such property is being leased. The Owned Real
Property and the Leased Real Property are collectively referred to
herein as the "Real Property." With respect to all such Owned Real
Property, the Company or its Subsidiaries have good, valid and
marketable title in fee simple thereto free and clear of all encum-
brances, except (i) as specifically disclosed in the Disclosure Schedule
or in the title policy obtained by the Buyer pursuant to Paragraph 6.1.4
hereof, or encumbrances which would not have a Material Adverse Effect,
(ii) Taxes not yet due, (iii) easements, rights-of-way and similar
covenants and restrictions of record, and (iv) municipal and zoning
ordinances. To the Company's knowledge, none of the matters in the
foregoing clauses (i) through (iv) interfere with the use of the Real
Property as currently utilized. Except as set forth in the Disclosure
Schedule, no work has been performed on or with respect to or in
connection with any of the Real Property that would cause such Real
Property to become subject to any mechanics', materialmen's, workmen's,
repairmen's, carriers' or similar lien. The structures, plants,
improvements, systems (including, without limitation, heating, venti-
lation, air conditioning, electrical, plumbing, fire sprinkler, light-
ing, elevator and other mechanical systems) and fixtures located in or
about each such parcel of Real Property have been maintained in
accordance with reasonable maintenance standards generally followed in
the industry.
(c) To the knowledge of the Company, all tangible personal
property of the Company which is material to the Company's operations
has been maintained in accordance with reasonable maintenance standards
generally followed in the industry and is physically located at or about
the places of business of the Company and its Subsidiaries. None of
such tangible personal property is subject to any agreement, arrangement
or understanding for its use by any person other than the Company and
its Subsidiaries, the presence of which would have a Material Adverse
Effect.
(d) The Disclosure Schedule sets forth a complete and correct
list of all tangible personal property leases to which the Company and
its Subsidiaries are parties which involve annual lease payments of more
than One Hundred Thousand Dollars ($100,000.00). Each such lease is in
full force and effect against the Company or one of its Subsidiaries.
All lease payments due to date on any such lease have been paid, and
neither the Company nor any Subsidiary is in default under any such
lease, and to the knowledge of the Company no event has occurred which
constitutes, or with the lapse of time or the giving of notice or both
would constitute, a default by the Company or any Subsidiary under such
lease. To the knowledge of the Company, there are no disputes or
disagreements between the Company and its Subsidiaries, on the one hand,
and any other party with respect to any such lease.
4.2.7. Patents, Trademarks, and Other Intellectual Property. The
Disclosure Schedule contains a list of all patents, patent applications,
trademarks, trademark applications, trade names, service marks and
copyrights, and licenses and rights to any of the foregoing (collectively
the "Intellectual Properties") which are owned, controlled, used or held
(under license or otherwise) by and which are material to the Company and
its Subsidiaries in connection with the conduct of their businesses. The
Company or its Subsidiaries are the sole and exclusive owner of the
Intellectual Properties described as owned in the Disclosure Schedule,
free and clear of all encumbrances except as set forth in the Disclosure
Schedule. No claims have been asserted or, to the knowledge of the
Company, threatened by any person challenging the Company's or its
Subsidiaries' ownership or use of any of the Intellectual Properties. To
the knowledge of the Company, none of the Intellectual Properties
infringes or otherwise violates the rights of others or is being infringed
by others in any manner which would have a Material Adverse Effect. In
order to conduct the business of the Company as such is currently being
conducted, to the knowledge of the Company, the Company does not require
any Intellectual Properties that it does not already have the use of. The
Company has not granted any license or made any assignment of any
Intellectual Properties listed in the Disclosure Schedule. The Company
does not pay any royalties or other consideration for the right to use any
intellectual properties of others. All Intellectual Properties of the
Company are valid, enforceable and in good standing, and to the knowledge
of the Company, there are no equitable defenses to enforcement based on
any act or omission of the Company.
4.2.8. Financial Statements. Included in the Disclosure Schedule
are true and correct copies of the consolidated financial statements of
the Company and its Subsidiaries for the fiscal periods ended October 31,
1994, and October 31, 1995 (the "Historical Financial Statements") and the
interim financial statements for the period ended June 30, 1996 (the
"Interim Financial Statements" and with the Historical Financial State-
ments, collectively the "Financial Statements". The Financial Statements
fairly present the financial condition of the Company and its Subsidiaries
(as applicable) on such dates and the results of operations for the
periods designated therein, and were prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the
periods covered thereby; subject, in the case of Interim Financial
Statements, to appropriate year-end adjustments and omitted disclosures
customarily placed in footnotes. The Historical Financial Statements were
audited by Arthur Andersen, LLP, whose reports thereon are attached to the
Disclosure Schedule. There has been no material adverse change in the
capitalization, assets or liabilities of the Company and its Subsidiaries
since the date of the Interim Financial Statements (the balance sheet
included therewith referred to as the "Interim Balance Sheet"), other than
changes in the ordinary course of business consistent with past practice.
4.2.9. Conduct Out of Ordinary Course. The Company has, since the
date of the Interim Balance Sheet, conducted its business and the
businesses of its Subsidiaries in the normal and ordinary course and has
not since such date, other than in the ordinary course of business or as
described in the Disclosure Schedule: (i) mortgaged, pledged or subjected
to, or agreed to mortgage, pledge or subject to, any Encumbrance, any
of the assets or business of the Company and its Subsidiaries, except as
contemplated in this Agreement; (ii) sold, transferred, leased to others
or otherwise disposed of or agreed to sell, transfer, lease or otherwise
dispose of any of the assets of the Company and its Subsidiaries; (iii)
suffered any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting any of the material assets
of the Company, reasonable wear and tear excepted, or materially and
adversely affecting the Company and its Subsidiaries; (iv) borrowed,
or agreed to borrow, funds in excess of One Million Dollars
($1,000,000.00); (v) discharged or satisfied any Encumbrance, cancelled
or compromised any material debt or claim or paid any material obligation
or liability; (vi) directly or indirectly paid, or agreed to pay, any
severance or termination pay to any employee or otherwise granted any
general or specific increase in the salary, commission rate or other
compensation payable to any employee which was not accrued at such date;
(vii) issued, or agreed to issue, any securities of the Company or any
Subsidiary other than pursuant to the stock options described in the Dis-
closure Schedule; (viii) declared, paid, made or agreed to declare, pay or
make any dividends, distributions, redemptions, equity repurchases or
other transactions with respect to any securities of the Company or any
Subsidiary; (ix) had any change in its accounting principles, methods or
practices or any change in its depreciation or amortization policies or
rates; (x) had any change in the relationship or course of dealing with
any of any of its suppliers, customers, distributors, lenders or creditors
that has had or could reasonably be expected to have a Material Adverse
Effect; or (xi) had any labor disputes or disturbances, other than
grievances, which have had or could reasonably be expected to have a
Material Adverse Effect.
4.2.10. Taxes.
(a) Definitions. For purposes of this Paragraph 4.2.10, the
following terms shall have the following meanings:
The terms "Tax" and "Taxes" shall mean and include any and all
United States, state, local, foreign income, alternative, minimum,
accumulated earnings, personal holding company, franchise, capital
stock, profits, windfall profits, gross receipts, sales, use, value
added, transfer, registration, stamp, premium, excise, customs duties,
severance, environmental (including taxes under section 59A of the
Internal Revenue Code of 1986, as amended (the "Code"), real property,
personal property, ad valorem, occupancy, license, occupation,
employment, payroll, social security, disability, unemployment, workers'
compensation, withholding, or other taxes, assessments, social security
obligations, deficiencies, fees, customs duties or other governmental
charges from time to time imposed by or required to be paid to any
governmental authority (including penalties and additions to tax
thereon, penalties for failure to file a return or report, and interest
on any of the foregoing).
The term "Tax Return" shall mean and include any return,
declaration, report, claim for refund, or information return or
statement filed or required to be filed relating to Taxes, including any
schedule or attachment thereto, and any amendment thereof.
(b) Warranties and Representations. Except as described in
the Disclosure Schedule:
(i) All Tax Returns which the Company or any Subsidiary
was required to file prior to the date hereof (including, without
limitation, sales, payroll, employee withholding, social security
and unemployment Tax Returns) have been filed when due and when
filed were true and correct in all material respects.
(ii) All Taxes that the Company or any Subsidiary is
required by law to withhold or to collect for payment have been
duly withheld and collected, and have been paid or accrued,
reserved against and entered on the books of the Company.
(iii) There has been no claim or issue (other than a
claim or issue that has been finally settled) concerning any
liability for Taxes of the Company or any Subsidiary asserted,
raised or to the knowledge of the Company, threatened by any taxing
authority.
(iv) There are no agreements or applications by the
Company or any Subsidiary for an extension of time for the
assessment or payment of any Taxes or for the filing of any Tax
Return, or waivers of a statute of limitations by the Company or
any Subsidiary in respect of Taxes.
(v) The Company is not a party to any agreement,
contract, or other arrangement that would result, separately or in
the aggregate, in the requirement to pay any "excess parachute
payment" within the meaning of Section 280G of the Code.
(vi) There are no Tax sharing agreements or other
similar arrangements with respect to or involving the Company or
any Subsidiary.
4.2.11. Contracts and Other Agreements.
(a) The Disclosure Schedule sets forth a true and complete
list of all of the following to which the Company or any Subsidiary is a
party or by which it or any Subsidiary is bound (collectively, the
"Contracts"):
(i) any lease of personal property which involves annual
expenditures or receipts in excess of One Hundred Thousand Dollars
($100,000.00);
(ii) each lease with respect to the Leased Real
Property;
(iii) any license agreement or other agreements of the
Company or any Subsidiary providing in whole or in part for the use
of any patents, trademarks, trade names, service marks, copyrights,
inventions, trade secrets or other proprietary know-how or other
intellectual property, whether the Company is the licensor or the
licensee thereunder, and all settlements, consents or forbearance
to sue agreements relating thereto;
(iv) any contract, arrangement or understanding not made
in the ordinary course of business and consistent with past
practice which is material to the business of the Company;
(v) any note, bond, indenture, credit facility,
mortgage, security agreement or other instrument or document
relating to or evidencing indebtedness for money borrowed, or a
security interest or mortgage in the assets of the Company or any
Subsidiary in excess of One Million Dollars ($1,000,000.00);
(vi) any indemnity or guaranty issued by the Company or
any Subsidiary during the past three (3) years (other than
customary product warranties provided by the Company or any Sub-
sidiary in the ordinary course of business);
(vii) any contract, arrangement or understanding
materially restricting the right of the Company or any Subsidiary
to engage in any business activity or compete with any business;
(viii) any contract, arrangement or understanding by the
Company or any Subsidiary to customers or distributors which
aggregate in excess of Four Hundred Thousand Dollars ($400,000.00)
to any one customer or distributor;
(ix) any power of attorney given by the Company or any
Subsidiary, which is currently in effect, to any person, firm or
corporation for any purpose whatsoever;
(x) any collective bargaining agreements with any
unions, guilds, shop committees or collective bargaining groups; or
(xi) any contracts or agreements with current officers,
other employees, consultants or advisors other than contracts which
by their terms are cancelable by the Company with notice or not
more than sixty (60) days.
(b) The Company has previously provided to the Buyer complete
and correct copies of each written Contract (and any amendments
thereto). (i) Each Contract is in full force and effect against the
Company; (ii) neither the Company nor any Subsidiary is in default under
any Contract, and no event has occurred which constitutes, or with the
lapse of time or the giving of notice or both would constitute, a
material default by the Company or any Subsidiary under any such
Contract; and (iii) to the knowledge of the Company, there are no
material disputes or disagreements between the Company or its Subsidi-
aries and any other party with respect to any such Contract. Copies of
the standard terms and conditions of sale, delivery or lease of the
Company are included in the Disclosure Schedule.
4.2.12. Product Warranty and Product Liability. The Disclosure
Schedule contains a true, correct and complete copy of the Company's
standard warranty or warranties provided for Products (as defined below)
sold and subject to such warranties as of the Closing. Except as stated
in the warranties or otherwise set forth on the Disclosure Schedule, there
are no warranties, commitments, policies or obligations with respect to
the return, repair or replacement of Products. The Disclosure Schedule
contains a description of all product liability claims and similar claims,
actions, litigation and other proceedings relating to Products
manufactured or sold, or services rendered, which are presently pending or
which to the Company's knowledge are threatened, or which have been
asserted or commenced against the Company within the last five (5) years,
in which a party thereto either requests injunctive relief (whether
temporary or permanent) or alleges damages (which are not covered by
insurance). Except as set forth in the Disclosure Schedule, to the
knowledge of the Company there are no defects in design, construction or
manufacture of Products which would adversely affect performance or create
an unusual risk of injury to persons or property. Except as set forth in
the Disclosure Schedule, to the knowledge of the Company no facts or
conditions exist which could reasonably be expected to result in a recall
campaign. To the knowledge of the Company, the Products have been
designed and manufactured so as to meet and comply with all governmental
standards and specifications currently in effect, and have received all
governmental approvals necessary to allow their sale and use. As used in
this Paragraph 4.2.12, the term "Products" means any and all products
currently or at any time previously manufactured, distributed or sold by
the Company, or by any predecessor of the Company for which the Company
has legal liability under any brand name or mark under which products are
or have been manufactured, distributed or sold by the Company.
4.2.13. Employee Benefit Matters. The Disclosure Schedule sets
forth all of the Company's bonus, deferred or incentive compensation,
profit sharing, retirement, vacation, sick leave, hospitalization,
insurance, disability stock options or severance plans, programs,
arrangements and policies and all "employee pension benefit plans" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) or "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) (collectively, the "Plans") sponsored
or contributed to by the Company or by any trade or business, whether or
not incorporated (an "ERISA Affiliate") that together with the Company
would be deemed a "single employer" within the meaning of Section 4001 of
ERISA, for the benefit of an employee or former employee of the Company or
any ERISA Affiliate. To the knowledge of the Company, each such Plan is
in compliance, and has been administered in accordance with the applicable
provisions of ERISA and the Code and all other applicable laws, rules and
regulations, the violation of which would have a Material Adverse Effect.
The Company has fulfilled its obligations under the minimum funding
standards of ERISA and the Code with respect to each such Plan and no
accumulated funding deficiency exists with respect to any such Plan which
would have a Material Adverse Effect. All contributions required to be
made with respect to all Plans on or prior to the Closing Date have been
timely made. To the knowledge of the Company, neither the Company nor any
ERISA Affiliate nor any Plan, Trust or Trustee or administrator thereof
has (i) engaged in any transaction prohibited by ERISA or the Code or
which would subject the Company to a material tax or civil penalty
thereunder; (ii) breached any fiduciary duty owed by it with respect to
the Plans described above; or (iii) failed to file and distribute in a
timely and proper manner all reports and information required to be filed
or distributed in accordance with ERISA. Neither the Company nor any
ERISA Affiliate has incurred any liability to the Pension Benefit Guaranty
Corporation (the "PBGC") nor, to the knowledge of the Company has the PBGC
taken any action to terminate any of the Plans described above. The
Company is not a participating or contributing employer in any multi-
employer benefit plan with respect to employees of the Company or its
Subsidiaries nor has the Company or its Subsidiaries incurred any
withdrawal liability with respect to any multi-employer plan or any
liability in connection with the termination or reorganization of any
multi-employer plan. Each Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under Section 501(a) of the
Code. There are no pending, or to the knowledge of the Company,
threatened or anticipated claims by or on behalf of any Plan, by any
employee or beneficiary covered under any such Plan, or otherwise
involving any such Plan (other than routine claims for benefits).
4.2.14. Labor Practices. Except as set forth in the Disclosure
Schedule, within the last three (3) years the Company has not experienced
any labor disputes, union organization attempts or any work stoppage due
to labor disagreements in connection with its business. Except to the
extent set forth in the Disclosure Schedule (a) the Company is in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours which
would have a Material Adverse Effect, and is not engaged in any unfair
labor practices; (b) there is no unfair labor practice charge or complaint
against the Company pending or threatened to the knowledge of the Company;
(c) there is no labor strike, dispute, request for representation,
slowdown or stoppage actually pending or to the knowledge of the Company,
threatened against or affecting the Company nor any secondary boycott with
respect to products of the Company; (d) to the knowledge of the Company,
no question concerning representation has been raised or is threatened
respecting the employees of the Company; (e) no grievance which might have
a Material Adverse Effect on the Company, nor any arbitration proceeding
arising out of or under collective bargaining agreements, is pending and
no such claim therefor exists; and (f) there are no administrative charges
or court complaints against the Company concerning alleged employment
discrimination or other employment related matters pending or to the
knowledge of the Company, threatened before the U.S. Equal Employment
Opportunity Commission or any state or federal court or agency.
4.2.15. Brokers; Agents. The Company has not dealt with retained,
employed or used any agent, finder, broker or other representative in any
manner which could result in the Company or the Buyer being liable for any
fee or commission in the nature of a finder's fee or originator's fee in
connection with the subject matter of this Agreement, other than any fees
which may be payable to Robert W. Baird & Co. Incorporated, whose fees and
expenses shall be paid by the Sellers.
4.2.16. Permits and Licenses. To the knowledge of the Company,
the Company has all licenses, permits, approvals, authorizations and
consents of all governmental and regulatory authorities and all
certification organizations required for the conduct of the business
operation of its facilities. All such licenses, permits, approvals,
authorizations and consents described in the Disclosure Schedule are in
full force and effect. To the knowledge of the Company, except as set
forth in Disclosure Schedule, the Company (including its operations,
properties and assets) is and has been in compliance with all such permits
and licenses, approvals, authorizations and consents, except where such
noncompliance would not have a material Adverse Effect. Neither the
Company nor any Subsidiary has received any notice of, and neither the
Company nor any Subsidiary has any knowledge of, any intention on the part
of any government authority to cancel, revoke or modify any permit,
license, exemption, consent, authorization or approval of the Company,
which in each case will have a Material Adverse Effect.
4.2.17. Major Customers. The Disclosure Schedule sets forth a
complete and correct list of the five (5) largest customers of the Company
and its Subsidiaries in terms of contracted work during the eight (8)
month period ended on the date of the Interim Balance Sheet, showing the
total value of such contracts. No such customer has given the Company or
any Subsidiary any notice terminating, rescinding, suspending or reducing
in any material respect, or specifying an intention to terminate, suspend
or reduce in any material respect in the future, or otherwise reflecting a
material adverse change in, the business relationship between such
customer and the Company and such Subsidiary. The Company has no sales
contracts or commitments except those made in the ordinary course of
business, at arm's length.
4.2.18. Dealers and Other Agents. The Disclosure Schedule sets
forth a complete and correct list of the names and addresses of each
authorized dealer, sales representative or other agent (a
"Representative") currently engaged by the Company and its Subsidiaries
and who is not an employee of the Company or its Subsidiaries, to whom the
Company has made annual payments during the year ended October 31, 1995,
aggregating more than Two Hundred Fifty Thousand Dollars ($250,000.00), a
summary description of the services provided by each such Representative
and the territory assigned to each such Representative. True and correct
copies of all agreements between any such Representative and the Company
and its Subsidiaries are included in the Disclosure Schedule. The Company
is not in default under any agreement with any Representative, nor has any
event or omission occurred which through the passage of time or the giving
of notice, or both, constitute a default thereunder, except such defaults
which would not have a Material Adverse Effect. To the knowledge of the
Company, no Representative is in default under any such agreement, nor has
any event or omission occurred which, through the passage of time or the
giving of notice, or both, would constitute a default thereunder or give
rise to an automatic termination or the right of discretionary
termination, thereof, except such defaults which would not have a Material
Adverse Effect. The Disclosure Schedule sets forth a complete and correct
list of all stocking or demonstration units, as such term is customary
used by the Company, located at, consigned, en route or sold to any
Representative as of July 31, 1996.
4.2.19. Material Suppliers of Inventories. The Disclosure
Schedule sets forth a complete and correct list of all written supply
contracts between the Company and its Subsidiaries and each supplier of
goods and services to the Company and its Subsidiaries who provided goods
and services to the Company and its Subsidiaries which involved an
aggregate value of Two Million Dollars ($2,000,000.00) or more during the
year ended October 31, 1995 with such supplier. The Disclosure Schedule
also correctly identifies all currently outstanding purchase orders of the
Company and its Subsidiaries for goods or services with an aggregate value
of Two Million Dollars ($2,000,000.00) or more. No supplier identified in
the Disclosure Schedule has given the Company or any Subsidiary any notice
terminating, suspending or reducing in any material respect, or specifying
an intention to terminate, suspend or reduce in any material respect, or
otherwise reflecting a material adverse change in, the business relation-
ship between such supplier and the Company and its Subsidiaries.
4.2.20. Insurance. The Disclosure Schedule contains a complete
and correct list of all material insurance policies carried by, or
covering, the Company and its Subsidiaries with respect to their
businesses, together with, in respect of each such policy, the name of the
insurer, the policy number, the expiration date thereof and each pending
claim thereunder known to the Company. Complete and correct copies of
each such policy have previously been provided to the Buyer. No written
notice of cancellation has been received by the Company with respect to
any such policy. To the knowledge of the Company, (i) all premiums due
thereon have been paid in a timely manner and (ii) the Company and its
Subsidiaries have complied in all material respects with the terms and
provisions of such policies. Except as set forth in the Disclosure
Schedule, to the knowledge of the Company, the Company has not been
refused any insurance with respect to any aspect of its operations of its
business nor has its coverage been limited by any insurance carrier to
which it has applied for insurance or with which it has carried insurance
during the last three (3) years. There is no claim by the Company pending
under any such policies as to which coverage has been questioned, denied
or disputed by the underwriters of such policies. Such policies are
sufficient in all material respects for compliance by the Company with all
requirements of law and with the requirements of all material contracts to
which the Company is a party.
4.2.21. Environmental Matters.
(a) Definitions. For purposes of this Paragraph 4.2.21 the
following terms shall have the following meanings:
"Environmental Claim" shall mean any investigation, notice,
violation, demand, suit, injunction, order, consent decree, penalty,
fine, lien, proceeding, or claim (whether administrative, judicial, or
private in nature) arising (a) pursuant to, or in connection with, a
violation by the Company or any Subsidiary of any Environmental Law, (b)
in connection with any Hazardous Material, (c) from any abatement,
removal, remedial, corrective, or other response action by the Company
or any of its Subsidiaries in connection with a Hazardous Material,
Environmental Law or order of a Governmental Authority or (d) from any
damage, injury, threat, or harm to the environment by the Company or any
of its Subsidiaries.
"Environmental Law" shall mean any past or current Legal
Requirement pertaining to the protection of the environment, including
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq., the
Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984,
42 USC 6901 et seq. ("RCRA"), and any implementing law, and any
amendment, rule, or regulation issued thereunder.
"Governmental Approval" shall mean any permit, license,
variance, certificate, clearance, closure, exemption, decision or action
or approval of a Governmental Authority which is required under an
Environmental Law.
"Governmental Authority" shall mean any federal, state,
regional, county, or local person or body having legal authority to
administer any Environmental Law.
"Hazardous Material" shall mean any material which is
hazardous or toxic to the environment and/or which is subject to
regulation, control or remediation under Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyl ("PCBs") and
petroleum (including crude oil and any fraction thereof).
"Legal Requirement" shall mean any treaty, convention,
statute, law, regulation, ordinance, Governmental Approval, injunction,
judgement, order, consent decree, or other requirement of any Govern-
mental Authority relating to health, safety, natural resources and the
environment.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injection, escaping, leaching, dumping,
or disposing into the indoor or outdoor environment including, without
limitation, the abandonment or discarding of barrels, drums, containers,
tanks, and other receptacles containing or previously containing any
Hazardous Material.
(b) Warranties and Representations. Except as described in
the Disclosure Schedule:
(i) The Subsidiaries and the Real Estate comply in all
material respects with any and all applicable Environmental Laws.
(ii) The Company and its Subsidiaries have obtained all
necessary Governmental Approvals necessary for the operations of
their businesses and properties.
(iii) Neither the Company nor any Subsidiary (a) has
caused any Release or disposal of any Hazardous Material at the
Real Property or (b) caused any Release of any Hazardous Material
at any third party property.
(iv) Neither the Company nor any Subsidiary has received
any notification of any actual or potential responsibility for any
Release at any third party property.
(v) The Real Property does not contain any: (a) under-
ground storage tank, (b) asbestos containing building material,
PCBs, radon, or urea formaldehyde foam, (c) landfill or dump, or
(d) hazardous waste management facility as defined pursuant to RCRA
or any comparable state law.
(vi) There is no Environmental Claim involving the Real
Property or other property formerly owned, leased or operated by
the Company and its Subsidiaries or to the knowledge of the Company
threatened against the Company or any Subsidiary.
(vii) There are no conditions on, under or in any way
affecting the Real Property which would impose liability to the
Company or any of its Subsidiaries under any Environmental Law.
4.2.22. Bank Accounts. The Disclosure Schedule sets forth the
names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which the Company
maintains a safe deposit box, lock box or checking, savings, custodial or
other account of any nature, the type and number of each such account and
the names of all persons authorized to draw thereon or who have access
thereto.
4.2.23. Inventory. Except to the extent a violation hereof will
not have a Material Adverse Effect and except as set forth in the
Disclosure Schedule (i) inventories of finished goods reflected on the
Interim Balance Sheet were and will be of a quality and quantity useable
and saleable in the ordinary course of business and had and are currently
expected to have a commercial value at least equal to the value shown
thereof, (ii) inventories of raw materials, work in process, and
replacement parts (whether located at the Company's facilities or in
transit) are (a) of good and merchantable quality, except commercial
liabilities and obligations incurred in the ordinary course of business of
the Company; (b) in conformity with warranties customarily given to
purchasers of like products; and (c) at levels adequate for and not
excessive in relation to the ordinary course of the operations and in
accordance with past inventory stocking practices of the Company. Except
as set forth in the Disclosure Schedule, all inventory of the Company is
located on premises owned or leased by the Company or its Subsidiaries.
4.2.24. Accounts Receivable. All accounts receivable of the
Company reflected on the Interim Balance Sheet, and as incurred in the
normal course of the Company's business since the date thereof, represent
arm's length sales actually made in the ordinary course of business and
not in dispute (net or their reserve shown on the Interim Balance Sheet
for doubtful accounts).
4.3. Warranties Survive Closing. The respective warranties and
representations of the Company and the Seller herein contained shall be
true and correct on the date hereof and on the Closing Date, and shall
survive the Closing: (i) with respect to any claim for a breach of any
warranty or representation made in Paragraph 4.2.10, until such time as
the underlying tax obligation is barred by the applicable period of
limitation under federal and state laws relating thereto (which may not be
extended without the consent of the Sellers); (ii) for a period of three
(3) years following the Closing Date for any claim based upon a breach of
any warranty or representation made in Paragraph 4.2.21; (iii)
indefinitely for any claim based upon a breach of any warranty or
representation made in Paragraph 4.1; and (iv) for a period of one (1)
year following the Closing Date with respect to any claim other than a
claim referred to in clauses (i) through (iii), above. Notwithstanding
the provisions of the previous sentence, if the Buyer provides written
notice to the Company and each Seller as specified in Paragraph 9.3,
below, of any claim for which the Buyer seeks indemnification pursuant to
Article IX, below, within the applicable period referred to in the
previous sentence, the claim so made shall survive the Closing until
resolved but, in any event, only for so long as the applicable statute of
limitations for matters covered by such claim. Any claim not so made in
writing prior to the expiration of the applicable period referred to in
the previous sentence shall be deemed to have been waived by the Buyer and
no other party shall have further liability therefor.
4.4. Knowledge. For each of those warranties and representations
which is made in Paragraph 4.1 and which is subject to the qualification
"to the knowledge of such Seller," such warranty and representation shall
be deemed limited to those matters of which the Seller who is making such
warranty or representation has actual knowledge. For those warranties and
representations which are made in Paragraph 4.2 and which are subject to
the qualification "to the knowledge of the Company," "to the Company's
knowledge," or similar words or phrases, such warranties and
representations shall be deemed limited to those matters of which any of
the following officers of the Company has actual knowledge: President
Michael R. Reese, Vice-President William H. Peters, Vice-President Jeffrey
W. Strenger, or Vice-President David A. Ogilvie.
ARTICLE V
Warranties and Representations of the Buyer
5.1. Warranties and Representations. The Buyer hereby warrants
and represents to the Sellers, which warranties and representations shall
survive the Closing for the period set forth in Paragraph 5.2, below, as
follows:
5.1.1. Authority. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Wisconsin and has the power and authority to carry on all business
activities which it currently conducts. The Buyer has the corporate power
and authority to execute and deliver this Agreement and the Buyer
Ancillary Documents and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Buyer
Ancillary Documents by the Buyer and the consummation of the transactions
contemplated hereby and thereby by the Buyer have been approved by all
necessary corporate action on behalf of the Buyer and are and shall
constitute valid and legally binding obligations of the Buyer, enforceable
against the Buyer in accordance with their respective terms except as
enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization and other laws generally affecting
the rights of creditors and general principles of equity and applicable
federal and state laws which may affect the availability of equitable
remedies. The execution and delivery of this Agreement and the Buyer
Ancillary Documents by the Buyer does not, and the consummation of the
transactions contemplated hereby and thereby and compliance with the terms
hereof and thereof by the Buyer will not (a) conflict with, or result in
any breach or violation of (i) any provision of the Articles of Incorpora-
tion or By-Laws of the Buyer or (ii) any law, statute, rule, regulation,
ordinance, code, judgement, order, writ, injunction, decree, determination
or award applicable to the Buyer, or (b) violate or conflict with, or
result in a breach under, any agreement, instrument or document to which
the Buyer is a party or is subject, except for any breach, violation or
default which would not adversely affect the ability of the Buyer to
consummate the purchase of the Subject Shares or the other transaction
contemplated by this Agreement or the Buyer Ancillary Documents. No
consent, approval, order or authorization of, or registration, declaration
or filing with, any court, governmental authority or instrumentality, or
other third party is required to be obtained or made in connection with
the execution and delivery of this Agreement or the Buyer Ancillary
Documents by the Buyer or the consummation by the Buyer of the
transactions contemplated hereby and thereby other than the pre-merger
notification with the FTC and DOJ under the HSR Act. No claim, action,
suit, proceeding, arbitration, investigation or inquiry by any federal,
state, municipal, foreign or other court or governmental or administrative
body or agency, any securities or commodities exchange or any private
arbitration tribunal is now pending or, to the knowledge of the Buyer,
threatened, against or relating to the Buyer which would adversely affect
the ability of the Buyer to consummate the purchase of the Subject Shares
or the other transactions contemplated by this Agreement or the Buyer
Ancillary Documents.
5.1.2. Investment Representations. The Subject Shares to be
purchased by the Buyer pursuant to this Agreement are being acquired by
the Buyer for investment only and not with a view to any public distribu-
tion thereof. The Buyer has such knowledge and experience in business
matters as to be capable of evaluating the merits and risks in purchasing
the Subject Shares. The Buyer acknowledges that the Subject Shares have
not been registered under the Securities Act of 1933, as amended, or the
securities laws of any state (collectively, the "Securities Laws"), and
have been issued in reliance upon exemptions from the registration
requirements of the Securities Laws. The Buyer understands that any
transfer or disposition of the Subject Shares may only be made pursuant to
an effective registration under applicable Securities Laws or pursuant to
an exemption from the registration requirements of the Securities Laws.
The Buyer understands that any certificates representing the Subject
Shares may bear an appropriate legend consistent with the foregoing.
5.1.3. Brokers; Agents. The Buyer has not dealt with any agent,
finder, broker or other representative in any manner which could result in
the Sellers or the Company being liable for any fee or commission in the
nature of a finder's or originator's fee in connection with the subject
matter of this Agreement or the Buyer Ancillary Documents.
5.1.4. Guarantees. The Buyer has completed all arrangements
necessary to secure the release of any obligations or guarantees of any
Seller of obligations of the Company with USF&G and agrees to deliver the
release of same at the Closing.
5.2. Warranties Survive Closing. The warranties and
representations of the Buyer herein contained shall be true and correct on
the date hereof and on the Closing Date and shall survive the Closing
until resolved among the Sellers and the Buyer.
ARTICLE VI
Covenants
6.1. Covenants of the Company. The Company covenants and agrees
as follows:
6.1.1. Access. Prior to the Closing, the Company will (i) give
the Buyer and its representatives, employees, counsel and accountants
reasonable access to the properties, books and records of the Company and
its Subsidiaries, and (ii) furnish the Buyer and its designated
representatives with financial and operating data and other information
with respect to the Company and its Subsidiaries for the purpose of
permitting the Buyer, among other things, to (a) conduct its due diligence
review, (b) review the financial statements of the Company and its
Subsidiaries and (c) prepare for the consummation of the transactions
contemplated by this Agreement. Without limiting the foregoing, the
Sellers and the Company will permit the Buyer and its accountants to have
access during normal business hours to examine and make copies of all work
papers and schedules of the Company, its Subsidiaries and its accountants.
In connection therewith, the Buyer shall be permitted to discuss the
business affairs and financial statements of the Company and its Subsidi-
aries with the Company's accountants, to review the work papers of such
accountants regarding the Company, and in the presence of such members of
management of the Company as reasonably designated by Buyer and at
reasonable times with proper notice, after prior consultation with such
management, to interview the employees of the Company regarding continued
employment and to discuss with the appropriate employees of the Company
and its Subsidiaries such matters regarding the business and assets of the
Company and its Subsidiaries as the Buyer may deem necessary or appro-
priate. The Buyer and the Company agree that nothing in this Agreement
shall be interpreted or construed as limiting, waiving, terminating or
otherwise affecting that Confidentiality Agreement between Buyer and the
Company dated April 22, 1996. The Buyer and the Company acknowledge that
the terms of such Confidentiality Agreement remain in full force and
effect.
6.1.2. Records. On the Closing Date, the Company will deliver to
the Buyer all original records relating to the Company and its
Subsidiaries which are in the possession of any of the Sellers, provided
that the Sellers shall have the right to make copies of any and all
materials which they may deem necessary and shall have the continual right
to have access to such records in accordance with Paragraph 6.2.2, below.
6.1.3. Conduct of the Business of the Company and its
Subsidiaries. The Company covenants and agrees with the Buyer that,
between the date hereof and the Closing Date (except as otherwise agreed
in writing by the Buyer):
(a) the business of the Company and its Subsidiaries will be
conducted in the ordinary course consistent with past practice;
(b) no change will be made in the Articles of Incorporation
or By-Laws or other constituent documents of the Company or any
Subsidiary;
(c) the Company will use reasonable efforts to keep available
the services of its employees and to preserve the goodwill of the
customers, suppliers, dealers and others having business relationships
with the Company and its Subsidiaries; provided, however, that the
Company shall not be deemed to have violated this covenant unless it
fails to take reasonable action to prevent any of its management
employees from continuing to take the action of which the Company has
received written notice from the Buyer, which the Buyer deems to be a
failure to use such reasonable efforts;
(d) the Company shall promptly advise the Buyer in writing of
the commencement or threat of any suit, proceeding or investigation
against, relating to or involving the Company or any Subsidiary or which
could otherwise affect the assets or the businesses of the Company and
its Subsidiaries and which in each case would, if determined adversely
to the Company, have a Material Adverse Effect, whether or not covered
by insurance;
(e) the Company shall advise the Buyer of (i) any material
adverse change in the assets, liabilities or financial condition of the
Company and its Subsidiaries and (ii) in any event, any condition or
state of facts which results in the failure to satisfy any of the
conditions of the Buyer's obligations hereunder;
(f) the Company shall not create or permit to become
effective any encumbrances on the assets of the Company and its
Subsidiaries other than encumbrances created in the ordinary course of
business;
(g) the Company will maintain its current liability,
casualty, property and other insurance coverage in full force and
effect;
(h) the Company will not issue any additional shares of
capital stock or any options, warrants or other rights to purchase, or
securities convertible into or exchangeable for, shares of capital stock
of the Company (except upon exercise of options described in the Stock-
holder Agreements or the Disclosure Schedule);
(i) the Company will not declare or pay any dividends on or
make any distributions (however characterized) in respect of shares of
its capital stock;
(j) the Company will not repurchase or redeem any shares of
its capital stock except as provided in the Stockholder Agreements;
(k) the Company will not make any change in the accounting
principles or practices reflected in the Interim Financial Statements
other than as required by GAAP or in the Company's methods of applying
such principles or practices, or in the credit criteria utilized by them
in connection with its businesses;
(l) the Company will not directly or indirectly (through a
representative or otherwise) solicit or furnish any information to any
prospective buyer, or commence or conduct presently ongoing negotiations
with any other party or enter into any agreement with any other party
concerning the sale of the Company, the Company's assets or business or
any part thereof or any equity securities of the Company (an
"Acquisition Proposal"), and the Company shall immediately advise the
Buyer of the receipt of any Acquisition Proposal;
(m) the Company shall refuse to accept any certificates for
Subject Shares to be transferred or otherwise to allow such transfers to
occur upon its books;
(n) the Company and its Subsidiaries will not enter into any
agreement or commitment that violates any of the foregoing; and
(o) the Company will not hire a replacement for any of the
individuals listed on Exhibit 6.1.7 or Exhibit 6.4.1 attached hereto.
6.1.4. Title Insurance. Within fifteen (15) days after the date
of this Agreement, the Company, at its expense, shall provide to the Buyer
title insurance commitments, issued by a title insurance company
reasonably satisfactory to the Buyer, committing to issue to the Company
standard form owner's policies of title insurance with respect to all
Owned Real Property, together with a copy of each document to which
reference is made in such commitments. Such polices shall be standard
ALTA Form B-1992 owner's policies in the full fair market value of the
Owned Real Property, insuring good and marketable title thereto (expressly
including all easements and other appurtenances). All policies shall
insure title in full accordance with the representations and warranties
set forth herein and shall be subject only to such conditions and
exceptions as shall be reasonably acceptable to Buyer, and shall contain
such endorsements as Buyer shall reasonably request (including, but not
limited to, a non-imputation endorsement, owners' comprehensive
endorsement, zoning endorsement, and an endorsement over rights of
creditors, if requested by the Buyer or the Buyer's lender).
6.1.5. Surveys. Within thirty (30) days after the date of this
Agreement, the Company, at its expense, shall provide to Buyer original
current surveys of the Owned Real Property, certified to Buyer and to the
title company issuing the title insurance policies in Paragraph 6.1.4,
prepared by registered surveyors reasonably satisfactory to the Buyer,
which surveys shall be prepared in accordance with the 1992 Minimum
Standard Detail Requirements for ALTA/ACSM Land Title Surveys (including
all Table A Items), and pursuant to the accuracy of an Urban Class A
Survey.
6.1.6. Tax Matters. No new elections with respect to Taxes, or
changes in current elections with respect to Taxes, affecting the Company
shall have been made after the date of this Agreement without the prior
written consent of the Buyer.
6.1.7. Bonuses. At the Closing, the Company shall have the
authority to pay and upon approval of the shareholders of the Company
shall pay to the management employees of the Company listed on Exhibit
6.1.7 attached hereto in accordance with the general terms set forth
therein, in consideration for the agreement of such individuals to remain
employed with the Company through the Closing Date and to facilitate the
Closing and in addition to and not in lieu of any other bonuses or other
payments due to such employees as disclosed in the Disclosure Schedule,
the amount set forth opposite such management employees' names on Exhibit
6.1.7 hereof. For purposes hereof, the "After Tax Bonus Amount" shall be
an amount equal to the aggregate amount of bonuses paid by the Company
under this Paragraph 6.1.7, less forty percent (40%) of such amount.
6.2. Covenants of the Sellers. Each of the Sellers severally
covenants and agrees as follows:
6.2.1. Solicitation. Each Seller severally agrees that such
Seller will not directly or indirectly (through a representative or
otherwise) solicit or furnish information to any prospective buyer or
commence or conduct presently ongoing negotiations with any other party or
enter any agreement with any other party concerning an Acquisition
Proposal and each Seller shall advise the Buyer of the receipt by such
Seller of any Acquisition Proposal.
6.2.2. Stock Transfer. No Seller shall transfer or attempt to
transfer any of the Subject Shares except to the Buyer pursuant hereto.
6.2.3. Delivery of Documents. Each Seller shall have provided the
Buyer with (i) all forms, certificates and/or other instruments required
to pay the transfer and recording taxes and charges arising from the
transactions contemplated by this Agreement, together with evidence
satisfactory to the Buyer that such transfer taxes and charges have been
paid by the Company, (ii) an affidavit, stating, under penalty of perjury,
each Seller's United States taxpayer identification number and that the
transferor is not a foreign person, pursuant to section 1445(b)(2) of the
Code (or any similar provisions of state or other tax law), and (iii) a
clearance certificate or similar document(s) which may be required by any
state taxing authority to relieve the Buyer of any obligation to withhold
any portion of the payments to the Sellers pursuant to this Agreement.
6.3. Mutual Covenants. Each of the Company, each Seller severally
and the Buyer covenant and agree as follows:
6.3.1. Cooperation. The Buyer, the Company and the Sellers shall
cooperate with each other and shall cause their respective officers,
employees, agents, accountants and representatives to cooperate with each
other after the Closing to ensure the orderly transition of the ownership
of the Company and its business from the Sellers to the Buyer and to
minimize any disruption to the business of the Company that might result
from the transactions contemplated hereby.
6.3.2. Records. For a period of six (6) years after the Closing,
upon reasonable written notice, the Buyer and the Sellers agree to furnish
or cause to be furnished to each other and their respective repre-
sentatives, counsel and accountants access, during normal business hours,
to such information (including records pertinent to the Company and its
Subsidiaries) relating to the Company and its Subsidiaries as
is reasonably necessary for financial reporting tax and accounting
matters, assistance in the preparation and filing of any returns, reports
or forms or the defense of any tax claim or assessment; provided, however,
that such access does not unreasonably disrupt the normal operations of
the Company and its Subsidiaries. Without limiting the foregoing, each of
the Sellers shall have access to and the right, at such Seller's expense,
to copy any books or records of the Company or any of its Subsidiaries
which relate to matters or events prior to the Closing.
6.3.3. Publicity. At the Closing, the parties shall issue the
press release in the form annexed as Exhibit 6.3.3 hereto. Except for
this disclosure, the Buyer, the Company and the Sellers agree that no
further public releases or announcements concerning the transactions
contemplated hereby shall be issued by any party without the prior consent
of the other parties, except as such release or announcement may be
required by law, in which case the party required to make the release or
announcement shall allow the other parties reasonable time to comment on
such release or announcement in advance of its issuance.
6.3.4. Execution of Additional Documents. From time to time, as
and when requested by a party hereto, each party hereto shall execute and
deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further or
other actions as such other parties may reasonably deem necessary or
desirable to consummate the transactions contemplated by this Agreement or
the agreements, documents or instruments associated herewith.
6.3.5. Reasonable Efforts. Prior to the Closing, the Buyer and
the Sellers shall undertake all reasonable efforts to take or cause to be
taken all action and to do or cause to be done all things necessary,
proper or advisable under applicable laws and regulations to consummate
and make effective the transactions contemplated hereby; provided,
however, that no party shall be required to respond to any "second
request" of the FTC or DOJ under the HSR Act and in the event such second
request is received, the Buyer or the Sellers, as the case may be, shall
have the right to terminate this Agreement under Paragraph 10.1, below.
6.4. Covenants of the Buyer. The Buyer covenants and agrees as
follows:
6.4.1. Severance Payments. In the event that during the twelve
(12) month period after the Closing Date the employment of any salaried
employee is terminated by the Company or the Buyer without Cause, or the
base compensation or Other Benefits (as defined below) of such employee as
of the Closing are reduced in any respect, the Buyer will, or will cause
the Company, to pay to each such affected employee within ten (10) days
after the triggering event, an amount calculated as follows: (i) for each
of the management employees listed on Exhibit 6.4.1 attached hereto, an
amount equal to six (6) months of base compensation and benefits; and (ii)
for each of the salaried employees of the Company not listed on Exhibit
6.4.1, an amount equal to three (3) months of base compensation and
benefits. For purposes hereof, "Cause" shall mean the material breach by
an employee of such employee's duties after the Closing Date to the
Company or the Buyer which is not cured after such employee has received
written notice of such breach and has been provided with a reasonable
opportunity to cure such breach.
6.4.2. Incentive Compensation Plan. The Buyer shall offer, or
cause the Company to offer, to the senior management of the Company the
right to participate in an incentive compensation plan on the general
terms and conditions set forth on Exhibit 6.4.2 attached hereto.
6.4.3. Other Benefits. The Buyer covenants and agrees that it
will offer or cause the Company to continue to offer to employees of the
Company hereunder the incentive arrangements described in Paragraph 6.4.2
and all fringe benefits due employees of the Company which are reasonably
comparable to the benefits disclosed on the Disclosure Schedule, except
for (i) the stock appreciation rights described in the Disclosure Schedule
and (ii) the incentive bonus arrangements described in the Disclosure
Schedule. For purposes hereof, all such fringe benefits (except for the
benefits described in clauses (i) and (ii)) shall be referred to herein
as the "Other Benefits."
ARTICLE VII
Disclosure Schedule
7.1. General. Although the schedules and information set forth in
the Disclosure Schedule specifically refer to the paragraph of this
Agreement to which such schedule and information is responsive, each such
schedule and information shall be deemed to have been disclosed with
respect to any other paragraph of this Agreement or for any other purpose
to which such disclosure is applicable and reasonably apparent. Terms
used in the Disclosure Schedule and not otherwise defined therein shall
have the same meanings as are ascribed to such terms in this Agreement.
Any documents attached to the Disclosure Schedule are incorporated in
their entirety into the Disclosure Schedule.
7.2. Updates to Disclosure Schedule. The Company or the Sellers
shall have the right to supplement the Disclosure Schedule prior to the
Closing by delivery to the Buyer prior to the Closing Date of any such
supplement (a "Disclosure Supplement"). Each Disclosure Supplement shall
be in writing and shall be delivered in accordance with Paragraph 11.2 of
this Agreement. Unless the existence of any matter set forth in any such
Disclosure Supplement which was not disclosed at the time of the signing
of this Agreement (a "New Matter") would have a Material Adverse Effect,
the Disclosure Schedule referred to herein shall be deemed amended and
supplemented as of the Closing Date by all information including, without
limitation, any New Matter set forth in any Disclosure Supplement and the
warranties and representations of the Sellers made in Article IV hereof
shall be deemed amended and supplemented by all such information set forth
in each Disclosure Supplement. In such event all references to Disclosure
Schedule shall include all Disclosure Supplements. To the extent that the
existence of any New Matter would have a Material Adverse Effect, the
Buyer shall have the right under Paragraph 10.1, below, (a) to terminate
this Agreement by written notice to the Sellers within five (5) days after
receipt of the Disclosure Supplement which includes the New Matter but
prior to the Closing or (b) to consummate the transactions contemplated
hereby. To the extent that the Buyer elects to so consummate the
transactions contemplated hereby, the Disclosure Schedule shall be deemed
amended and supplemented by all information set forth in each Disclosure
Supplement, and the warranties and representations of the Sellers made in
Article IV hereof shall be deemed amended and supplemented by all such
information set forth in each Disclosure Supplement as if amended on the
date of execution hereof.
ARTICLE VIII
Non-Disclosure
8.1. Non-Disclosure of Confidential Information. Except as may be
agreed to in writing by the Buyer, each of the Sellers acknowledges and
agrees, severally but not jointly, that such Seller shall not, at any time
during the two (2) year period following the Closing Date, disclose any
Confidential Information (as hereinafter defined) to anyone other than to
employees and representatives of the Buyer. For purposes of this
Paragraph 8.1, the term "Confidential Information" shall mean all propri-
etary information which is not in or does not come into, the public domain
through any fault of such Seller or information which such Seller is
required by law or court order to disclose relating to the Company and its
Subsidiaries, their customers, products and services including, without
limitation, the following: (i) all technical information relating to the
provision of goods or services by the Company and its Subsidiaries; (ii)
information concerning pricing policies of the Company and its
Subsidiaries, prices charged by the Company and its Subsidiaries to their
customers, the volume of orders of such customers and all other
information concerning the transactions of the Company and its
Subsidiaries with their customers or proposed customers; (iii) the
customer lists of the Company and its Subsidiaries; (iv) information
concerning the marketing programs or strategies of the Company and its
Subsidiaries; (v) financial information concerning the Company and its
Subsidiaries; and (vi) information concerning salaries or wages paid to,
the work records of and other personal information relating to employees
of the Company and its Subsidiaries.
8.2. Enforcement. In addition to all other legal remedies
available to the Buyer for the enforcement of the covenants of this
Article VIII, each of the Sellers hereby agrees severally but not jointly,
that the Buyer shall be entitled to an injunction by any court of compe-
tent jurisdiction to prevent or restrain any breach or threatened breach
hereof. Each of the Sellers further agrees severally, but not jointly,
that if any of the covenants set forth herein shall at any time be
adjudged invalid to any extent by any court of competent jurisdiction,
such covenant shall be deemed modified to the extent necessary to render
it enforceable.
ARTICLE IX
Indemnification
9.1. Indemnification of the Buyer.
(a) Subject to the limitations, restrictions and conditions
set forth in this Agreement, each of the Sellers shall severally but not
jointly indemnify the Buyer and the Company and hold them harmless from
and against any and all damages, losses, deficiencies, actions,
judgements, costs expenses, debts, liabilities and obligations
(including reasonable attorneys' and accountants' fees) ("Claims") of or
against the Buyer or the Company resulting from or arising out of (i)
any misrepresentation or breach of any warranty made by such Seller (but
not by any other Seller) in Paragraphs 4.1.1, 4.1.2 or 4.1.3,
(regardless of whether such breach is deemed material for purposes of
Paragraph 2.1(a), above) above, or (ii) any nonfulfillment by such
Seller of any covenant or agreement which is to be performed by such
Seller (but only by such Seller) under this Agreement or any of the
Seller Ancillary Documents including, without limitation, the covenants
to be performed by such Seller in Paragraph 8.1, above.
(b) Subject to the limitations, restrictions and conditions
set forth in this Agreement, each of the Sellers shall severally but not
jointly indemnify the Buyer and hold it harmless from and against any
and all Claims of or against the Buyer or the Company resulting from or
arising out of (i) any misrepresentation or breach of any warranty made
by the Company in Paragraph 4.2 of this Agreement (regardless of whether
such breach is deemed material for purposes of Paragraph 2.1(a), above),
or any Claim based upon a fact or circumstance which would constitute a
breach of any warranty or representation set forth in Paragraph 4.2.21,
above, whether or not disclosed on the Disclosure Schedule (for purposes
hereof any such Claim shall be referred to as a "Deemed Environmental
Breach") or (ii) any nonfulfillment of any covenant or agreement on the
part of the Company under this Agreement which is to be performed by the
Company prior to the Closing.
9.2. Indemnification of the Sellers. The Buyer shall indemnify
the Sellers and hold them harmless from and against any and all Claims of
or against the Sellers resulting from or arising out of (i) any
misrepresentation or breach of warranty of the Buyer contained in this
Agreement or any of the Buyer Ancillary Documents on the part of the Buyer
(regardless whether such breach is deemed material for purposes of
Paragraph 2.2(a), above or (ii) the nonfulfillment of any covenant or
agreement on the part of the Buyer contained in this Agreement or any of
the Buyer Ancillary Documents.
9.3. Procedure Relative to Indemnification.
(a) In the event that any party hereto shall claim that it is
entitled to be indemnified pursuant to the terms of this Article IX, it
(the "Claiming Party") shall so notify the party against which the claim
is made (the "Indemnifying Party") in writing of such claim promptly
after discovery of the facts supporting the claim or receipt of a
written notice of any claim of a third party (a "Third Party Claim")
that may reasonably be expected to result in a claim by such party
against the party to which such notice is given, as the case may be.
Such notice shall specify the breach of representation, warranty,
covenant or agreement claimed by the Claiming Party and the liability,
loss, cost or expense incurred by or imposed upon or expected to be
incurred by or imposed upon the Claiming Party on account thereof. If
such liability, loss, cost or expense is liquidated in amount, the
notice shall so state. If the amount is not liquidated, the notice
shall so state and in such event a claim shall be deemed asserted
against the Indemnifying Party on behalf of the Claiming Party, but no
payment shall be made on account thereof until the amount of such claim
is liquidated and the claim is finally determined.
(b) The Indemnifying Party may, upon receipt of written
notice of a Third Party Claim and at its expense, defend such claim in
its own name or, if necessary, in the name of the Claiming Party, unless
the aggregate potential liability of the Claiming Party exceeds the
aggregate potential liability of the Indemnifying Party (calculated
assuming indemnification by the Indemnifying Party with reference to the
limitations set forth in Paragraph 9.5, below), in which event the
Indemnifying Party shall only have the right to defend the Third Party
Claim with the consent of the Claiming Party, but shall have the right
to participate at its expense in the defense thereof. The Claiming
Party will cooperate with and make available to the Indemnifying Party
such assistance and materials as may be reasonably requested of it, and
the Claiming Party shall have the right, at its expense, to participate
in the defense. The Indemnifying Party shall have the right to settle
and compromise such claim only with the consent of the Claiming Party
which consent shall not be unreasonably withheld. However, if the
Claiming Party fails to consent to such settlement or compromise offer,
the Indemnifying Party may continue to contest or defend such Third
Party Claim and, in such event, the maximum liability of the
Indemnifying Party as to such Third Party Claim will not exceed the
amount of such settlement or compromise offer.
(c) In the event the Indemnifying Party shall fail or not
have the right to assume the defense under Paragraph 9.3(b), above, or
shall notify the Claiming Party that it shall refuse to conduct a
defense against a Third Party Claim, then the Claiming Party shall have
the right to conduct a defense against such claim and shall have the
right to settle and compromise such claim with the consent of the
Indemnifying Party which consent shall not be unreasonably withheld.
Once the amount of such claim is liquidated and the claim is finally
determined, the Claiming Party shall be entitled to pursue each and
every remedy available to it at law or in equity to enforce the indemni-
fication provisions of this Article IX and, in the event such amount is
determined, or the Indemnifying Party agrees, that it is obligated to
indemnify the Claiming Party for such claim, the Indemnifying Party
agrees to pay all costs, expenses and fees, including all reasonable
attorneys' fees which may be incurred by the Claiming Party in
attempting to enforce indemnification under this Article IX, whether the
same shall be enforced by suit or otherwise.
(d) Upon judgment, determination, settlement or compromise of
any Third Party Claim, the Indemnifying Party shall pay on behalf of the
Claiming Party, and/or to the Claiming Party in reimbursement of any
amount theretofore required to be paid by the Claiming Party, the amount
so determined by judgment, determination, settlement or compromise and
all other Claims of the Claiming Party with respect thereto within
fifteen (15) days of the date of such judgment, determination,
settlement or compromise, unless in the case of a judgment an appeal is
made from the judgment. If the Indemnifying Party desires to appeal
from an adverse judgment, then the Indemnifying Party shall post and pay
the cost of the security or bond to stay execution of the judgment
pending appeal.
9.4. Effect of Taxes, Other Benefits and Insurance. The
determination of any liability, claim, lien, encumbrance, charge, fine or
penalty for which indemnification may be claimed under this Article IX
shall be net of insurance proceeds received (but also net of recovery
costs and adjusted for any tax incurred as a result of the receipt of such
insurance proceeds except to the extent of any tax benefits received from
the loss which gave rise to such insurance proceeds) by the party bearing
such liability, claim, lien, encumbrance, charge, fine or penalty as a
result thereof.
9.5. Limits on Indemnification Claims.
9.5.1. Basket. Except with respect to Claims for breaches of the
warranties or representations contained in Paragraph 4.1 or in Paragraph
4.2.10(b)(v), the Sellers shall not be required to provide indemnification
under Paragraph 9.1, above: (i) unless the damages of the Buyer for all
Claims of indemnification under Paragraph 9.1, except for breaches of the
warranties and representations contained in Paragraph 4.2.21 and Deemed
Environmental Breaches, shall exceed in the aggregate Seven Hundred Fifty
Thousand Dollars ($750,000.00), (the "Non-Environmental Basket Amount")
and then only for amounts in excess of the Non-Environmental Basket
Amount; and (ii) unless the damages of the Buyer (excluding any costs
related to environmental consultants and audits) for breaches of the
warranties and representations set forth in Paragraph 4.2.21 and Deemed
Environmental Breaches shall exceed in the aggregate Two Hundred Fifty
Thousand Dollars ($250,000.00) (the "Environmental Basket Amount") and
then only for amounts in excess of the Environmental Basket Amount.
9.5.2. Maximum Amount of Indemnification.
(a) Except with respect to Claims (i) for breaches of the
warranties or representations contained in Paragraph 4.1, or (ii) for
breaches of the warranties or representations contained in Paragraph
4.2.21 or for Deemed Environmental Breaches (as to both of which the
limits in Paragraph 9.5.2(b), shall apply), in no event shall: (A) the
aggregate liability of all of the Sellers with respect to all Claims of
indemnification by the Buyer exceed the aggregate amount of Three
Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00), (the "Cap
Amount"), and (B) the liability of any Seller with respect to all Claims
of indemnification exceed the product of the Cap Amount and the
percentage set forth opposite such Seller's name on Schedule 1 attached
hereto.
(b) With respect to any Claim based upon breaches of the
warranties or representations contained in Paragraph 4.2.21 or a Deemed
Environmental Breach, the following shall apply: (i) the Sellers shall
be responsible for providing indemnification to the Buyer under this
Article IX, subject to the Environmental Basket Amount, in an amount
equal to fifty percent (50%) of the amount of the Buyer's Claims for
breach of such warranty or representation or Deemed Environmental Breach
until the aggregate liability of the Sellers for breach of such warranty
or representation or Deemed Environmental Breach equals Three Million
Seven Hundred Fifty Thousand Dollars ($3,750,000.00), at which time the
Sellers shall have no further liability for breach of such warranty or
representation or Deemed Environmental Breach; and (ii) each Seller
shall be responsible for an amount equal to the product of the liability
of all Sellers under clause (i), above, and the percentage set forth
opposite such Seller's name on Schedule 1 attached hereto.
(c) Subject to the limitations in Paragraphs 9.5.2(a) and
9.5.2(b), the liability of any Seller with respect to any individual
Claim of indemnification shall in no event exceed an amount equal to the
product of the amount of such Claim and the percentage set forth
opposite such Seller's name on Schedule 1 attached hereto.
9.6. Sole Remedy; Termination. The sole remedy of the Buyer for
any and all claims against the Sellers with respect to the transactions
contemplated herein, whether under or as a result of this Agreement or
otherwise, shall be the indemnity set forth in this Article IX, as limited
by the provisions set forth in this Article IX. Any claim for
indemnification not submitted in writing by the Buyer prior to the
expiration of the applicable survival period of the warranty,
representation or covenant on which such claim is based shall be deemed to
have been waived and the Sellers shall have no further liability with
respect thereto.
9.7. No Indemnification for Known Breaches of Representations and
Warranties. Notwithstanding any of the provisions set forth in this
Article IX, above, and except for the warranties and representations set
forth in Paragraph 4.2.21 or 4.2.10(b)(v) of this Agreement, in the event
that the Buyer had knowledge, on or before the Closing Date, of the facts
giving rise to a claim hereunder, then the Sellers shall have no liability
for any loss resulting from or arising out of such facts. In addition,
Buyer shall deliver to Sellers, and attach to this Agreement at Closing, a
statement of any facts known to Buyer at Closing and not disclosed by the
Company as part of the Disclosure Schedule which could give rise to a
claim under this Article IX but for the provisions of this Paragraph 9.7.
ARTICLE X
Termination
10.1. Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the mutual written consent of the Buyer and the
Sellers;
(b) by the Buyer, or the Sellers;
(i) if any court or governmental body or agency thereof
shall have enacted, promulgated or issued any statute, rule,
regulation, ruling, writ or injunction, or taken any other action,
restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby; or
(ii) if the Closing shall not have occurred on or before
October 31, 1996; provided, however, that the right to terminate
this Agreement pursuant to this Paragraph 10.1(b)(ii) shall not be
available to any party whose breach of any representation or war-
ranty or failure to perform or comply with any covenant or
obligation under this Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before such date; or
(c) by the Buyer if the DOJ or FTC shall issue a "second
request" to the Buyer, or the Sellers or the Company shall breach this
Agreement; or
(d) by the Sellers if the DOJ or FTC shall issue a "second
request" to the ultimate parent entity of the Company or the Buyer shall
breach this Agreement; or
(e) by the Buyer pursuant to Article VII.
10.2. Effect of Termination. In the event of termination of this
Agreement, this Agreement shall forthwith become null and void and there
shall be no liability on the part of any party hereto, except for
Paragraphs 11.1, 11.2 and 11.9 hereof and this Paragraph 10.2, which shall
remain in full force and effect and which shall survive such termination,
and provided that no such termination shall relieve any party hereto from
liability for any breach by such party of this Agreement.
ARTICLE XI
Miscellaneous
11.1. Expenses. Except as may be otherwise specifically provided
herein, the parties hereto shall pay their own legal fees and expenses
incurred in connection with the negotiation and consummation of the
transactions contemplated by this Agreement, provided that the Company
shall pay all previously billed fees and expenses of Godfrey & Kahn, S.C.
and Arthur Andersen, LLP related to this transaction, all verifiable
unbilled fees and expenses of Godfrey & Kahn, S.C. in an amount not to
exceed Six Hundred Thousand Dollars ($600,000.00) and all verifiable
unbilled fees and expenses of Arthur Andersen, LLP not to exceed One
Hundred Thousand Dollars ($100,000.00). The Sellers shall be severally
responsible for any fees payable to Robert W. Baird & Co. Incorporated in
connection with the transactions contemplated herein other than the
retainer and expenses previously paid by the Company. The Buyer shall be
responsible for any fees payable to any brokers, consultants, or other
agents retained by the Buyer in connection with the transactions
contemplated herein.
11.2. Notices. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be
considered to be given and received in all respects when hand delivered,
when sent one (1) business day after it is sent by prepaid express or
courier delivery service, when sent by facsimile transmission actually
received by the receiving equipment, or five (5) days after it is
deposited in the United States mail, certified mail, postage prepaid,
return receipt requested (or international equivalents thereof), in each
case addressed as follows, or to such other address as shall be designated
by notice duly given:
IF TO THE BUYER: Oshkosh Truck Corporation
2307 Oregon Street
P.O. Box 2566
Oshkosh, WI 54903-2566
Attention: R. Eugene Goodson
Chief Executive Officer
Facsimile: (414) 233-9624
With a Copy To: Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
Attention: Benjamin F. Garmer, III
Facsimile: (414) 297-4900
IF TO THE COMPANY: Pierce Manufacturing Inc.
P.O. Box 2017
Appleton, WI 54913-2017
Attention: Michael R. Reese,
President
Facsimile: (414) 830-3058
With a Copy To: Godfrey & Kahn, S.C.
100 West Lawrence Street
Appleton, WI 54913-2728
Attention: Jeffrey D. Riester
Facsimile: (414) 830-3530
IF TO THE SELLERS: c/o Northwestern Mutual Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202-4797
Attention: A. Kipp Koester,
Vice-President
Facsimile: (414) 299-7124
With a Copy To: Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, WI 53202
Attention: Peter M. Sommerhauser
Facsimile: (414) 273-5198
11.3. Entire Agreement. This Agreement, the Disclosure Schedule,
the exhibits attached hereto and the agreements executed and delivered
simultaneously herewith constitute the entire agreement among the parties
hereto relating to the subject matter hereof, and all prior agreements,
correspondence, discussions and understandings of the parties (whether
oral or written) are merged herein and superseded hereby, it being the
intention of the parties hereto that this Agreement and the instruments
and agreements contemplated hereby shall serve as the complete and
exclusive statement of the terms of their agreement together. No
amendment, waiver or modification hereto or hereunder shall be valid
unless in writing signed by an authorized signatory of the party or
parties to be affected thereby.
11.4. Assignment. This Agreement and the rights hereunder shall
not be assignable or transferrable (i) by the Buyer without the prior
written consent of the Sellers or (ii) by the Company or any of the
Sellers without the prior written consent of the Buyer.
11.5. Binding Effect. This Agreement shall be binding upon the
parties hereto and their respective successors and permitted assigns.
11.6. Paragraph Headings. The headings in this Agreement are for
purposes of convenience and ease of reference only and shall not be
construed to limit or otherwise affect the meaning of any part of this
Agreement.
11.7. Severability. The parties agree that if any provision of
this Agreement shall under any circumstances be deemed invalid or
inoperative, this Agreement shall be construed with the invalid or
inoperative provision deleted, and the rights and obligations of the
parties shall be construed and enforced accordingly.
11.8. Applicable Law. This Agreement and all questions arising in
connection herewith shall be governed by and construed in accordance with
the internal laws of the State of Wisconsin without regard to the
principles of conflicts of laws thereunder.
11.9. Counterparts. This Agreement may be executed in one or more
original or facsimile counterparts, all of which shall be considered but
one and the same agreement, and shall become effective when one or more
such counterparts have been executed by each of the parties and delivered
to the other parties.
11.10. Passage of Title. Legal title, equitable title and risk of
loss with respect to the Subject Shares will not pass to the Buyer until
the Subject Shares are transferred at the Closing, which transfer, once it
has occurred, will be deemed effective as of 12:01 AM, Milwaukee,
Wisconsin time, on the Closing Date for all purposes.
11.11. Use of Terms. In this Agreement, (a) the words "hereof,"
"herein," "hereto," "hereunder" and words of similar import mean and refer
to this Agreement as a whole and not merely to the specific section,
paragraph or clause in which the respective word appears, (b) words
importing gender include the other genders and (c) any terms defined in
this Agreement may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day, month and year first above written.
THE COMPANY:
PIERCE MANUFACTURING INC.
_____________________________________
By: Michael R. Reese, Its President
SELLERS:
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
_____________________________________
By: ______________, Its______________
ROBERT W. BAIRD & CO. INCORPORATED
_____________________________________
By: ______________, Its______________
THE MICHAEL R. REESE AND KATHLEEN A. REESE JOINT
REVOCABLE TRUST DATED SEPTEMBER 23, 1993
By: ________________________________
Michael R. Reese, Trustee
THE MICHAEL R. REESE IRREVOCABLE TRUST, DATED
SEPTEMBER 23, 1993, f/b/o JULIE S. REESE, Marshall &
Ilsley Trust Company, Successor Trustee
By: ________________________________
Name: _______________________________
Title: ______________________________
ANDREW D. OGILVIE IRREVOCABLE CHARITABLE REMAINDER
UNITRUST, F&M Bank of Kaukauna, Trustee
By: ________________________________
Name: _______________________________
Title: ______________________________
_____________________________________
Peter N. Jansen
_____________________________________
William H. Peters
_____________________________________
Lloyd A. De Wald
_____________________________________
James W. Staats
_____________________________________
Gregory E. Potts
_____________________________________
Jeffrey W. Strenger
_____________________________________
Thomas R. Olson
_____________________________________
Neil L. Ort
MARGARET BOLDT ANDERSON TRUST DATED OCTOBER 13, 1987
______________________________________
By: Margaret Boldt Anderson, Trustee
_____________________________________
John W. Puth
_____________________________________
Allison L. Puth
_____________________________________
David W. Puth
_____________________________________
Jonathan C. Puth
WINDFALLS UNLIMITED, LLC
_____________________________________
By: Jeffrey D. Riester, Manager
BUYER:
OSHKOSH TRUCK CORPORATION
______________________________________
By: _______________, Its______________
THE MICHAEL R. REESE IRREVOCABLE TRUST, DATED
SEPTEMBER 23, 1993, f/b/o BRET T. REESE, Marshall &
Ilsley Trust Company, Successor Trustee
By: ________________________________
Name: _______________________________
Title: ______________________________
_____________________________________
David A. Ogilvie
BETH ALEXANDER LIMITED PARTNERSHIP DATED MAY 31,
1996
_____________________________________
By: David A. Ogilvie, General Partner
DAVID A. OGILVIE CHARITABLE REMAINDER UNITRUST, F&M
Bank of Kaukauna, Trustee
By: ________________________________
Name: _______________________________
Title: ______________________________
_____________________________________
Andrew D. Ogilvie
FAITH LIMITED PARTNERSHIP DATED MAY 31, 1996
_____________________________________
By: Andrew D. Ogilvie, General Partner
FIRST AMENDMENT TO STOCK PURCHASE
AGREEMENT By and Among PIERCE MANUFACTURING INC.,
THE SHAREHOLDERS OF PIERCE MANUFACTURING INC.,
and OSHKOSH TRUCK CORPORATION
THIS FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (the "First
Amendment") is made and entered into as of this ___ day of September,
1996, by and between Pierce Manufacturing Inc., a Wisconsin corporation
(the "Company"), Oshkosh Truck Corporation, a Wisconsin corporation
("Buyer") and the individuals, entities and trusts listed on the signature
page hereof (the "Sellers").
WHEREAS, the parties entered into the Stock Purchase Agreement by and
among Buyer, the Company and Sellers dated August 7, 1996 (the
"Agreement");
WHEREAS, the Company has disclosed certain environmental matters
described herein to Buyers subsequent to the signing of the Agreement; and
WHEREAS, as a condition to Closing, Buyer requires the escrow of a
portion of the Purchase Price under the Agreement relating to these
recently disclosed environmental matters and an increase in the
environmental cap as provided by the modifications contained in this First
Amendment.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and conditions herein contained, the parties agree as
follows:
1. The last sentence of Paragraph 1.2 shall be deleted, and be
replaced as follows:
At the Closing, the Buyer shall pay the Purchase Price
by wire transfer of immediately available funds as follows:
(a) One Million Dollars ($1,000,000) to the Escrow Agent as
defined in and established pursuant to that certain
Investigation, Remediation and Escrow Agreement by and
among the Company, Buyer, the Sellers and Firstar Trust
Company (the "Escrow Agreement") in the form of Exhibit 9.8
(attached to this First Amendment); and (b) the remainder
of the Purchase Price to the Sellers in the amounts and per
the wire transfer instructions set forth on Schedule 1
attached hereto.
2. Paragraph 3.2(d) shall be added to the Agreement to read in its
entirety as follows:
(d) The Escrow Agreement dated the Closing Date duly
executed by Buyer and Escrow Agent.
3. Paragraph 3.3(h) shall be added to the Agreement to read in its
entirety as follows:
(h) The Escrow Agreement dated the Closing Date duly
executed by the Sellers, Company and Escrow Agent.
4. Paragraph 9.5.2(b) shall be deleted from the Agreement and
replaced to read in its entirety as follows:
(b) With respect to any Claim based upon breaches of the
warranties or representations contained in Paragraph 4.2.21 or a
Deemed Environmental Breach, the following shall apply: (i) the
Sellers shall be responsible for providing indemnification to
the Buyer under this Article IX, subject to the Environmental
Basket Amount, in an amount equal to fifty percent (50%) of the
amount of the Buyer's Claims for breach of such warranty or
representation or Deemed Environmental Breach until the
aggregate liability of the Sellers for breach of such warranty
or representation or Deemed Environmental Breach equals Four
Million Two Hundred Fifty Thousand Dollars ($4,250,000.00), at
which time the Sellers shall have no further liability for
breach of such warranty or representation or Deemed
Environmental Breach; and (ii) each Seller shall be responsible
for an amount equal to the product of the liability of all
Sellers under clause (i), above, and the percentage set forth
opposite such Seller's name on Schedule 1 attached hereto.
5. Paragraph 9.8 shall be added to the Agreement to read in its
entirety as follows:
9.8 Limitations/Relation to Escrow Agreement. The
limitations and procedures of this Article IX shall not apply
to, nor in any way limit the rights of Buyer and Company to be
reimbursed for Specific Environmental Claims (as defined in the
Escrow Agreement). To the extent that the Buyer shall receive
any disbursement of Escrow Funds under the Escrow Agreement, the
amount of any such disbursement shall not be included in
calculating the amount of any Buyer's Claim under Article IX of
the Agreement. In addition, the Buyer shall have no right to
receive any indemnification under Article IX of the Agreement,
for any Special Environmental Claim (as defined in the Escrow
Agreement) until such time as there are no remaining Escrow
Funds thereunder.
6. Except as modified by this First Amendment, the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, each party has caused this First Amendment
to Stock Purchase Agreement to be executed as of the date first written
above.
THE COMPANY:
PIERCE MANUFACTURING INC.
By:
William H. Peters, Vice President
and Treasurer
SELLERS:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: _______________, Its_________________
ROBERT W. BAIRD & CO. INCORPORATED
By: _______________, Its_________________
THE MICHAEL R. REESE AND KATHLEEN A. REESE
JOINT REVOCABLE TRUST DATED SEPTEMBER 23,
1993
By:
Michael R. Reese, Trustee
THE MICHAEL R. REESE IRREVOCABLE TRUST,
DATED SEPTEMBER 23, 1993, f/b/o JULIE S.
REESE, Marshall & Ilsley Trust Company,
Successor Trustee
By:
Name:
Title:
THE MICHAEL R. REESE IRREVOCABLE TRUST,
DATED SEPTEMBER 23, 1993, f/b/o BRET T.
REESE, Marshall & Ilsley Trust Company,
Successor Trustee
By:
Name:
Title:
David A. Ogilvie
BETH ALEXANDER LIMITED PARTNERSHIP DATED MAY
31, 1996
David A. Ogilvie, General Partner
Andrew D. Oglivie
FAITH LIMITED PARTNERSHIP DATED MAY 31, 1996
By:
Andrew D. Ogilvie, General Partner
DAVID A. OGLIVIE CHARITABLE REMAINDER
UNITRUST, F&M Bank of Kaukauna, Trustee
By:
Name:
Title:
ANDREW D. OGLIVIE IRREVOCABLE CHARITABLE
REMAINDER UNITRUST, F&M Bank of Kaukauna,
Trustee
By:
Name:
Title:
Peter M. Jansen
William H. Peters
Lloyd A. DeWald
James W. Staats
Gregory E. Potts
Jeffrey W. Strenger
Thomas R. Olson
Neil L. Ort
MARGARET BOLDT ANDERSON TRUST DATED OCTOBER
13, 1987
By: Margaret Boldt Anderson, Trustee
John W. Puth
Alison L. Puth
David W. Puth
Jonathan C. Puth
WINDFALLS UNLIMITED, LLC
By: Jeffrey D. Riester, Manager
THE BUYER:
OSHKOSH TRUCK CORPORATION
By: __________________, Its_______________
CREDIT AGREEMENT
Dated as of September 18, 1996
among
OSHKOSH TRUCK CORPORATION,
as Borrower,
CERTAIN SUBSIDIARIES FROM
TIME TO TIME PARTIES HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
FIRSTAR BANK MILWAUKEE, N.A.,
as Agent
and
BANK ONE, MILWAUKEE, NA,
NATIONSBANK, N.A.
and
HARRIS TRUST AND SAVINGS BANK,
as Co-Agents
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions. . . . . . . . . . . . . . . 26
1.3 Accounting Terms and Determinations . . . . . . . . . . . . 26
SECTION 2 CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . 27
2.1 Revolving Loans. . . . . . . . . . . . . . . . . . . . . . 27
2.2 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.3 Letter of Credit Subfacility . . . . . . . . . . . . . . . 30
2.4 Swing Line Loans . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES . . . . . . 36
3.1 Default Rate . . . . . . . . . . . . . . . . . . . . . . . 36
3.2 Extension and Conversion . . . . . . . . . . . . . . . . . 36
3.3 Reductions in Commitments and Prepayments . . . . . . . . . 37
3.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . 39
3.6 Inability To Determine Interest Rate . . . . . . . . . . . 39
3.7 Illegality . . . . . . . . . . . . . . . . . . . . . . . . 40
3.8 Requirements of Law . . . . . . . . . . . . . . . . . . . . 40
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.10 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.11 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . 43
3.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . . 44
3.13 Place and Manner of Payments . . . . . . . . . . . . . . . 45
3.14 Indemnification: Nature of Issuing Lender's Duties . . . . 46
3.15 Cleanup Period . . . . . . . . . . . . . . . . . . . . . . 48
3.16 Transfers at Borrower's Request . . . . . . . . . . . . . . 48
SECTION 4 GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . 48
4.1 The Guaranty . . . . . . . . . . . . . . . . . . . . . . . 48
4.2 Obligations Unconditional . . . . . . . . . . . . . . . . . 49
4.3 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . 50
4.4 Certain Additional Waivers . . . . . . . . . . . . . . . . 50
4.5 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.6 Continuing Guarantee . . . . . . . . . . . . . . . . . . . 51
SECTION 5 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . 51
5.1 Conditions to Closing Date . . . . . . . . . . . . . . . . 51
5.2 Conditions to All Extensions of Credit . . . . . . . . . . 54
SECTION 6 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 54
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . 55
6.2 Ownership of Properties; Liens and Encumbrances . . . . . . 55
6.3 Corporate Existence; Compliance with Law . . . . . . . . . 55
6.4 Corporate Power; Authorization; Enforceable Obligations . . 56
6.5 No Legal Bar; No Default . . . . . . . . . . . . . . . . . 56
6.6 No Material Litigation . . . . . . . . . . . . . . . . . . 57
6.7 Investment Company Act . . . . . . . . . . . . . . . . . . 57
6.8 Federal Regulations . . . . . . . . . . . . . . . . . . . . 57
6.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.10 Environmental Matters . . . . . . . . . . . . . . . . . . . 58
6.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 59
6.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 59
6.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.14 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 59
6.16 Amendments to Schedule 6.12 . . . . . . . . . . . . . . . . 60
SECTION 7 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 60
7.1 Annual Financial Statement . . . . . . . . . . . . . . . . 60
7.2 Interim Financial Statements . . . . . . . . . . . . . . . 61
7.3 Payment of Obligations . . . . . . . . . . . . . . . . . . 62
7.4 Conduct of Business and Maintenance of Existence . . . . . 62
7.5 Maintenance of Property; Insurance . . . . . . . . . . . . 62
7.6 Inspection of Property; Books and Records; Discussions . . 62
7.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . 63
7.9 Financial Covenants . . . . . . . . . . . . . . . . . . . . 64
7.10 Capital Expenditures . . . . . . . . . . . . . . . . . . . 65
7.11 Additional Subsidiary Guarantors . . . . . . . . . . . . . 65
SECTION 8 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 66
8.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 66
8.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.3 Nature of Business . . . . . . . . . . . . . . . . . . . . 67
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc . . 68
8.5 Advances Investments and Loans . . . . . . . . . . . . . . 68
8.6 Guarantee Obligations . . . . . . . . . . . . . . . . . . . 69
8.7 Transactions with Affiliates . . . . . . . . . . . . . . . 69
8.8 Ownership of Subsidiaries . . . . . . . . . . . . . . . . . 69
8.9 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . 69
8.10 Prepayments of Indebtedness, etc . . . . . . . . . . . . . 69
8.11 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 70
SECTION 10 AGENCY PROVISIONS . . . . . . . . . . . . . . . . . . . . 74
10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . 74
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . 74
10.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . . 74
10.4 Reliance on Communications . . . . . . . . . . . . . . . . 75
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . 76
10.6 Non-Reliance on Agent and Other Lenders . . . . . . . . . . 76
10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . 76
10.8 Agent in its Individual Capacity . . . . . . . . . . . . . 77
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 78
11.1 Amendments, Waivers and Release of Collateral . . . . . . 78
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . 80
11.4 Survival of Representations and Warranties . . . . . . . . 80
11.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . 80
11.6 Successors and Assigns; Participations; Purchasing
Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.7 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.8 Confidentiality . . . . . . . . . . . . . . . . . . . . . 85
11.9 Table of Contents and Section Headings . . . . . . . . . . 86
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . 86
11.11 Severability . . . . . . . . . . . . . . . . . . . . . . 86
11.12 Integration . . . . . . . . . . . . . . . . . . . . . . . 86
11.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . 86
11.14 Consent to Jurisdiction and Venue . . . . . . . . . . . . 86
11.15 Acknowledgements . . . . . . . . . . . . . . . . . . . . 87
11.16 Waivers of Jury Trial . . . . . . . . . . . . . . . . . . 87
11.17 Limitation of Liability . . . . . . . . . . . . . . . . . 87
EXHIBITS
Exhibit 2.1(b)(i) Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.2(d) Form of Term Note
Exhibit 2.4(b) Form of Swing Line Note
Exhibit 3.2 Form of Notice for Conversion/Extension of Revolving
Loan or Term Loan
Exhibit 5.1(d) Form of Certificate of Financial Condition
Exhibit 5.1(g) Officer's Certificate
Exhibit 5.1(l) Form of Landlord Waiver
Exhibit 7.11 Joinder Agreement
Exhibit 11.6(c) Commitment Transfer Supplement
SCHEDULES
Schedule 1.1(a) Existing Letters of Credit
Schedule 1.1(b) Existing Investments
Schedule 1.1(c) Transaction Costs
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 2.1(d) Applicable Percentage
Schedule 6.6 Litigation
Schedule 6.10 Environmental Matters
Schedule 6.12 Subsidiaries of the Borrower
Schedule 8.1(b) Permitted Indebtedness
Schedule 8.2 Permitted Liens
Schedule 11.2 Schedule of Lenders and Addresses
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of September 18, 1996 (the "Credit
Agreement"), is by and among OSHKOSH TRUCK CORPORATION, a Wisconsin
corporation (the "Borrower"), those Subsidiaries identified as a
"Guarantor" on the signature pages hereto and such other Subsidiaries as
may from time to time become a party hereto (the "Guarantors"), the
several lenders identified on the signature pages hereto and such other
lenders as may from time to time become a party hereto (the "Lenders"),
FIRSTAR BANK MILWAUKEE, N.A., as agent for the Lenders (in such capacity,
the "Agent") and BANK ONE, MILWAUKEE, NA, NATIONSBANK, N.A. and HARRIS
TRUST AND SAVINGS BANK, as co-agents.
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a
$200,000,000 credit facility for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit
facility available to the Borrower on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions. As used in this Credit Agreement, the following
terms shall have the meanings specified below unless the context otherwise
requires:
"Additional Credit Party" means each Person that becomes a
Guarantor after the Closing Date by execution of a Joinder Agreement
in accordance with Section 7.11.
"Affiliate" means, with respect to any Person, any other Person
(i) directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person or (ii) directly
or indirectly owning or holding five percent (5%) or more of the
equity interest in such Person. For purposes of this definition,
"control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Agent" means Firstar Bank Milwaukee, N.A. as administrative
agent in such capacity hereunder, and any successors and assigns in
such capacity.
"Aggregate Revolving Committed Amount" means the aggregate
amount of all of the Revolving Commitments in effect from time to
time.
"Applicable Percentage" means, for any day, the rate per annum
set forth opposite the applicable pricing level then in effect as
shown on Schedule 2.1(d), it being understood that the Applicable
Percentage for (i) Revolving Loans and the Letter of Credit Fee shall
be the percentage set forth under the column "Applicable Percentage
for Revolving Loans and Letter of Credit Fee," (ii) the Term Loan
shall be the percentage set forth under the column "Applicable
Percentage for Term Loan," and (iii) the Unused Facility Fee shall be
the percentage set forth under the column "Applicable Percentage for
Unused Facility Fee." The Applicable Percentage shall, in each case,
be determined and adjusted quarterly by the Agent as soon as
practicable (but in any event within 5 days) after delivery of the
annual financial information required by Section 7.1 or the monthly
financial information required by Section 7.2 (each an "Interest
Determination Date") based on the information contained in such
financial information, with the first such determination and
adjustment hereunder to be made upon the Agent's receipt of financial
information for the month ended December 31, 1996. Such Applicable
Percentage shall be effective from an Interest Determination Date
until the next such Interest Determination Date. The Agent shall
determine the appropriate pricing level promptly upon its receipt of
the foregoing financial information and promptly notify the Borrower
and the Lenders of any change thereof. Such determinations by the
Agent shall be conclusive absent manifest error. The initial
Applicable Percentages shall be based on pricing level 6. The term
"pricing level" shall be as referenced in Schedule 2.1(d).
"Borrowing Date" means in respect of any Loan, the date such
Loan is made.
"Business" is defined in Section 6.10(b).
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Wisconsin, Illinois or North
Carolina are closed, except that, when used in connection with a rate
determination, borrowing or payment in respect of a Eurodollar Loan,
such day shall also be a day on which dealings between banks are
carried on in U.S. dollar deposits in London, England and Nassau,
Bahamas.
"Calculation Date" is defined in the definition of Interbank
Offered Rate.
"Capital Expenditures" means all expenditures which in
accordance with GAAP would be classified as capital expenditures,
including, without limitation, Capital Lease Obligations.
"Capital Lease" means any lease of property, real or personal,
the obligations with respect to which are required to be capitalized
on a balance sheet of the lessee in accordance with GAAP.
"Capital Lease Obligations" means the capital lease obligations
relating to a Capital Lease determined in accordance with GAAP.
"Cash Equivalents" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof)
having maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and
certificates of deposit of (i) any Lender, (ii) any domestic
commercial bank of recognized standing having capital and surplus in
excess of $500,000,000 or (iii) any bank whose short-term commercial
paper rating from S&P is at least A-1 or the equivalent thereof or
from Moody's is at least P-1 or the equivalent thereof (any such bank
being an "Approved Lender"), in each case with maturities of not more
than 364 days from the date of acquisition, (c) commercial paper and
variable or fixed rate notes issued by any Approved Lender (or by the
parent company thereof) or any variable or fixed rate notes issued
by, or guaranteed by, any domestic corporation rated A-1 (or the
equivalent thereof) or better by S&P or P-1 (or the equivalent
thereof) or better by Moody's and maturing within six months of the
date of acquisition, (d) repurchase agreements with a bank or trust
company (including any of the Lenders) or recognized securities
dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United States
of America in which the Borrower shall have a perfected first
priority security interest (subject to no other Liens) and having, on
the date of purchase thereof, a fair market value of at least 100% of
the amount of the repurchase obligations, (e) obligations of any
State of the United States or any political subdivision thereof, the
interest with respect to which is exempt from federal income taxation
under Section 103 of the Code, having a long term rating of at least
Aa-3 or AA- by Moody's or S&P, respectively, (f) investments in
municipal auction preferred stock (i) rated AAA or the equivalent
thereof) or better by S&P or Aaa (or the equivalent thereof) or
better by Moody's and (ii) with dividends that reset at least once
every 365 days and (g) investments, classified in accordance with
GAAP as current assets, in money market investment programs
registered under the Investment Company Act of 1940, as amended,
which are administered by reputable financial institutions having
capital of at least $100,000,000 and the portfolios of which are
limited to investments of the character described in the foregoing
subdivisions (a) through (f).
"Cleanup Period" means the sixty (60) consecutive day period in
any fiscal year used by the Borrower to satisfy the cleanup
requirement set forth in Section 3.15.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment" means the Revolving Commitment, the LOC Commitment
and the Term Loan Commitment, individually or collectively, as
appropriate.
"Commitment Fee" is defined in Section 3.4(c).
"Commitment Percentage" means the Revolving Commitment
Percentage, the LOC Commitment Percentage and/or the Term Loan
Commitment Percentage, as appropriate.
"Commitment Transfer Supplement" means a Commitment Transfer
Supplement, substantially in the form of Exhibit 11.6(c).
"Commonly Controlled Entity" means an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"Consolidated EBIT" means for any period, the aggregate of (i)
the sum of Consolidated Net Income plus Consolidated Interest Expense
plus all provisions for any federal, state or other income taxes for
such period plus the noncash write-offs for such period of the
Borrower's investments in and receivables from Autobus es de Mexico
(MASA), Steeltech Manufacturing, Inc., Chasises Y Autopartes Oshmex
S.A. de C.V. and the Borrower's former United States chassis
division, but not to exceed in the aggregate $6,281,000 for all
periods plus Transaction Costs plus losses incurred in such period,
if any, in performing the Borrower's obligations under the U.S. Army
component (if awarded to the Borrower) of that certain Medium
Tactical Truck Remanufacturing Prototype Contract between the
Borrower and the United States Department of Defense not to exceed in
the aggregate $2,500,000 for all periods, plus reserves established
by the Borrower with respect to a judgment entered against the
Borrower in the Super Steel litigation described on Schedule 6.6, and
(ii) to the extent not included in (i), the sum of Consolidated Net
Income plus Consolidated Interest Expense plus all provisions for any
federal, state or other income taxes for Pierce and its Subsidiaries
on a consolidated basis, determined in each case in accordance with
GAAP applied on a consistent basis. Except as expressly provided
otherwise, the applicable period shall be for the four consecutive
quarters ending as of the date of determination.
"Consolidated EBITDA" means for any period, the aggregate of (i)
the sum of Consolidated Net Income plus Consolidated Interest Expense
plus all provisions for any federal, state or other income taxes for
such period plus depreciation, amortization and other noncash charges
for the Borrower and its Subsidiaries on a consolidated basis for
such period (including, without limitation, the noncash write-offs
for such period of the Borrower's investments in and receivables from
Autobus es de Mexico (MASA), Steeltech Manufacturing, Inc., Chasises
Y Autopartes Oshmex S.A. de C.V. and the Borrower's former United
States chassis division, but not to exceed in the aggregate
$6,281,000 for all periods), plus Transaction Costs, plus losses
incurred in such period, if any, in performing the Borrower's
obligations under the U.S. Army component (if awarded to the
Borrower) of that certain Medium Tactical Truck Remanufacturing
Prototype Contract between the Borrower and the United States
Department of Defense not to exceed in the aggregate $2,500,000 for
all periods, plus reserves established by the Borrower with respect
to a judgment entered against the Borrower in the Super Steel
litigation described on Schedule 6.6, and (ii) to the extent not
included in (i), the sum of Consolidated Net Income plus Consolidated
Interest Expense plus all provisions for any federal, state or other
income taxes plus depreciation, amortization and other non-cash
charges for Pierce and its Subsidiaries on a consolidated basis,
determined in each case in accordance with GAAP applied on a
consistent basis. Except as expressly provided otherwise, the
applicable period shall be for the four consecutive quarters ending
as of the date of determination.
"Consolidated Funded Debt" means Funded Debt of the Borrower and
its Subsidiaries on a consolidated basis determined in accordance
with GAAP applied on a consistent basis.
"Consolidated Funded Debt Ratio" means, as of the last day of
any fiscal quarter, the ratio of Consolidated Funded Debt on such day
to Consolidated EBITDA for the period of four consecutive fiscal
quarters ending as of such day.
"Consolidated Interest Expense" means for any period, all
interest expense, including the amortization of debt discount and
premium and the interest component under Capital Leases for the
Borrower and its Subsidiaries on a consolidated basis determined in
accordance with GAAP applied on a consistent basis. The applicable
period shall be for the four consecutive quarters ending as of the
last date of such period, except that for the first three complete
fiscal quarters to occur after the Closing Date, Consolidated
Interest Expense shall be determined by annualizing the components
thereof for the complete fiscal quarters occurring after the Closing
Date such that Consolidated Interest Expense for the first complete
fiscal quarter to occur after the Closing Date would be multiplied by
four (4), the first two complete fiscal quarters would be multiplied
by two (2) and the first three complete fiscal quarters would be
multiplied by one and one-third (1-1/3).
"Consolidated Net Income" means for any period, the net income
of the Borrower and its Subsidiaries on a consolidated basis
determined in accordance with GAAP applied on a consistent basis, but
excluding for purposes of determining the Consolidated Funded Debt
Ratio and the Interest Coverage Ratio any extraordinary gains or
losses (including, without limitation, gains or losses on disposal of
property, plant and equipment relating to discontinued operations),
and any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses. The applicable
period shall be for the four consecutive quarters ending as of the
date of computation.
"Consolidated Net Worth" means total stockholders' equity of the
Borrower and its Subsidiaries on a consolidated basis as determined
in accordance with GAAP applied on a consistent basis.
"Consolidated Subsidiaries" means Subsidiaries whose financial
statements are consolidated with those of the Borrower in accordance
with GAAP.
"Consolidated Total Assets" means total assets of the Borrower
and its Subsidiaries on a consolidated basis as determined in
accordance with GAAP applied on a consistent basis.
"Continuing Director" is defined in Section 9(h).
"Contractual Obligation" means, as to any Person, any provision
of any security issued by such Person or of any agreement, instrument
or undertaking to which such Person is a party or by which it or any
of its property is bound.
"Credit Documents" means this Credit Agreement, the Notes, any
Joinder Agreement, the Security Agreement, the General Intangibles
Mortgage, any Letter of Credit Document, and all other related
agreements and documents issued or delivered hereunder or thereunder
or pursuant hereto or thereto.
"Credit Party" means any of the Borrower and the Guarantors.
"Credit Party Obligations" means, without duplication, all of
the obligations of the Borrower and the other Credit Parties to the
Lenders, the Agent and the Issuing Lender (including the obligations
to pay principal of and interest on the Loans, to pay LOC
Obligations, to pay all Fees, to provide cash collateral in respect
of Letters of Credit, to pay certain expenses and the obligations
arising in connection with various indemnities) whenever arising,
under this Credit Agreement, the Notes or any other of the Credit
Documents to which the Borrower or any other Credit Party is a party.
"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 Borrower 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 Borrower
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 Capital Lease Obligations due in 12 months or less
and customers' advances and progress billings on contracts, but
excluding the aggregate unpaid principal balance of the Notes.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means at any time, any Lender that, at such
time (a) has failed to make a Loan or advance required pursuant to
the terms of this Credit Agreement, including the funding of a
Participation Interest in accordance with the terms hereof, (b) has
failed to pay to the Agent or any Lender an amount owed by such
Lender pursuant to the terms of this Credit Agreement, or (c) has
been deemed insolvent or has become subject to a bankruptcy or
insolvency proceeding or to a receiver, trustee or similar official.
"Dollars" and "$" means dollars in lawful currency of the United
States of America.
"Domestic Lending Office" means the office or branch of the
Lender identified on Schedule 11.2, or such other office or branch as
the Lender may identify by written notice to the Borrower and the
Agent.
"Domestic Subsidiary" is defined in Section 7.11.
"Eligible Transferee" means and includes a commercial bank,
financial institution or other "accredited investor" as defined in
Regulation D of the Securities Act of 1933, (as amended).
"Environmental Laws" means any and all applicable foreign,
federal, state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any
Governmental Authority (or other Requirement of Law including common
law) regulating, relating to or imposing liability or standards of
conduct concerning protection of human health or the environment, as
now or may at any time be in effect during the term of this Credit
Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
and the rulings issued thereunder.
"Eurodollar Lending Office" means the office or branch of the
Lender identified on Schedule 11.2, or such other office or branch as
the Lender may identify by written notice to the Borrower and the
Agent.
"Eurodollar Loan" means any Loan bearing interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate
---------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time to
time under Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as such regulation may be amended
from time to time or any successor regulation, as the maximum reserve
requirement (including, without limitation, any basic, supplemental,
emergency, special, or marginal reserves) applicable with respect to
Eurocurrency liabilities as that term is defined in Regulation D or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is
determined, whether or not Lender has any Eurocurrency liabilities
subject to such reserve requirement at that time. Eurodollar Loans
shall be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefit of
credits for proration, exceptions or offsets that may be available
from time to time to a Lender. The Eurodollar Rate shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default" is defined in Section 9.
"Existing Letters of Credit" means those Letters of Credit
outstanding on the Closing Date and identified on Schedule 1.1(a).
"Extension of Credit" means as to any Lender, the making of a
Loan by such Lender or the issuance of, or participation in, a Letter
of Credit by such Lender.
"Federal Funds Rate" means, for any day, the rate of interest
per annum (rounded upwards, if necessary, to the nearest whole
multiple of 1/100 of 1%) equal to the weighted average of the rates
on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (A) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Business Day and (B) if no
such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to
the Agent on such day on such transactions as determined by the
Agent.
"Fee" means any fee payable pursuant to Section 3.4.
"Firstar" means Firstar Bank Milwaukee, N.A.
"Funded Debt" means, for any Person, (i) all Indebtedness of
such Person for borrowed money (including, without limitation,
indebtedness evidenced by promissory notes, bonds, debentures and
similar instruments and further any portion of the purchase price for
assets or acquisitions permitted hereunder which may be financed by
the seller and Guarantee Obligations by such Person of Funded Debt of
other Persons), (ii) all purchase money Indebtedness of such Person,
(iii) the principal portion of Capital Lease Obligations, (iv) all
preferred stock issued by such Person and required by the terms
thereto to be redeemed, or for which mandatory sinking fund payments
are due, by a fixed date, and (v) the outstanding balance of the
purchase price of uncollected accounts receivable of such Person
subject at such time to a sale of receivables or other similar
transaction, regardless of whether such transaction is effected
without recourse to such Person or in a manner which would not be
reflected on the balance sheet of such Person in accordance with
GAAP. Funded Debt shall include payments in respect of Funded Debt
which constitute current liabilities of the obligor under GAAP. For
purposes hereof, Funded Debt shall not include any Indebtedness owing
in respect of the Revolving Loans, Subordinated Debt or intercompany
Indebtedness owing by a Credit Party to another Credit Party.
"GAAP" means generally accepted accounting principles in effect
in the United States of America applied on a consistent basis.
"General Intangibles Mortgage" means that General Intangibles
Mortgage and Security Agreement dated as of the Closing Date given by
the Borrower and the Guarantors to the Agent, as amended,
supplemented or otherwise modified from time to time.
"Government Acts" is defined in Section 3.14(a).
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantee Obligation" means, as to any Person (the
"guaranteeing person"), any obligation of (a) the guaranteeing person
or (b) another Person (including, without limitation, any bank under
any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations
(the "primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation
in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the Borrower in good
faith.
"Guarantor" means those Subsidiaries of the Borrower identified
as a "Guarantor" on the signature pages hereto, and each Additional
Credit Party which has executed a Joinder Agreement, together with
their successors and permitted assigns.
"Guaranty" means the guaranty of the Guarantors set forth in
Section 4.
"Indebtedness" means, of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services other than trade liabilities
incurred in the ordinary course of business and not restructured
thereafter for credit reasons, (b) any other indebtedness of such
Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Capital Leases,
(d) all obligations of such Person in respect of acceptances issued
or created for the account of such Person, (e) all liabilities
secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the
payment thereof, (f) all obligations of such Person under conditional
sale or other title retention agreements relating to property
purchased by such Person other than customary reservations or
retentions of title under agreements with suppliers entered into in
the ordinary course of business), (g) all obligations of such Person
under take-or-pay or similar arrangements or under commodities
agreements, (h) all Guarantee Obligations of such Person, (i) all
obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements, commodity purchase
or option agreements or other interest or exchange rate or commodity
price hedging agreements, (j) the maximum amount of all letters of
credit issued or bankers' acceptances created for the account of such
Person and, without duplication, all drafts drawn thereunder to the
extent not theretofore reimbursed, (k) all preferred stock issued by
such Person and required by the terms thereto to be redeemed, or for
which mandatory sinking fund payments are due, by a fixed date, (l)
all other obligations which would be shown as a liability on the
balance sheet of such Person, and (m) the outstanding balance of the
purchase price of uncollected accounts receivable of such Person
subject at such time to a sale of receivables or other similar
transaction, regardless of whether such transaction is effected
without recourse to such Person or in a manner which would not be
reflected on the balance sheet of such Person in accordance with
GAAP; but specifically excluding from the foregoing (x) trade
payables, (y) obligations for advances by customers for the purchase
of goods or services from the Borrower and its Subsidiaries, and
(z) other obligations, expenses and reserves (whether classified as
long term or short term) arising or incurred in the ordinary course
of business. For purposes hereof, Indebtedness shall include
Indebtedness of any partnership in which such Person is a general
partner (except for any such Indebtedness with respect to which the
holder is limited to the assets of such partnership or joint
venture).
"Indemnified Liabilities" is defined in Section 11.5.
"Insolvency" means with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of such term
as used in Section 4245 of ERISA.
"Insolvent" means pertaining to a condition of Insolvency.
"Interbank Offered Rate" means, with respect to any Eurodollar
Loan for the Interest Period applicable thereto, the per annum rate
of interest determined by the Agent (each such determination to be
conclusive and binding absent manifest error) to be the average
(rounded up, if necessary, to the nearest one-sixteenth (1/16) of one
percent) of the offered rates for deposits in U.S. dollars for the
applicable Interest Period which appear on the Reuters Screen LIBOR
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 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period (the "Calculation Date"),
except as provided below. If fewer than two offered rates appear for
the applicable Interest Period or if the appropriate screen is not
accessible as of such time, the term "Interbank Offered Rate" shall
mean the per annum rate of interest determined by the Agent (each
such determination to be conclusive and binding absent manifest
error) to be the average (rounded up, if necessary, to the nearest
one-sixteenth (1/16) of one percent) as the effective rate at which
deposits in immediately available funds in Dollars are being, have
been, or would be offered or quoted by major banks to the Agent in
the applicable interbank market for Eurodollar deposits at 11:00 a.m.
(Milwaukee, Wisconsin) on the Business Day which is the second
Business Day immediately preceding the first day of such Interest
Period, for a term comparable to such Interest Period and in the
amount of the requested Eurodollar Loan. If no such offers or quotes
are generally available for such amount, then the provisions of
Section 3.6 shall apply.
"Interest Coverage Ratio" means for any period, the ratio of
Consolidated EBIT to Consolidated Interest Expense.
"Interest Payment Date" means (a) as to any Prime Rate Loan, the
last day of each month and the Revolving Termination Date or the Term
Termination Date, as applicable, (b) as to any Eurodollar Loan having
an Interest Period of three months or less, the last day of such
Interest Period, and (c) as to any Eurodollar Loan having an Interest
Period of more than three months, the day which is three months after
the first day of such Interest Period and the last day of such
Interest Period. Whenever any Interest Payment Date shall be stated
to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day (subject to
accrual of interest and Fees for the period of such extension),
except that in the case of Eurodollar Loans, if the extension would
cause the payment to be made in the next following calendar month,
then such payment shall instead be made on the next preceding
Business Day as provided in Section 3.13.
"Interest Period" means with respect to any Eurodollar Loan,
(i) initially, the period commencing on the Borrowing Date
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three or, if available,
four or six months thereafter, as selected by the Borrower in
the notice of borrowing or notice of conversion given with
respect thereto; and
(ii) thereafter, each period commencing on the last day of
the immediately preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or, if available,
four or six months thereafter, as selected by the Borrower by
irrevocable notice to the Agent not less than three Business
Days prior to the last day of the then current Interest Period
with respect thereto;
provided that the foregoing provisions are subject to the following:
(A) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately
preceding Business Day;
(B) any Interest Period pertaining to a Eurodollar Loan
that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on
the last Business Day of the relevant calendar month;
(C) if the Borrower shall fail to give notice as provided
above, the Borrower shall be deemed to have selected a Prime
Rate Loan to replace the affected Eurodollar Loan;
(D) with regards to Revolving Loans, any Interest Period
that would otherwise extend beyond the Revolving Termination
Date shall end on the Revolving Termination Date and with regard
to the Term Loan, no Interest Period shall extend beyond any
principal amortization payment date unless the portion of the
Term Loan consisting of Prime Rate Loans together with the
portion of the Term Loan consisting of Eurodollar Loans with
Interest Periods expiring prior to or concurrently with the date
such principal amortization payment is due, is at least equal to
the amount of such principal amortization payment due on such
date; and
(E) no more than 10 Eurodollar Loans may be in effect at
any time. For purposes hereof, Eurodollar Loans with different
Interest Periods shall be considered as separate Eurodollar
Loans, even if they shall begin on the same date and have the
same duration, although borrowings, extensions and conversions
may, in accordance with the provisions hereof, be combined at
the end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period.
"Issuing Lender" means as to the Existing Letters of Credit, the
Issuing Lenders identified on Schedule 1.1(a), and as to Letters of
Credit issued after the Closing Date, one or more of the Lenders, as
the Borrower may elect.
"Joinder Agreement" means a Joinder Agreement substantially in
the form of Exhibit 7.11, executed and delivered by an Additional
Credit Party in accordance with the provisions of Section 7.11.
"Lenders" means each of the Persons identified as a "Lender" on
the signature pages hereto, and each Person which may become a Lender
by way of assignment in accordance with the terms hereof, together
with their successors and permitted assigns.
"Letter of Credit" means any Existing Letter of Credit and any
letter of credit issued for the account of a Credit Party by an
Issuing Lender as provided in Section 2.3, as such letter of credit
may be amended, supplemented, extended or otherwise modified from
time to time.
"Letter of Credit Fees" is defined in Section 3.4(b).
"Lien" means any mortgage, pledge, hypothecation, assignment,
security interest, encumbrance, lien (statutory or otherwise),
priority or charge of any kind including any agreement to give any of
the foregoing, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under
the Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction (or other similar recording or notice statute, and any
lease in the nature thereof), except a filing for precautionary
purposes made with respect to a true lease or other true bailment.
"Loan" means a Revolving Loan and/or the Term Loan and/or a
Swing Line Loan, as appropriate.
"LOC Commitment" means the commitment of the Issuing Lender to
issue Letters of Credit and with respect to each Lender, the
commitment of such Lender to purchase participation interests in the
Letters of Credit up to such Lender's LOC Committed Amount as
specified in Schedule 2.1(a) (subject to adjustment on account of
assignment pursuant to the provisions of Section 11.6(c) hereof), as
such amount may be reduced from time to time in accordance with the
provisions hereof.
"LOC Commitment Percentage" means for each Lender, the
percentage identified as its LOC Commitment Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.6(c).
"LOC Committed Amount" means, collectively, the aggregate amount
of all of the LOC Commitments of the Lenders to issue and participate
in Letters of Credit as referenced in Section 2.3(a) and,
individually, the amount of each Lender's LOC Commitment as specified
in Schedule 2.1(a) (subject to adjustment on account of assignment
pursuant to the provisions of Section 11.6(c) hereof).
"LOC Documents" means with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned
or (ii) any collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to
be drawn under Letters of Credit then outstanding, assuming
compliance with all requirements for drawings referred to in such
Letters of Credit plus (ii) the aggregate amount of all payments
made, or drafts accepted for subsequent payments to be made, under
Letters of Credit honored by the Issuing Lender but not theretofore
reimbursed.
"Mandatory Borrowing" is defined in Section 2.3(e).
"Material Adverse Effect" means a material adverse effect on (a)
the business, operations, property or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole, (b)
the ability of the Borrower or the other Credit Parties to perform
their obligations, when such obligations are required to be
performed, under this Credit Agreement or any of the other Credit
Documents or (c) the validity or enforceability of this Credit
Agreement, any of the Notes or any of the other Credit Documents or
the rights or remedies of the Agent or the Lenders hereunder or
thereunder.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products or any hazardous or toxic substances, materials or wastes,
defined or regulated as such in or under any Environmental Law,
including, without limitation, asbestos, polychlorinated biphenyls
and urea-formaldehyde insulation.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the business
of rating securities.
"Multiemployer Plan" means a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Net Proceeds" means the gross cash proceeds including cash by
way of deferred payment pursuant to a promissory note, receivable or
otherwise, (but only as and when received) received from the sale,
lease, conveyance, disposition or other transfer of assets, or from a
Recovery Event or from the sale, issuance or placement of equity
securities, Indebtedness for borrowed money or Subordinated Debt to
or from a Person other than a Credit Party, net of (i) transaction
costs payable to third parties, (ii) the estimated taxes payable with
respect to such proceeds (including, without duplication, withholding
taxes), (iii) Indebtedness (other than Indebtedness of the Lenders
pursuant to the Credit Documents) which is secured by the assets
which are the subject of such event to the extent such Indebtedness
is paid with a portion of the proceeds therefrom, and (iv) any and
all cash costs which may occur as a result of discontinuing
operations, shut-downs or otherwise resulting from, the disposition
of such assets.
"Non-Excluded Taxes" is defined in Section 3.9.
"Non-Guarantor Domestic Subsidiaries" is defined in Section
7.11.
"Note" or "Notes" means the Revolving Notes and/or the Term
Notes and/or the Swing Line Note, collectively, separately or
individually, as appropriate.
"Notice of Borrowing" means the written notice of borrowing as
referenced and defined in Section 2.1(b)(i).
"Notice of Extension/Conversion" means the written notice of
extension or conversion as referenced and defined in Section 3.2.
"Obligations" means collectively, Loans and LOC Obligations.
"Participant" and "Participants" are defined in Section 11.6.
"Participation Interest" means the purchase by a Lender of a
participation interest in Letters of Credit as provided in Section
2.3.
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA, and any successor thereto.
"Permitted Guarantee Obligations" means (i) the Guaranty, (ii)
Guarantee Obligations of the Borrower and its Subsidiaries in favor
of suppliers and vendors of the Borrower and its Subsidiaries (which
may include Steeltech Manufacturing, Inc.), to enable such suppliers
and vendors to purchase goods or parts to be processed and sold to
the Borrower and its Subsidiaries, provided, however, that the
aggregate of the liability of the Borrower and its Subsidiaries under
such Guarantee Obligations and advances of the Borrower and its
Subsidiaries permitted by clause (iii) of the definition of Permitted
Investments shall not exceed $15,000,000 outstanding at any one time
(including any such advances which have been written off,
compromised, forgiven or satisfied after the Closing Date without the
payment in full thereof), (iii) Guarantee Obligations of the Borrower
and its Subsidiaries relating to Indebtedness of the Borrower or a
Domestic Subsidiary otherwise permitted under Section 8.1, (iv)
Guarantee Obligations of the Borrower under that certain Steeltech
Manufacturing, Inc./Lease Investment Partnership I Guaranty dated as
of April 6, 1992, in the maximum amount of $1,700,000, (v) Guarantee
Obligations of the Borrower and its Subsidiaries relating to
obligations of their customers under third-party wholesale/retail
finance arrangements, consistent with past practices of the Borrower
and its Subsidiaries, and (vi) Guarantee Obligations of the Borrower
and its Subsidiaries relating to performance bonds issued for their
customers to facilitate sales of products of the Borrower and its
Subsidiaries, consistent with past practices of the Borrower and its
Subsidiaries.
"Permitted Investments" means (i) cash and Cash Equivalents,
(ii) receivables owing to the Borrower or any of its Subsidiaries for
trade credit, in each case if created, acquired or made in the
ordinary course of business, (iii) advances to vendors of the
Borrower and its Subsidiaries (which may include Steeltech
Manufacturing, Inc.), or suppliers to such vendors, to enable such
vendors and suppliers to purchase goods or parts to be processed and
sold to the Borrower and its Subsidiaries, provided, however, that
the aggregate of such advances and the liability of the Borrower and
its Subsidiaries under Guarantee Obligations of the Borrower and its
Subsidiaries permitted by clause (ii) of the definition of Permitted
Guarantee Obligations shall not exceed $15,000,000 outstanding at any
one time, (iv) investments in and advances to a domestic Credit
Party, (v) loans and advances to officers, directors, employees and
Affiliates in an aggregate amount not to exceed $1,000,000 at any
time outstanding, (vi) investments (including debt obligations)
received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations
of, and other disputes with, customers and suppliers arising in the
ordinary course of business, (vii) investments, acquisitions or
transactions permitted under Section 8.4(b), (viii) with respect to
any pension trust maintained for the benefit of any present or former
employees of the Borrower or any Subsidiary, such loans, advances
and/or investments as the trustee or administrator of the trust shall
deem advisable pursuant to the terms of such trust, (ix) investments
of a nature not contemplated by the foregoing clauses hereof that are
outstanding as of the Closing Date and set forth on Schedule 1.1(b),
and (x) additional loans, advances and/or investments of a nature not
contemplated by the foregoing clauses hereof provided that such
loans, advances and/or investments made pursuant to this clause (x)
shall not exceed an aggregate amount of $5,000,000 outstanding at any
one time and further provided that no such loans, advances and/or
investments shall be used to acquire all or substantially all of the
voting stock of any corporation the board of directors of which has
not approved such acquisition. As used herein, "investment" means
all investments, in cash or by delivery of property made, directly or
indirectly in, to or from any Person, whether by acquisition of
shares of capital stock, property, assets, indebtedness or other
obligations or securities or by loan advance, capital contribution or
otherwise.
"Permitted Liens" means
(i) Liens created by or otherwise existing, under or in
connection with this Credit Agreement or the other Credit Documents
in favor of the Agent for the benefit of the Lenders;
(ii) Liens in favor of a Lender hereunder as the provider
of interest rate protection relating to the Loans hereunder, but only
(A) to the extent such Liens secure obligations under such interest
rate protection agreements permitted under Section 8.1, (B) to the
extent such Liens are on the same collateral as to which the Agent
for the benefit of the Lenders also has a Lien, (C) if such provider
and the Agent for the benefit of the Lenders shall have agreed to
share pari passu in the collateral subject to such Liens, up to a
maximum aggregate amount of 5% of the proceeds of such collateral for
such provider and all other providers hereunder, and thereafter all
such providers' Liens shall be subordinate to the Liens in favor of
the Agent for the benefit of the Lenders, and (D) if such provider
shall have agreed, pursuant to an agreement reasonably satisfactory
in form and substance to the provider, the Borrower and the Agent, to
pay to the Agent, for the pro rata benefit of the Lenders, an amount
equal to the amount of any payment made to such provider by or on
behalf of a Credit Party after a default by reason of the amendment,
conversion, buy-out or termination of such interest rate protection
agreements;
(iii) purchase money Liens securing purchase money
indebtedness (and refinancings thereof) and Capital Lease
Obligations, to the extent permitted under Section 8.1(c);
(iv) Liens for taxes, assessments, charges or other
governmental levies not yet due or as to which the period of grace,
if any, related thereto has not expired or which are being contested
in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with
GAAP (or, in the case of Subsidiaries with significant operations
outside of the United States of America, generally accepted
accounting principles in effect from time to time in their respective
jurisdictions of incorporation);
(v) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings;
(vi) pledges or deposits in connection with workers
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance carriers
under insurance or self-insurance arrangements;
(vii) deposits to secure the performance of bids, trade
contracts, (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(viii) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any
Lien referred to in the foregoing clauses; provided that such
extension, renewal or replacement Lien shall be limited to all or a
part of the property which secured the Lien so extended, renewed or
replaced (plus improvements on such property);
(ix) easements, rights of way, restrictions and other
similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not material in amount and which do not
in any case materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the
business of the Borrower or any Subsidiary;
(x) Liens in existence on the date hereof listed on
Schedule 8.2, securing Indebtedness permitted by Section 8.1(b),
provided that no such Lien is spread to cover any additional property
(other than proceeds of the collateral originally subject to such
Lien in accordance with the instrument creating such Lien) after the
Closing Date and that the amount of Indebtedness secured thereby is
not increased;
(xi) Liens on the property or assets of a corporation which
becomes a Subsidiary after the Closing Date securing Indebtedness
permitted by Section 8.1(i), provided that (A) such Liens existed at
the time such corporation became a Subsidiary and were not created in
anticipation thereof, and (B) no such Lien is spread to cover any
additional property (other than proceeds of the collateral originally
subject to such Lien in accordance with the instrument creating such
Lien) after the Closing Date and that the amount of Indebtedness
secured thereby is not increased;
(xii) Liens in the nature of licenses that arise in the
ordinary course of business and consistent with past practice;
(xiii) Liens incurred in connection with Indebtedness
permitted by Section 8.1(h), provided that no such Lien shall be
spread to cover any additional property after the Closing Date and
the amount of Indebtedness secured thereby shall not be increased;
(xiv) leases and subleases otherwise permitted hereunder
granted to others not interfering in any material respect in the
business of the Borrower or any Subsidiary; and
(xv) attachment or judgment Liens, where the attachment or
judgment which gave rise to such Liens does not constitute an Event
of Default hereunder.
"Permitted Sale-Leaseback Transaction" means a transaction
pursuant to which a Credit Party sells an item of equipment to a
financial institution and concurrently with such sale (i) leases such
item of equipment back from such financial institution and (ii)
subleases such item of equipment to a customer of the Credit Party
pursuant to a sublease agreement under which such customer obtains an
option to purchase such item of equipment at or before the end of
such sublease.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental
Authority.
"Pierce" means Pierce Manufacturing Inc., a Wisconsin
corporation.
"Plan" means at any particular time, any employee benefit plan
which is covered by Title IV of ERISA and in respect of which the
Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed
to be) an "employer" as defined in Section 3(5) of ERISA.
"Prime Rate" means, for any day, the higher of (i) the per annum
rate of interest established from time to time by the Agent at its
principal office in Milwaukee, Wisconsin as its Prime Rate, or
(ii) the Federal Funds Rate plus 1%. Any change in the interest rate
resulting from a change in the Prime Rate shall become effective as
of 12:01 a.m. of the Business Day on which each change in the Prime
Rate is announced by the Agent. The Prime Rate is a reference rate
used by the Agent in determining interest rates on certain loans and
is not intended to be the lowest rate of interest charged on any
extension of credit to any debtor.
"Prime Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Prime Rate.
"Pro Forma Basis" means, with respect to any transaction, that
such transaction shall be deemed to have occurred as of the first day
of the four-fiscal quarter period ending as of the end of the fiscal
quarter most recently ended prior to the date of such transaction
with respect to which the Agent has received the financial
information required under Section 7.1. As used herein,
"transaction" means any merger, consolidation or acquisition as
referenced in Section 8.4(b).
"Properties" is defined in subsection 6.10(a).
"Purchase Agreement" is defined in Section 5.1(c).
"Purchasing Lender" is defined in Section 11.6(c).
"Recovery Event" means the receipt by the Borrower or any of its
Subsidiaries of any cash insurance proceeds or condemnation award
payable by reason of theft, loss, physical destruction or damage,
taking or similar event with respect to any of their respective
property or assets.
"Refunded Swing Line Loans" is defined in Section 2.4(c).
"Register" is defined in Section 11.6(d).
"Reorganization" means with respect to any Multiemployer Plan,
the condition that such Plan is in reorganization within the meaning
of such term as used in Section 4241 of ERISA.
"Reportable Event" means any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day
notice period is waived under subsections .13, .14, .16, .18, .19 or
.20 of PBGC Reg. Section 2615.
"Required Lenders" means Lenders holding in the aggregate at
least 66-2/3% of the sum of (i) all Obligations then outstanding at
such time and (ii) the aggregate unused Commitments at such time
(treating for purposes hereof in the case of LOC Obligations and the
Issuing Lender, only the portion of the LOC Obligations of the
Issuing Lender which is not subject to the Participation Interests of
the other Lenders and, in the case of the Lenders other than the
Issuing Lender, the Participation Interests of such Lenders in LOC
Obligations hereunder as direct Obligations); provided, however, that
if any Lender shall be a Defaulting Lender at such time, then there
shall be excluded from the determination of Required Lenders the
Obligations (including Participation Interests) of such Defaulting
Lender and such Defaulting Lender's Commitments, or after termination
of the Commitments, the principal balance of the Obligations owing to
such Defaulting Lender.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
to which any of its material property is subject.
"Revolving Commitment" means with respect to each Lender, the
commitment of such Lender to make Revolving Loans in an aggregate
principal amount at any time outstanding up to such Lender's
Revolving Committed Amount as specified in Schedule 2.1(a) (subject
to adjustment on account of assignment pursuant to the provisions of
Section 11.6(c) hereof), as such amount may be reduced from time to
time in accordance with the provisions hereof.
"Revolving Commitment Percentage" means for each Lender, the
percentage identified as its Revolving Commitment Percentage on
Schedule 2.1(a), as such percentage may be modified in connection
with any assignment made in accordance with the provisions of Section
11.6(c).
"Revolving Commitment Period" means the period from and
including the Closing Date to but not including the Revolving
Termination Date.
"Revolving Committed Amount" means collectively, the aggregate
amount of all of the Revolving Commitments as referenced in Section
2.1(a) and, individually, the amount of each Lender's Revolving
Commitment as specified in Schedule 2.1(a) (subject to reduction
pursuant to the provisions of Section 3.3(a) and to adjustment on
account of assignment pursuant to the provisions of Section 11.6(c)).
"Revolving Loans" is defined in Section 2.1.
"Revolving Note" or "Revolving Notes" means the promissory notes
of the Borrower in favor of each of the Lenders evidencing the
Revolving Loans provided pursuant to Section 2.1(e), individually or
collectively, as appropriate, as such promissory notes may be
amended, modified, supplemented, extended, renewed or replaced from
time to time.
"Revolving Termination Date" means September 30, 1999 or the
earlier termination in full of the Revolving Commitments pursuant to
this Agreement.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor or assignee of the business of
such division in the business of rating securities.
"Security Agreement" means that Security Agreement dated as of
the Closing Date given by the Borrower and the Guarantors to the
Agent, as amended, supplemented or otherwise modified from time to
time.
"Single Employer Plan" means any Plan which is not a Multi-
Employer Plan.
"Solvent" means, with respect to any Credit Party as of a
particular date, that on such date (i) such Credit Party is able to
realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the
normal course of business, (ii) such Credit Party does not intend to,
and does not believe that it will, incur debts or liabilities beyond
such Credit Party's ability to pay as such debts and liabilities
mature in their ordinary course, (iii) such Credit Party is not
engaged in a business or a transaction, and is not about to engage in
a business or a transaction, for which such Credit Party's property
would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which
such Credit Party is engaged or is to engage, (vi) the fair value of
the property of such Credit Party is greater than the total amount of
liabilities, including, without limitation, contingent liabilities,
of such Credit Party and (v) the present fair saleable value of the
assets of such Credit Party is not less than the amount that will be
required to pay the probable liability of such Credit Party on its
debts as they become absolute and matured. In computing the amount
of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured
liability.
"Specified Sales" means (i) the sale, transfer, lease or other
disposition of inventory and materials in the ordinary course of
business, (ii) the sale, transfer, lease or other disposition of
machinery, parts, equipment and real estate no longer useful in the
conduct of the business of the Borrower or any of its Subsidiaries,
as appropriate, (iii) the sale, transfer, lease or other disposition
of assets for cash, provided, however, that 100% of the proceeds of
which shall be paid to the Agent as a prepayment of Revolving Loans
or Term Loans under Section 3.3(c), as the Borrower shall direct, and
provided further, that if any such prepayment shall be made with
respect to Revolving Loans, the Revolving Committed Amount shall be
automatically, immediately, and permanently reduced by an amount
equal to the prepayment applied to the Revolving Loans under Section
3.3(a), and (iv) in addition to the transactions described in
subsections (i), (ii) and (iii), any other sale, transfer, lease or
other disposition of assets where the proceeds of such disposition do
not exceed $3,000,000 during any fiscal year or $15,000,000 during
the term of this Credit Agreement.
"Subordinated Debt" is defined in Section 8.10.
"Subsidiary" means, as to any Person, a corporation, partnership
or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified,
all references to a "Subsidiary" or to "Subsidiaries" in this Credit
Agreement shall refer to a Subsidiary or Subsidiaries of the
Borrower.
"Swing Line Loan" and "Swing Line Loans" are defined in Section
2.4(a).
"Swing Line Note" means the promissory note of the Borrower in
favor of Firstar evidencing Swing Line Loans provided pursuant to
Section 2.4(a), as such promissory note may be amended, modified,
supplemented, extended, renewed or replaced from time to time.
"Term Loan" is defined in Section 2.2(a).
"Term Loan Commitment" means with respect to each Lender, the
commitment of such Lender to make its portion of the Term Loan as
specified in Schedule 2.1(a) (and for purposes of making
determinations of Required Lenders hereunder after the Closing Date,
the principal amount outstanding on the Term Loan).
"Term Loan Commitment Percentage" means for each Lender, its
Term Loan Commitment Percentage on Schedule 2.1(a), as such
percentage may be modified in accordance with the provisions of
Section 11.6(c).
"Term Loan Committed Amount" means collectively, the aggregate
amount of all of the Term Loan Commitments as referenced in Section
2.2(a) and, individually, the amount of each Lender's Term Loan
Commitment as specified in Schedule 2.1(a).
"Term Note" or "Term Notes" means the promissory notes of the
Borrower in favor of each of the Lenders evidencing the Term Loan
provided pursuant to Section 2.2(d), individually or collectively, as
appropriate, as such promissory notes may be amended, modified,
supplemented, extended, renewed or replaced from time to time.
"Term Termination Date" means September 30, 2003 or the earlier
termination in full of the Term Loan Commitment.
"Threshold Requirement" is defined in Section 7.11.
"Transaction Costs" means the costs set forth on Schedule
1.1(c).
"Transfer Effective Date" is defined in the Commitment Transfer
Supplement.
"Transferee" is defined in Section 11.6(f).
"Type" means, as to any Loan, its nature as a Prime Rate Loan or
a Eurodollar Loan, as the case may be.
1.2 Other Definitional Provisions.
(a) Unless otherwise specified therein, all capitalized
definitional terms defined in this Credit Agreement shall have the
defined meanings when used in the Notes or other Credit Documents or
any certificate or other document made or delivered pursuant hereto.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Credit Agreement shall refer to this
Credit Agreement as a whole and not to any particular provision of
this Credit Agreement, and Section, subsection, Schedule and Exhibit
references are to this Credit Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(d) For purposes of computation of periods of time hereunder,
the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding".
1.3 Accounting Terms and Determinations. Unless otherwise specified
herein, all terms of an accounting character used herein shall be
interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent (except
for changes concurred in by the Borrower's independent public accountants
or otherwise required by a change in GAAP) with the most recent audited
consolidated financial statements of the Borrower and its Consolidated
Subsidiaries delivered to the Lenders.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. During the Revolving Commitment
Period, subject to the terms and conditions hereof, each Lender
severally agrees to make revolving credit loans ("Revolving Loans")
to the Borrower from time to time for the purposes hereinafter set
forth; provided, however, that (i) with regard to each Lender
individually, the sum of such Lender's share of outstanding Revolving
Loans plus such Lender's LOC Commitment Percentage of LOC Obligations
shall not exceed such Lender's Revolving Committed Amount, and
(ii) with regard to the Lenders collectively, the sum of the
aggregate amount of outstanding Revolving Loans plus the aggregate
amount of LOC Obligations plus the aggregate amount of outstanding
Swing Line Loans shall not exceed FIFTY MILLION DOLLARS ($50,000,000)
(as such aggregate maximum amount may be reduced from time to time as
provided herein). Revolving Loans may consist of Prime Rate Loans or
Eurodollar Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the
provisions hereof. Eurodollar Loans shall be made by each Lender at
its Eurodollar Lending Office and Prime Rate Loans at its Domestic
Lending Office.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephone notice
promptly confirmed in writing which confirmation may be by fax)
to the Agent not later than 10:30 A.M. (Milwaukee, Wisconsin
time) on the Business Day of the requested borrowing in the case
of Prime Rate Loans, and on the third Business Day prior to the
date of the requested borrowing in the case of Eurodollar Loans.
Each such request for borrowing shall be irrevocable and shall
specify (A) that a Revolving Loan is requested, (B) the date of
the requested borrowing (which shall be a Business Day), (C) the
aggregate principal amount to be borrowed, and (D) whether the
borrowing shall be comprised of Prime Rate Loans, Eurodollar
Loans or a combination thereof, and if Eurodollar Loans are
requested, the Interest Period(s) therefor. A form of Notice of
Borrowing a ("Notice of Borrowing") is attached as Exhibit
2.1(b)(i). If the Borrower shall fail to specify in any such
Notice of Borrowing (I) an applicable Interest Period in the
case of a Eurodollar Loan, then such notice shall be deemed to
be a request for an Interest Period of one month, or (II) the
type of Revolving Loan requested, then such notice shall be
deemed to be a request for a Prime Rate Loan hereunder. The
Agent shall give notice to each Lender (promptly upon receipt of
each Notice of Borrowing, and in any event not later than 12:00
noon, Milwaukee, Wisconsin time, with respect to any Notice of
Borrowing delivered to the Agent pursuant to this section) of
the contents thereof and each such Lender's share thereof.
(ii) Minimum Amounts. Each Revolving Loan borrowing shall
be: (A) if a Prime Rate Loan, in a minimum aggregate amount of
$1,000,000 and integral multiples of $100,000 in excess thereof;
and (B) if a Eurodollar Loan, in a minimum aggregate amount of
$5,000,000 and integral multiples of $1,000,000 in excess
thereof (or, in either case, the remaining amount of the
Revolving Commitment, if less).
(iii) Advances. Each Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing available
to the Agent for the account of the Borrower at the office of
the Agent specified in Schedule 11.2, or at such other office as
the Agent may designate in writing, by 1:30 P.M. (Milwaukee,
Wisconsin time) on the date specified in the applicable Notice
of Borrowing in Dollars and in funds immediately available to
the Agent. Such borrowing will then be made available to the
Borrower by the Agent by crediting the account of the Borrower
on the books of such office with the aggregate of the amounts
made available to the Agent by the Lenders and in like funds as
received by the Agent by the close of Agent's business on such
date.
(c) Repayment. The principal amount of all Revolving Loans
shall be due and payable in full on the Revolving Termination Date.
(d) Interest. Subject to the provisions of Section 3.1,
Revolving Loans shall bear interest as follows:
(i) Prime Rate Loans. During such periods as Revolving
Loans shall be comprised of Prime Rate Loans, each such Prime
Rate Loan shall bear interest at a per annum rate equal to the
Prime Rate;
(ii) Eurodollar Loans. During such periods as Revolving
Loans shall be comprised of Eurodollar Loans, each such
Eurodollar Loan shall bear interest at a per annum rate equal to
the sum of the applicable Eurodollar Rate plus the Applicable
Percentage as of the commencement of the Interest Period
applicable thereto; and
(iii) Interest at Term Loan Rate. If the aggregate amount
of outstanding Revolving Loans exceeds $10,000,000 during any
Cleanup Period, the excess of such Revolving Loans over
$10,000,000 shall bear interest at a rate per annum, during that
part of the Cleanup Period that an excess exists, equal to the
rate that would be applicable were such excess a Term Loan.
Interest on Revolving Loans shall be payable in arrears on each Interest
Payment Date.
(e) Revolving Notes. The Revolving Loans shall be evidenced by
a duly executed promissory note of the Borrower to each Lender in the
original principal amount of each such Lender's Revolving Committed
Amount in substantially the form of Exhibit 2.1(e).
2.2 Term Loan.
(a) Term Loan. Subject to and upon the terms and conditions
hereof, each Lender severally agrees to make its Term Loan Commitment
Percentage of a term loan (the "Term Loan") to the Borrower on the
Closing Date in the aggregate principal amount of ONE HUNDRED FIFTY
MILLION DOLLARS ($150,000,000) for the purposes hereinafter set
forth. The Term Loan may consist of Prime Rate Loans or Eurodollar
Loans, or a combination thereof, as the Borrower may request. The
Term Loan shall initially be comprised entirely of Prime Rate Loans.
Amounts repaid on the Term Loan may not be reborrowed. Each Lender
will make its Term Loan Commitment Percentage of each Term Loan
advance available to the Agent on the Closing Date. Eurodollar Loans
shall be made by each Lender at its Eurodollar Lending Office and
Prime Rate Loans at its Domestic Lending Office. In the event the
Borrower shall fail to borrow the entire Term Loan Committed Amount,
the scheduled amortization payments required under Section 2.2(b)
shall be reduced in inverse order of maturity by the amount of the
difference.
(b) Repayment of Term Loan. The principal amount of the Term
Loan shall be repaid in seven (7) consecutive annual installments as
follows:
Payment Date Amount
September 25, 1997 $ 15,000,000
September 25, 1998 $ 15,000,000
September 25, 1999 $ 15,000,000
September 25, 2000 $ 15,000,000
September 25, 2001 $ 15,000,000
September 25, 2002 $ 15,000,000
September 25, 2003 $ 60,000,000
-------------
$ 150,000,000
=============
(c) Interest on the Term Loan. Subject to the provisions of
Section 3.1, the Term Loan shall bear interest as follows:
(i) Prime Rate Loans. During such periods as the Term
Loan shall be comprised of Prime Rate Loans, each such Prime
Rate Loan shall bear interest at a per annum rate equal to the
Prime Rate; and
(ii) Eurodollar Loans. During such periods as the Term
Loan shall be comprised of Eurodollar Loans, each such
Eurodollar Loan shall bear interest at a per annum rate equal to
the sum of the applicable Eurodollar Rate plus the Applicable
Percentage.
Interest on the Term Loan shall be payable in arrears on each Interest
Payment Date.
(d) Term Notes. The Term Loan shall be evidenced by a duly
executed promissory note of the Borrower to each Lender in the
original principal amount of each such Lender's Term Loan Committed
Amount in substantially the form of Exhibit 2.2(d).
2.3 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and
of the LOC Documents, if any, and provided that no Default or Event
of Default shall have occured and be continuing, and further subject
to any other terms and conditions which the Issuing Lender may
reasonably require, during the Revolving Commitment Period the
Issuing Lender shall issue, and the Lenders shall participate in,
Letters of Credit for the account of a Credit Party from time to time
upon request in a form acceptable to the Issuing Lender; provided,
however, that (i) the aggregate amount of LOC Obligations shall not
at any time exceed FIFTY MILLION DOLLARS ($50,000,000) the ("LOC
Committed Amount") and (ii) the sum of the aggregate amount of
Revolving Loans plus the aggregate amount of LOC Obligations plus the
aggregate amount of Swing Line Loans shall not at any time exceed the
aggregate Revolving Committed Amount. No Letter of Credit as
originally issued or as extended shall have an expiry date extending
beyond the Revolving Termination Date, except that prior to the
Revolving Termination Date a Letter of Credit may be issued or
extended with an expiry date extending beyond the Revolving
Termination Date if, and to the extent that the Borrower shall
provide cash collateral to the Issuing Lender on the date of issuance
or extension in an amount equal to the maximum amount available to be
drawn under such Letter of Credit. Each Letter of Credit shall
comply with the related LOC Documents. The issuance and expiry date
of each Letter of Credit shall be a Business Day. In the case of a
conflict in the terms of the LOC Documents and this Credit Agreement,
the terms of this Credit Agreement shall control.
(b) Notice and Reports. The request for the issuance of a
Letter of Credit shall be submitted to the Issuing Lender and the
Agent on such prior notice as the Issuing Lender and Borrower shall
agree. The Issuing Lender will, at least quarterly and more
frequently upon request, provide to the Agent (who shall promptly
disseminate to the Lenders and the Borrower) a detailed report
specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may have
occurred since the date of the prior report, and including therein,
among other things, the account party, the beneficiary, the face
amount, expiry date as well as any payments or expirations which may
have occurred. The Issuing Lender will further provide to the Agent
promptly upon request copies of the Letters of Credit. The Issuing
Lender will provide to the Agent prompt notice of any changes in LOC
Obligations issued by it, and more frequently upon request, a summary
report of the nature and extent of LOC Obligations then outstanding.
(c) Participations. Each Lender, with respect to the Existing
Letters of Credit, hereby purchases a participation interest in such
Existing Letters of Credit and with respect to Letters of Credit
issued on or after the Closing Date, upon issuance of a Letter of
Credit, shall be deemed to have purchased without recourse a risk
participation from the Issuing Lender in such Letter of Credit and
the obligations arising thereunder and any collateral relating
thereto, in each case in an amount equal to its LOC Commitment
Percentage of the obligations under such Letter of Credit and shall
absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the Issuing
Lender therefor and discharge when due, its LOC Commitment Percentage
of the obligations arising under such Letter of Credit. Without
limiting the scope and nature of each Lender's participation in any
Letter of Credit, to the extent that the Issuing Lender has not been
reimbursed as required hereunder or under any LOC Document, each such
Lender shall pay to the Issuing Lender its LOC Commitment Percentage
of such unreimbursed drawing in same day funds on the day of
notification by the Issuing Lender of an unreimbursed drawing
pursuant to the provisions of subsection (d) hereof. The obligation
of each Lender to so reimburse the Issuing Lender shall be absolute
and unconditional and shall not be affected by the occurrence of a
Default, an Event of Default or any other occurrence or event. Any
such reimbursement shall not relieve or otherwise impair the
obligation of the Borrower to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any
Letter of Credit, the Issuing Lender will promptly notify the
Borrower and the Agent. The Borrower shall reimburse the Issuing
Lender on the first Business Day following notice of payment under
any Letter of Credit (either with the proceeds of a Revolving Loan
obtained hereunder or otherwise) in same day funds as provided herein
or in the LOC Documents, together with interest on the amount of such
payment at the Prime Rate from the date of payment until the date of
reimbursement. Unless the Borrower shall notify the Issuing Lender
and the Agent on the date Borrower receives notice of a payment of
its intent to otherwise reimburse the Issuing Lender, the Borrower
shall be deemed to have requested a Revolving Loan in the amount of
the payment as provided in subsection (e) hereof, the proceeds of
which will be used to satisfy the reimbursement obligations. The
Borrower's reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of
set-off, counterclaim or defense to payment the Borrower may claim or
have against the Issuing Lender, the Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other Person,
including, without limitation, any defense based on any failure of
the Borrower to receive consideration or the legality, validity,
regularity or unenforceability of the Letter of Credit. The Issuing
Lender will promptly notify the other Lenders of the amount of any
unreimbursed payment and each Lender shall promptly pay to the Agent
for the account of the Issuing Lender in Dollars and in immediately
available funds, the amount of such Lender's LOC Commitment
Percentage of such unreimbursed drawing. Such payment shall be made
on the day such notice is received by such Lender from the Issuing
Lender if such notice is received at or before 2:00 P.M. (Milwaukee,
Wisconsin time), otherwise such payment shall be made at or before
12:00 P.M. (Milwaukee, Wisconsin time) on the Business Day next
succeeding the day such notice is received. If such Lender does not
pay such amount to the Issuing Lender in full upon such request, such
Lender shall, on demand, pay to the Agent for the account of the
Issuing Lender interest on the unpaid amount during the period from
the date of such payment until such Lender pays such amount to the
Issuing Lender in full at a rate per annum equal to, if paid within
two (2) Business Days of the date of such request, the Federal Funds
Rate and thereafter at a rate equal to the Prime Rate. Each Lender's
obligation to make such payment to the Issuing Lender, and the right
of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever
and without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default
or the acceleration of the Obligations hereunder and shall be made
without any offset, abatement, withholding or reduction whatsoever.
(e) Repayment with Revolving Loans. On any day on which the
Borrower shall be deemed to have requested a Revolving Loan to
reimburse a drawing under a Letter of Credit, the Agent shall give
notice to the Lenders that a Revolving Loan has been requested or
deemed requested in connection with a drawing under a Letter of
Credit, in which case a Revolving Loan borrowing comprised entirely
of Prime Rate Loans (each such borrowing, a "Mandatory Borrowing")
shall be immediately made (without giving effect to any termination
of the Commitments pursuant to Section 9) pro rata based on each
Lender's respective Revolving Commitment Percentage (determined
before giving effect to any termination of the Commitments pursuant
to Section 9) and in the case of both clauses (i) and (ii) the
proceeds thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each Lender hereby
irrevocably agrees to make such Revolving Loans immediately upon any
such request or deemed request on account of each Mandatory Borrowing
in the amount and in the manner specified in the preceding sentence
and on the same such date notwithstanding (i) the amount of Mandatory
Borrowing may not comply with the minimum amount for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 5.2 are then satisfied, (iii) whether
a Default or an Event of Default then exists, (iv) failure for any
such request or deemed request for Revolving Loan to be made by the
time otherwise required in Section 2.1(b), (v) the date of such
Mandatory Borrowing, or (vi) any reduction in the Revolving Committed
Amount after any such Letter of Credit may have been drawn upon;
provided, however, that in the event any such Mandatory Borrowing
should be less than the minimum amount for borrowings of Revolving
Loans otherwise provided in Section 2.1(b)(ii), the Borrower shall
pay to the Agent for its own account an administrative fee of $500.
In the event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower), then each such Lender
hereby agrees that it shall forthwith fund (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such date and
prior to such purchase) its Participation Interests in the
outstanding LOC Obligations; provided, further, that in the event any
Lender shall fail to fund its Participation Interest on the day the
Mandatory Borrowing would otherwise have occurred, then the amount of
such Lender's unfunded Participation Interest therein shall bear
interest payable to the Issuing Lender upon demand, at the rate equal
to, if paid within two (2) Business Days of any such request, the
Federal Funds Rate, and thereafter at a rate equal to the Prime Rate.
(f) Modification, Extension. The issuance of any supplement,
modification, amendment, renewal, or extension to any Letter of
Credit shall, solely for purposes of this Agreement, be treated in
all respects the same as the issuance of a new Letter of Credit, but
without duplication in computing the aggregate outstanding amount of
LOC Obligations.
(g) Uniform Customs and Practices. The Issuing Lender shall
have the Letters of Credit be subject to The Uniform Customs and
Practice for Documentary Credits, as published as of the date of
issue by the International Chamber of Commerce (the "UCP"), in which
case the UCP may be incorporated therein and deemed in all respects
to be a part thereof, with such exceptions thereto as the beneficiary
may request and the Issuing Lender may approve.
2.4 Swing Line Loans.
(a) Swing Line Loans. Subject to the terms and conditions
hereof and provided that no Event of Default shall have occurred and
be continuing, at its discretion Firstar may make swing line loans to
the Borrower (individually, a "Swing Line Loan"; collectively the
"Swing Line Loans") from time to time during the Revolving Commitment
Period in an aggregate principal amount at any one time outstanding
not to exceed $2,000,000, provided, however, that (i) with regard to
Firstar individually, the sum of Firstar's share of outstanding
Revolving Loans plus Firstar's LOC Commitment Percentage of LOC
Obligations shall not exceed Firstar's Revolving Committed Amount,
and (ii) with regard to the Lenders collectively, the sum of the
aggregate amount of outstanding Swing Line Loans plus Revolving Loans
plus the aggregate amount of LOC Obligations shall not exceed FIFTY
MILLION DOLLARS ($50,000,000) (as such aggregate maximum amount may
be reduced from time to time as provided herein). Amounts borrowed
under this Section 2.4 may be repaid and, through but excluding the
Revolving Termination Date, reborrowed. All Swing Line Loans shall
be made as Prime Rate Loans and shall not be entitled to be converted
into Eurodollar Loans. The Borrower shall give Firstar irrevocable
notice (which notice must be received by Firstar prior to 12:00 noon,
Milwaukee time) on the date of the requested borrowing specifying the
amount of the requested Swing Line Loan. The proceeds of any
approved Swing Line Loan will be made available by Firstar to the
Borrower at the office of Firstar by crediting the account of the
Borrower at such office with such proceeds.
(b) Swing Line Note. The Swing Line Loans made to the Borrower
shall be evidenced by a duly executed promissory note substantially
in the form of Exhibit 2.4(b), payable to the order of Firstar and
representing the obligation of the Borrower to pay the unpaid
principal amount of the Swing Line Loans made to the Borrower, with
interest thereon at a per annum rate equal to the Prime Rate.
Firstar is hereby authorized to record the Borrowing Date, the amount
of each Swing Line Loan made to the Borrower and the date and amount
of each payment or prepayment of principal thereof, on the
appropriate schedule annexed to and constituting a part of the Swing
Line Note (or any continuation thereof) and any such recordation
shall constitute prima facie evidence of the accuracy of the
information so recorded. The Swing Line Note shall (a) be dated the
Closing Date, (b) be stated to mature on the Revolving Termination
Date and (c) bear interest for the period from the date thereof to
the Revolving Termination Date on the unpaid principal amount thereof
from time to time outstanding at a per annum rate equal to the Prime
Rate payable in arrears on each Interest Payment Date.
(c) Repayment with Revolving Loans. Firstar may, at any time
in its sole and absolute discretion after a Default or an Event of
Default shall have occurred and be continuing, on behalf of the
Borrower (which hereby irrevocably directs Firstar to act on its
behalf) request prior to 10:30 A.M. (Milwaukee, Wisconsin time) each
Lender, including Firstar, to make a Revolving Loan to the Borrower
in an amount equal to such Lender's Revolving Commitment Percentage
of the amount of the Swing Line Loans made to the Borrower
outstanding on the date such notice is given (the "Refunded Swing
Line Loans"). Unless any of the events described in Section 9(e)
shall have occurred (in which event the procedures of Section 2.4(d)
shall apply) each Lender shall make the proceeds of its Revolving
Loan to the Borrower available to Firstar for the account of Firstar
at the office of Firstar specified in Schedule 11.2, or at such other
office of Firstar as Firstar may designate in writing, by 1:00 P.M.
(Milwaukee, Wisconsin time) on the date such notice is given in funds
immediately available to Firstar. The proceeds of such Revolving
Loans shall be immediately applied to repay the Refunded Swing Line
Loans of the Borrower. Each Revolving Loan made pursuant to this
subsection 2.4(c) shall be a Prime Rate Loan.
(d) Participations. If prior to the making of a Revolving Loan
to the Borrower pursuant to Section 2.4(c) one of the events
described in Section 9(e) shall have occurred, each Lender will, on
the date such Revolving Loan was to have been made, purchase an
undivided participating interest in the Refunded Swing Line Loans in
an amount equal to its Revolving Commitment Percentage of such
Refunded Swing Line Loans. Each Lender will immediately transfer to
Firstar, in immediately available funds, the amount of its
participation and upon receipt thereof Firstar will deliver to such
Lender a Swing Line Loan participation certificate dated the date of
receipt of such funds and in such amount.
(e) Payments to Participants. Whenever, at any time after
Firstar has received from any Lender such Lender's participating
interest in a Refunded Swing Line Loan, Firstar receives any payment
on account thereof, Firstar will distribute to such Lender its
participating interest in such amount (appropriately adjusted in the
case of interest payments, to reflect the period of time during which
such Lender's participating interest was outstanding and funded);
provided, however, that in the event that such payment received by
Firstar is required to be returned, such Lender will return to
Firstar any portion thereof previously distributed by Firstar to it.
(f) Unconditional Participation Obligation. Each Lender's
obligation to purchase participating interests pursuant to Section
2.4(d) shall not be affected by any circumstance (except for any
circumstance resulting solely from the gross negligence or willful
misconduct of Firstar), including, without limitation, (i) any set-
off, counterclaim, recoupment, defense or other right which such
Lender or the Borrower may have against Firstar, any Borrower or any
other Person for any reason whatsoever; (ii) any adverse change in
the condition (financial or otherwise) of the Borrower or the
Subsidiary of the Borrower; (iii) any breach of this Agreement by any
Borrower or any other Lender; or (iv) any other circumstance,
happening or event whatsoever, whether or not similar to any of the
foregoing.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate. Upon the occurrence, and during the continuance,
of an Event of Default, the principal of and, to the extent permitted by
law, interest on the Loans and any other amounts owing hereunder or under
the other Credit Documents shall bear interest, payable on demand, at a
per annum rate which is equal to the rate which would otherwise be
applicable (or if no rate is applicable, whether in respect of interest,
fees or other amounts, then the Prime Rate) plus 2%.
3.2 Extension and Conversion. The Borrower shall have the option,
on any Business Day, to extend existing Loans into a subsequent
permissible Interest Period or to convert Loans into Loans of another
Type; provided, however, that (i) except as provided in Section 3.7,
Eurodollar Loans may be converted into Prime Rate Loans only on the last
day of the Interest Period applicable thereto, (ii) Eurodollar Loans may
be extended, and Prime Rate Loans may be converted into Eurodollar Loans,
only if no Default or Event of Default is in existence on the date of
extension or conversion, (iii) Loans extended as, or converted into,
Eurodollar Loans shall be subject to the terms of the definition of
"Interest Period" set forth in Section 1.1 and shall be in such minimum
amounts as provided in Section 2.l(b)(ii) and (iv) any request for
extension or conversion of a Eurodollar Loan which shall fail to specify
an Interest Period shall be deemed to be a request for an Interest Period
of one month. Each such extension or conversion shall be effected by the
Borrower by giving a Notice of Extension/Conversion in the form of Exhibit
3.2 (or telephone notice promptly confirmed in writing) to the Agent prior
to 10:30 A.M. (Milwaukee, Wisconsin time) on the Business Day of, in the
case of the conversion of a Eurodollar Loan into a Prime Rate Loan and on
the third Business Day prior to, in the case of the extension of a
Eurodollar Loan as, or conversion of a Prime Rate Loan into, a Eurodollar
Loan, the date of the proposed extension or conversion, specifying the
date of the proposed extension or conversion, the Loans to be so extended
or converted, the Types of Loans into which such Loans are to be converted
and, if appropriate, the applicable Interest Periods with respect thereto.
Each request for extension or conversion shall constitute a representation
and warranty by the Borrower of the matters specified in paragraphs (a)
and (b), and in (c) or (d), of Section 5.2. In the event the Borrower
fails to request extension or conversion of any Eurodollar Loan in
accordance with this Section, or any such conversion or extension is not
permitted or required by this Section, then such Loans shall be
automatically converted into Prime Rate Loans at the end of their Interest
Period. The Agent shall give each Lender notice as promptly as
practicable of any such proposed extension or conversion affecting any
Loan.
3.3 Reductions in Commitments and Prepayments.
(a) Voluntary Reduction in Revolving Commitment. The Borrower may
from time to time permanently reduce the aggregate amount of the Revolving
Commitments in whole or in part without premium or penalty except as
provided in Section 3.10 upon three (3) Business Days' prior written
notice to the Agent; provided that after giving effect to any such
voluntary reduction the sum of Revolving Loans plus LOC Obligations plus
Swing Line Loans then outstanding shall not exceed the Aggregate Revolving
Committed Amount, as reduced. Except as otherwise specified herein,
partial reductions in the aggregate Revolving Commitment shall in each
case be in a minimum aggregate amount of $1,000,000 and integral multiples
of $500,000 in excess thereof.
(b) Mandatory Prepayment on Revolving Loans. If at any time the sum
of the aggregate amount of Revolving Loans plus LOC Obligations plus Swing
Line Loans then outstanding shall exceed the Aggregate Revolving Committed
Amount, as reduced from time to time, the Borrower shall immediately make
payment on the Revolving Loans and then, if necessary, to a cash
collateral account in respect of the LOC Obligations, in an amount
sufficient to eliminate the deficiency. Any such payments shall be
applied first to Prime Rate Loans and then to Eurodollar Loans in direct
order of their Interest Period maturities.
(c) Voluntary Prepayments. Loans may be prepaid in whole or in part
without premium or penalty except as provided in Section 3.10. Any
partial prepayment shall be in a minimum aggregate principal amount of
$1,000,000 and integral multiples of $500,000 in excess thereof. Except
as otherwise specified herein, amounts prepaid on the Revolving Loans may
be reborrowed in accordance with the provisions hereof. Amounts prepaid
on the Term Loan in any one fiscal year of the Borrower shall be applied
first to the annual payment of principal due on September 30 of such
fiscal year pursuant to Section 2.2(b) and the remaining amount of such
prepayment(s), if any, shall be applied in equal amounts to each of the
remaining principal installments. Amounts prepaid on the Term Loan may
not be reborrowed.
(d) Notice. Except as otherwise provided herein, the Borrower will
provide notice to the Agent of any prepayment of the Term Loan by 10:30
A.M. (Milwaukee, Wisconsin time) on the day prior to the date of
prepayment.
3.4 Fees.
(a) Unused Facility Fee. In consideration of the Revolving
Commitments by the Lenders hereunder, the Borrower agrees to pay to the
Agent for the ratable benefit of the Lenders an unused facility fee (the
"Unused Facility Fee") in an amount equal to the Applicable Percentage per
annum on the average daily unused portion of the Revolving Commitments in
effect from time to time; provided, however, that for purposes of
computing the Unused Facility Fee, LOC Obligations and Swing Line Loans
shall not be considered usage under the Revolving Committed Amount. The
Unused Facility Fee shall be payable quarterly in arrears on the 15th day
following the last day of each calendar quarter for such calendar quarter
and on the Revolving Credit Termination Date.
(b) Letter of Credit Fee. In consideration of the issuance of
Letters of Credit hereunder, the Borrower agrees to pay to the Agent for
the ratable benefit of the Lenders a fee with respect to each Letter of
Credit (the "Letter of Credit Fee") equal to the Applicable Percentage per
annum on the average daily maximum amount available to be drawn under such
Letter of Credit from the date of issuance to the date of expiration
calculated for the term of availability thereof. The Letter of Credit Fee
shall be payable quarterly in arrears with respect to each Letter of
Credit on the last day of each calendar quarter and on the Revolving
Termination Date and shall be in lieu of any other fees in connection with
the issuance of Letters of Credit hereunder, except for such standard and
customary fees, costs and expenses incurred or charged by the Issuing
Lender in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit as the Borrower and the Issuing Lender
may mutually agree.
(c) Commitment Fee. In consideration of the Commitments by the
Lenders hereunder, the Borrower agrees to pay to the Agent for the ratable
benefit of the Lenders a commitment fee the "Commitment Fee") in an amount
equal to one-quarter of 1% of the Revolving Committed Amount and the Term
Loan Committed Amount. The Commitment Fee shall be payable and fully
earned on the Closing Date.
(d) Administrative Fees. The Borrower agrees to pay to the Agent,
for its own account, the annual administrative fee, structuring fee and
other fees collectively, (the "Agent's Fees") referred to in that certain
Agent's fee letter dated September 16, 1996.
3.5 Capital Adequacy. If any Lender has reasonably determined that
the adoption or effectiveness of any applicable law, rule or regulation
regarding capital adequacy made after the date hereof, or any change
therein made after the date hereof, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or
comparable agency charged with the interpretation or administration
thereof made after the date hereof, or compliance by such Lender or its
parent company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central
bank or comparable agency made after the date hereof, has or would have
the effect of reducing the rate of return on such Lender's or its parent
company's capital or assets as a consequence of its commitments or
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, effectiveness, change or compliance
(taking into consideration the policies of such Lender and its parent
company with respect to capital adequacy), then, within 10 Business Days
after the Borrower's receipt of the certificate referred to in the next
sentence, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender and its parent company for such
reduction; provided that no such amounts shall be payable with respect to
reduction in rate of return incurred more than three (3) months before
such Lender demands compensation under this Section 3.5. A certificate as
to the amount of such reduction in rate of return, the good faith basis
therefor and setting forth in reasonable detail the calculations used by
the applicable Lender to arrive at the amount or amounts claimed to be
due, shall be submitted to the Borrower and the Agent. Each determination
by a Lender of amounts owing under this Section shall be rebuttably
presumptive evidence of the matters set forth therein. No demand for
payment under this Section shall be made unless the Lender shall make
comparable demands of other similarly situated borrowers. The provisions
of this Section shall survive termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
3.6 Inability To Determine Interest Rate. If prior to the first day
of any Interest Period, the Agent shall have reasonably determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, the Agent shall give telecopy or telephonic notice
thereof to the Borrower and the Lenders as soon as practicable thereafter.
If such notice is given (a) any Eurodollar Loans requested to be made on
the first day of such Interest Period shall be made as Prime Rate Loans,
(b) any Loans that were to have been converted on the first day of such
Interest Period to or continued as Eurodollar Loans shall be converted to
or continued as Prime Rate Loans and (c) any outstanding Eurodollar Loans
shall be converted, on the first day of such Interest Period, to Prime
Rate Loans. Until such notice has been withdrawn by the Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the
Borrower have the right to convert Prime Rate Loans to Eurodollar Loans.
3.7 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the
interpretation or application thereof occurring after the Closing Date
shall make it unlawful for any Lender to make or maintain Eurodollar Loans
as contemplated by this Credit Agreement, (a) such Lender shall promptly
give written notice of such circumstances to the Borrower and the Agent
which notice shall be withdrawn whenever such circumstances no longer
exist), (b) the commitment of such Lender hereunder to make Eurodollar
Loans, continue Eurodollar Loans as such and convert a Prime Rate Loan to
Eurodollar Loans shall forthwith be canceled and, until such time as it
shall no longer be unlawful for such Lender to make or maintain Eurodollar
Loans, such Lender shall then have a commitment only to make a Prime Rate
Loan when a Eurodollar Loan is requested and (c) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically
to Prime Rate Loans on the respective last days of the then current
Interest Periods with respect to such Loans or within such earlier period
as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with
respect thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to Section 3.10.
3.8 Requirements of Law. If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof
applicable to any Lender, or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank
or other Governmental Authority, in each case made subsequent to the
Closing Date (or, if later, the date on which such Lender becomes a
Lender):
(i) shall subject such Lender to any tax of any kind whatsoever
on or in respect of any Letter of Credit, letter of credit
application or any Eurodollar Loans made by it or its obligation to
make Eurodollar Loans, or change the basis of taxation of payments to
such Lender in respect thereof except for Non-Excluded Taxes covered
by Section 3.9 (including Non-Excluded Taxes imposed solely by reason
of any failure of such Lender to comply with its obligations under
Section 3.9(b)) and changes in taxes measured by or imposed upon the
overall net income, or franchise tax (imposed in lieu of such net
income tax), of such Lender or its applicable lending office, branch,
or any affiliate thereof); or
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar condition or requirement
against assets held by, deposits or other liabilities in or for the
account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or to reduce
any amount receivable hereunder in respect thereof, then, in any such
case, upon notice to the Borrower from such Lender, through the Agent, in
accordance herewith, the Borrower shall promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable, provided that, in any
such case, the Borrower may elect to convert the Eurodollar Loans made by
such Lender hereunder to Prime Rate Loans by giving the Agent at least one
Business Day's notice of such election, in which case the Borrower shall
promptly pay to such Lender, upon demand, without duplication, such
amounts, if any, as may be required pursuant to Section 3.10. If any
Lender becomes entitled to claim any additional amounts pursuant to this
subsection, it shall provide prompt notice thereof to the Borrower,
through the Agent, certifying (a) that one of the events described in this
Section 3.8 has occurred and describing in reasonable detail the nature of
such event, (b) as to the increased cost or reduced amount resulting from
such event and (c) as to the additional amount demanded by such Lender and
a reasonably detailed explanation of the calculation thereof. Such a
certificate as to any additional amounts payable pursuant to this
subsection shall be submitted by such Lender, through the Agent, to the
Borrower and shall be conclusive in the absence of manifest error. No
demand for payment under this Section shall be made unless the Lender
shall make comparable demands of other similarly situated borrowers. This
covenant shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
3.9 Taxes.
(a) Except as provided below in this subsection, all payments made
by the Borrower under this Credit Agreement and any Notes shall be made
free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding taxes measured by or imposed upon the overall net
income of any Lender or its applicable lending office, or any branch or
affiliate thereof, and all franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of any Lender or its
applicable lending office, or any branch or affiliate thereof, in each
case imposed in lieu of net income taxes, imposed: (i) by the jurisdiction
under the laws of which such Lender, applicable lending office, branch or
affiliate is organized or is located, or in which its principal executive
office is located, or any nation within which such jurisdiction is located
or any political subdivision thereof; or (ii) by reason of any connection
between the jurisdiction imposing such tax and such Lender, applicable
lending office, branch or affiliate other than a connection arising solely
from such Lender having executed, delivered or performed its obligations,
or received payment under or enforced, this Credit Agreement or any Notes.
If any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to the Agent or any Lender hereunder or
under any Notes, (A) the amounts so payable to the Agent or such Lender
shall be increased to the extent necessary to yield to the Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified
in this Credit Agreement and any Notes, provided, however, that the
Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes
and shall not be required to increase any such amounts payable to any
Lender that is not organized under the laws of the United States of
America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection whenever any Non-Excluded
Taxes are payable by the Borrower, and (B) as promptly as possible
thereafter the Borrower shall send to the Agent for its own account or for
the account of such Lender, as the case may be, a certified copy of an
original official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to
the appropriate taxing authority or fails to remit to the Agent the
required receipts or other required documentary evidence, the Borrower
shall indemnify the Agent and the Lenders for any incremental taxes,
interest or penalties that may become payable by the Agent or any Lender
as a result of any such failure. The agreements in this subsection shall
survive the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
(b) At least five Business Days prior to the first day on which
interest or Fees are payable hereunder for the account of any Lender, each
Lender that is not incorporated under the laws of the United States of
America, or a state thereof, agrees that it will deliver to each of the
Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such
Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income
taxes. Each Lender which so delivers a Form 1001 or 4224 further
undertakes to deliver to each of the Borrower and the Agent two additional
copies of such form (or a successor form) on or before the date that such
form expires (currently, three successive calendar years for Form 1001 and
one calendar year for Form 4224) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent forms so
delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Borrower or the Agent, in
each case certifying that such Lender is entitled to receive payments
under this Credit Agreement and the Notes without deduction or withholding
of any United States federal income taxes, unless an event (including,
without limitation, any change in treaty, law or regulation) has occurred
prior to the date on which any such delivery would otherwise be required
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to
it and such Lender advises the Borrower and the Agent that it is not
capable of receiving payments without any deductions or withholding of
United States federal income tax.
3.10 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may
sustain or incur (other than through such Lender's gross negligence or
willful misconduct) as a consequence of (a) default by the Borrower in
making a borrowing of, conversion into or continuation of Eurodollar Loans
after the Borrower has given a notice requesting the same in accordance
with the provisions of this Credit Agreement, (b) default by the Borrower
in making any prepayment of a Eurodollar Loan after the Borrower has given
a notice thereof in accordance with the provisions of this Credit
Agreement or (c) the making of a prepayment of Eurodollar Loans on a day
which is not the last day of an Interest Period with respect thereto.
Such indemnification may include an amount equal to the excess, if any, of
(i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from
the date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the
applicable rate of interest for such Eurodollar Loans provided for herein
over (ii) the amount of interest (as reasonably determined by such Lender)
which would have accrued to such Lender on such amount by placing such
amount on deposit for a comparable period with leading banks in the
interbank Eurodollar market, provided, however, that the amount of such
lost interest, if any, shall be discounted to a present value as of the
date of the indemnification payment, using as the applicable discount
rate(s) the rate(s) of per annum interest used by such Lender in making
the computations pursuant to the foregoing clause (ii). This covenant
shall survive the termination of this Credit Agreement and the payment of
the Loans and all other amounts payable hereunder.
3.11 Pro Rata Treatment. Except to the extent otherwise provided
herein:
(a) Loans. Each Loan, each payment or prepayment of principal
of any Loan, each payment of interest on the Loans, each payment of
Fees (other than the Fee to the Agent pursuant to Section 3.4(d)),
each reduction of the Revolving Committed Amount and each conversion
or extension of any Loan, shall be allocated pro rata among the
Lenders in accordance with the respective Commitment Percentages
relating to such respective Loans and Participation Interests.
(b) Advances. Unless the Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not
make the amount that would constitute its Commitment Percentage of
such borrowing available to the Agent, the Agent may assume that such
Lender is making such amount available to the Agent, and the Agent
may, in reliance upon such assumption, make available to the Borrower
a corresponding amount. If such amount is not made available to the
Agent by such Lender within the time period specified therefor
hereunder, such Lender shall pay to the Agent, on demand, such amount
with interest thereon at a rate equal to the Federal Funds Rate for
the period until such Lender makes such amount immediately available
to the Agent. A certificate of the Agent submitted to any Lender
with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's
Commitment Percentage of such borrowing is not made available to the
Agent by such Lender within two business Days of the date of the
related borrowing, (i) the Agent shall notify the Borrower of the
failure of such Lender to make such amount available to the Agent and
the Agent shall also be entitled to recover such amount with interest
thereon at the rate per annum applicable to Prime Rate Loans
hereunder, on demand, from the Borrower and (ii) then the Borrower
may, without waiving any rights it may have against such Lender, (x)
request the Lender serving as Agent to increase its Revolving
Commitment Percentage and make such borrowing available, which
request such Lender may in its sole discretion approve or deny, and
(y) if the Lender serving as Agent shall deny a request submitted to
it pursuant to the foregoing clause (x), borrow a like amount on an
unsecured basis from any commercial bank for a period ending on the
date upon which such Lender does in fact make such borrowing
available; provided, however, that at the time any such replacement
borrowing is made and at all times while such amount is outstanding
the Borrower would be permitted to borrow such amount pursuant to
Section 2.1 of this Credit Agreement.
3.12 Sharing of Payments. The Lenders agree among themselves that,
in the event that any Lender shall obtain payment in respect of any Loan
or any other obligation owing to such Lender under this Credit Agreement
through the exercise of a right of setoff, banker's lien or counterclaim,
or pursuant to a secured claim under Section 506 of Title 11 of the United
States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, in excess of its pro rata share of such payment as provided for in
this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a participation in such Loans and other obligations in such
amounts, and make such other adjustments from time to time, as shall be
equitable to the end that all Lenders share such payment in accordance
with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to
a Lender obtained by such Lender through the exercise of a right of
setoff, banker's lien, counterclaim or other event as aforesaid shall be
rescinded or must otherwise be restored, each Lender which shall have
shared the benefit of such payment shall, by repurchase of a participation
theretofore sold, return its share of that benefit (together with its
share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise restored. The
Borrower agrees that any Lender so purchasing such a participation may, to
the fullest extent permitted by law, exercise all rights of payment,
including setoff, banker's lien or counterclaim, with respect to such
participation as fully as if such Lender were a holder of such Loan or
other obligation in the amount of such participation. Except as otherwise
expressly provided in this Credit Agreement, if any Lender or the Agent
shall fail to remit to the Agent or any other Lender an amount payable by
such Lender or the Agent to the Agent or such other Lender pursuant to
this Credit Agreement on the date when such amount is due, such payments
shall be made together with interest thereon for each date from the date
such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a setoff to which this Section
3.12 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the
rights of the Lenders under this Section 3.12 to share in the benefits of
any recovery on such secured claim.
3.13 Place and Manner of Payments. Except as otherwise specifically
provided herein, all payments hereunder shall be made to the Agent in
Dollars in immediately available funds, without offset, deduction,
counterclaim or withholding of any kind, at its offices at the Agent's
office specified in Schedule 11.2 not later than 1:00 P.M. (Milwaukee,
Wisconsin time) on the date when due. Payments received after such time
shall be deemed to have been received on the next succeeding Business Day.
The Agent may, at the Borrower's request, debit the amount of any such
payment which is not made by such time to Account No. 111501414 maintained
by the Borrower with the Agent or any other account which may be
maintained by the Borrower with the Agent and designated for such purpose
by the Borrower. The Borrower shall, at the time it makes any payment
under this Credit Agreement, specify to the Agent the Loans, Fees or other
amounts payable by the Borrower hereunder to which such payment is to be
applied (and in the event that it fails so to specify, or if such
application would be inconsistent with the terms hereof, the Agent shall
distribute such payment to the Lenders in such manner as the Agent may
determine to be appropriate in respect of obligations owing by the
Borrower hereunder, subject to the terms of Section 3.11). The Agent will
distribute such payments to such Lenders, if any such payment is received
prior to 1:00 p.m. (Milwaukee, Wisconsin time) on a Business Day in like
funds as received prior to the end of such Business Day and otherwise the
Agent will distribute such payment to such Lenders on the next succeeding
Business Day. Whenever any payment hereunder shall be stated to be due on
a day which is not a Business Day, the due date thereof shall be extended
to the next succeeding Business Day (subject to accrual of interest and
Fees for the period of such extension), except that in the case of
Eurodollar Loans, if the extension would cause the payment to be made in
the next following calendar month, then such payment shall instead be made
on the next preceding Business Day. Except as expressly provided
otherwise herein, all computations of interest and fees shall be made on
the basis of actual number of days elapsed over a year of 360 days.
Interest shall accrue from and include the date of borrowing, but exclude
the date of payment.
3.14 Indemnification: Nature of Issuing Lender's Duties.
(a) In addition to its other obligations under Section 2.3, the
Borrower hereby agrees to protect, indemnify, pay and save each
Issuing Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance
of any Letter of Credit or (B) the failure of the Issuing Lender to
honor a drawing under a Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority (all such acts
or omissions, herein called "Government Acts").
(b) As between the Borrower and the Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or misuse of
any Letter of Credit by the beneficiary thereof. The Issuing Lender
shall not be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any
Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) for the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any Letter of Credit
or the rights or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective for any reason;
(iii) for failure of the beneficiary of a Letter of Credit to comply
fully with conditions required in order to draw upon a Letter of
Credit; (iv) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) for errors
in interpretation of technical terms; (vi) for any loss or delay in
the transmission or otherwise of any document required in order to
make a drawing under a Letter of Credit or of the proceeds thereof;
and (vii) for any consequences arising from causes beyond the control
of the Issuing Lender, including, without limitation, any Government
Acts. None of the above shall affect, impair, or prevent the vesting
of the Issuing Lender's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Lender, under or in connection with any Letter
of Credit or the related certificates, if taken or omitted in good
faith, shall not put such Issuing Lender under any resulting
liability to the Borrower. It is the intention of the parties that
this Credit Agreement shall be construed and applied to protect and
indemnify the Issuing Lender against any and all risks involved in
the issuance of the Letters of Credit, all of which risks are hereby
assumed by the Borrower, including, without limitation, any and all
risks of the acts or omissions, whether rightful or wrongful, of any
present or future Government Acts. The Issuing Lender shall not, in
any way, be liable for any failure by the Issuing Lender or anyone
else to pay any drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the Issuing
Lender.
(d) Nothing in this Section 3.14 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.3(d)
hereof. The obligations of the Borrower under this Section 3.14
shall survive the termination of this Agreement. No act or omissions
of any current or prior beneficiary of a Letter of Credit shall in
any way affect or impair the rights of the Issuing Lender to enforce
any right, power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary contained in this
Section 3.14, the Borrower shall have no obligation to indemnify any
Issuing Lender in respect of any liability incurred by such Issuing
Lender arising out of the gross negligence or willful misconduct of
the Issuing Lender (including action not taken by an Issuing Lender)
or to reimburse the Issuing Lender for payments made by such Issuing
Lender on a Letter of Credit with respect to which the drafts and
accompanying documents do not reasonably appear to comply with the
terms of the Letter of Credit, as determined by a court of competent
jurisdiction.
3.15 Cleanup Period. Notwithstanding any provision to the contrary
contained herein, Borrower agrees that for at least sixty (60) consecutive
days during each fiscal year ending on the dates specified below the
aggregate amount of outstanding Revolving Loans, Swing Line Loans and Term
Loans shall not exceed the amount specified for such fiscal year:
Fiscal Year Ending Amount
September 27, 1997 $ 160,000,000
September 26, 1998 $ 145,000,000
September 25, 1999 $ 130,000,000
3.16 Transfers at Borrower's Request. In the event that any Lender
requests payment by the Borrower of any additional amounts pursuant to
Section 3.5, 3.7, 3.8 or 3.9, then, provided that no Default or Event of
Default has occurred and is continuing at such time, the Borrower may, at
its own expense (such expense to include any transfer fee payable to the
Agent under Section 11.6(b)), and in its sole discretion require such
Lender to transfer and assign in whole or in part, without recourse (in
accordance with and subject to the terms and conditions of Section
11.6(b)), all or part of its interests, rights and obligations under this
Credit Agreement to an Eligible Transferee which shall assume such
assigned obligations; provided that (i) the other Lenders may, by written
notice to the Agent, the Lenders and the Borrower, in their respective
discretion, elect to assume such Lender's Revolving Commitment, LOC
Commitment and Term Loan Commitment, pro rata based upon the respective
Term Loan Commitment Percentages of the other Lenders so electing to
assume such Lender's Commitments hereunder, (ii) such Eligible Transferee
which is not a Lender shall be reasonably acceptable to the Required
Lenders, (iii) such assignment shall not relieve the Borrower from its
obligations to pay such additional amounts that may be due in accordance
with Section 3.5, 3.7, 3.8 or 3.9, (iv) such assignment shall not conflict
with any law, rule or regulation or order of any court or other
Governmental Authority and (v) the Borrower or such Eligible Transferee
shall have paid to the assigning Lender in immediately available funds the
principal of and interest accrued to the date of such payment on the Loans
made by it hereunder and all accrued Fees and other amounts owed to it
hereunder.
SECTION 4
GUARANTY
4.1 The Guaranty. Each of the Credit Parties hereby jointly and
severally guarantees to each Lender, the Agent and the Issuing Lender as
hereinafter provided the prompt payment of the Credit Party Obligations in
full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) strictly
in accordance with the terms thereof. The Credit Parties hereby further
agree that if any of the Credit Party Obligations are not paid in full
when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise), the
Credit Parties will, jointly and severally, promptly pay the same, without
any demand or notice whatsoever, and that in the case of any extension of
time of payment or renewal of any of the Credit Party Obligations, the
same will be promptly paid in full when due (whether at extended maturity,
as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents, the obligations of each Credit Party
hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the U.S. Bankruptcy Code or any comparable
provisions of any applicable state law.
4.2 Obligations Unconditional. The obligations of the Credit
Parties under Section 4.1 hereof are joint and several, absolute and
unconditional, irrespective of the value, genuineness, validity or
enforceability of any of the Credit Documents, or any other agreement or
instrument referred to therein, or any substitution, release or exchange
of any other guarantee of or security for any of the Credit Party
Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.2 that the obligations of
the Credit Parties hereunder shall be absolute and unconditional under any
and all circumstances other than indefeasible payment in full. Without
limiting the generality of the foregoing, it is agreed that the occurrence
of any one or more of the following shall not alter or impair the
liability of any Credit Party hereunder which shall remain absolute and
unconditional as described above:
(i) at any time or from time to time, without notice to any
Credit Party, the time for any performance of or compliance with any
of the Credit Party Obligations shall be extended, or such
performance or compliance shall be waived;
(ii) any of the acts mentioned in any of the provisions of any
of the Credit Documents or any other agreement or instrument referred
therein shall be done or omitted;
(iii) the maturity of any of the Credit Party Obligations shall
be accelerated, or any of the Credit Party Obligations shall be
modified, supplemented or amended in any respect, or any right under
any of the Credit Documents or any other agreement or instrument
referred to therein shall be waived or any other guarantee of any of
the Credit Party Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt with;
(iv) any Lien granted to, or in favor of, the Agent or any
Lender or Lenders as security for any of the Credit Party Obligations
shall fail to attach or be perfected; or
(v) any of the Credit Party Obligations shall be determined to
be void or voidable (including, without limitation, for the benefit
of any creditor of any Credit Party) or shall be subordinated to the
claims of any Person (including, without limitation, any creditor of
any Credit Party).
With respect to its obligations hereunder, each Credit Party hereby
expressly waives diligence, presentment, demand of payment, protest and
all notices whatsoever, and any requirement that the Agent or any Lender
exhaust any right, power or remedy or proceed against any Person under any
of the Credit Documents or any other agreement or instrument referred to
therein, or against any other Person under any other guarantee of, or
security for, any of the Credit Party Obligations.
4.3 Reinstatement. The obligations of the Credit Parties under this
Section 4 shall be automatically reinstated if and to the extent that for
any reason any payment by or on behalf of any Person in respect of the
Credit Party Obligations is rescinded or must be otherwise restored by any
holder of any of the Credit Party Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and each Credit
Party agrees that it will indemnify each of the Agent and each Lender on
demand for all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) incurred by the Agent or such
Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or similar
payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers. Without limiting the generality of
the provisions of any other Section of this Section 4, each Credit Party
further agrees that it shall have no right of recourse to security for the
Credit Party Obligations. Each of the Credit Parties further agrees that
it shall have no right of subrogation, reimbursement or indemnity, nor any
right of recourse to security, if any, for the Credit Party Obligations
until indefeasible payment in full of all such obligations shall have been
made.
4.5 Remedies. The Credit Parties agree that, as between the Credit
Parties, on the one hand, and the Agent, the Lenders and the Issuing
Lender, on the other hand, the Credit Party Obligations may be declared to
be forthwith due (and payable as provided in Section 9 hereof and shall be
deemed to have become automatically due and payable in the circumstances
provided in said Section 9) for purposes of Section 4.1 hereof
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or preventing such Credit Party Obligations from becoming
automatically due and payable) as against any other Person and that, in
the event of such declaration (or such Credit Party Obligations being
deemed to have become automatically due and payable), such Credit Party
Obligations whether or not due and payable by any other Person) shall
forthwith become due and payable by the Credit Parties for purposes of
said Section 4.1.
4.6 Continuing Guarantee. The guarantee in this Section 4 is a
continuing guarantee, and shall apply to all Credit Party Obligations
whenever arising.
SECTION 5
CONDITIONS
5.1 Conditions to Closing Date. This Credit Agreement shall become
effective upon the satisfaction of the following conditions precedent:
(a) Execution of Agreement. The Agent shall have received (i)
multiple counterparts of this Credit Agreement for each Lender,
executed by a duly authorized officer of each party hereto, (ii) for
the account of each Lender a Revolving Note and a Term Note, (iii)
multiple counterparts of the Security Agreement for each Lender and
UCC financing statements relating thereto executed by a duly
authorized officer of each party thereto, and (iv) multiple
counterparts of the General Intangibles Mortgage executed by a duly
authorized officer of each party thereto, in each case conforming to
the requirements of this Credit Agreement and executed by a duly
authorized officer of the Borrower and the Guarantors.
(b) Liability and Casualty Insurance. Copies of insurance
policies or certificates of insurance evidencing liability and
casualty insurance meeting the requirements set forth herein and in
the Security Agreement.
(c) Acquisition of Pierce Manufacturing Inc. A certified copy
of the Stock Purchase Agreement for the acquisition of Pierce by the
Borrower dated August 7, 1996 (the "Purchase Agreement") among the
Borrower, Pierce and the shareholders of Pierce relating to the
purchase by the Borrower of all of the issued and outstanding capital
stock of Pierce, which Purchase Agreement shall be in form and
substance reasonably satisfactory to the Agent and the Required
Lenders, together with evidence that (i) consummation of the
transactions contemplated therein has occurred, or will occur
contemporaneous with the funding of the initial Extensions of Credit
hereunder, substantially in accordance with the terms of the Purchase
Agreement, (ii) the aggregate amount paid (including indebtedness
assumed) in connection with the acquisition shall not exceed
$165,000,000, (iii) the corporate structure of the Borrower and its
Subsidiaries after giving effect to the acquisition shall not differ
in any material respect from that contemplated in the Purchase
Agreement, and (iv) all consents and approvals, if any, necessary in
connection with consummation of such acquisition (including
compliance with the Hart-Scott-Rodino Antitrust Improvements Act)
shall have been obtained.
(d) Proforma Balance Sheet and Financial Information. A
proforma balance sheet for the Borrower and its Subsidiaries
estimated as of the Closing Date after giving effect to the
transactions contemplated in the Purchase Agreement, reflecting
estimated purchase accounting adjustments, prepared in good faith
upon reasonable assumptions by the Borrower and indicating a
Consolidated Net Worth of at least $120,000,000 and a Certificate of
Financial Condition in the form of Exhibit 5.1(d) with appropriate
insertions and attachments.
(e) Financial Information. Copies of audited consolidated
financial statements for the Borrower and its Subsidiaries and for
Pierce and its Subsidiaries for fiscal years 1993, 1994 and 1995;
interim quarterly company-prepared consolidated financial statements
for the Borrower and its Subsidiaries and for Pierce and its
Subsidiaries for fiscal year 1996.
(f) Corporate Documents. Receipt by the Agent of the
following:
(i) Articles of Incorporation. Copies of the articles of
incorporation or charter documents of the Borrower and each of
the other Credit Parties certified to be true and complete as of
a recent date by the appropriate governmental authority of the
state of its incorporation.
(ii) Resolutions. Copies of resolutions of the Board of
Directors of the Borrower and each of the other Credit Parties
approving and adopting the Credit Documents, the transactions
contemplated therein and authorizing execution and delivery
thereof, certified by a secretary or assistant secretary as of
the Closing Date to be true and correct and in force and effect
as of such date.
(iii) Bylaws. A copy of the bylaws of the Borrower and
each of the other Credit Parties certified by a secretary or
assistant secretary as of the Closing Date to be true and
correct and in force and effect as of such date.
(iv) Good Standing. Copies of certificates of good
standing, existence or its equivalent with respect to the
Borrower and each of the other Credit Parties certified as of a
recent date by the appropriate Governmental Authorities of the
state of incorporation and each other state in which the failure
to so qualify and be in good standing would have a material
adverse effect on the business or operations of the Borrower or
other Credit Party in such state.
(g) Officer's Certificate. The Agent shall have received, with
a counterpart for each Lender, a certificate of a duly authorized
officer of each of the Borrower and each of the other Credit Parties
dated the Effective Date, substantially in the form of Exhibit 5.1(g)
with appropriate insertions and attachments.
(h) Legal Opinion of Counsel. The Agent shall have received,
with a copy for each Lender, an opinion of Foley & Lardner, counsel
for the Borrower and the Guarantors, dated the Closing Date and
addressed to the Agent and the Lenders, in form and substance
satisfactory to the Agent and the Lenders.
(i) Fees. The Agent shall have received all Fees owing
pursuant to Section 3.4.
(j) Subsection 5.2 Conditions. The conditions specified in
subsections 5.2(a) and (b) shall be satisfied on the Closing Date as
if Loans were to be made on such date.
(k) Environmental Reports. Copies of Phase I environmental
assessment reports and other environmental documentation relating to
properties owned by Pierce and its Subsidiaries, which reports and
documentation shall be in form and substance reasonably satisfactory
to the Agent and the Lenders.
(l) Landlord Waivers in the form of Exhibit 5.1(l), with
appropriate insertions and attachments, in favor of the Agent for the
benefit of the Lenders, from the following real property lessors of
the Borrower and Pierce, as the case may be: Cadence Company,
Airport Business Center III, The Fielding Company, Winnebago County
Highway Dept., VTM & Associates, Donald J. and Donna Benson, and Mark
G. Bachman.
(m) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Credit
Agreement shall be reasonably satisfactory in form and substance to
the Agent and the Lenders.
5.2 Conditions to All Extensions of Credit. The obligation of each
Lender to make any Extension of Credit hereunder
(including the initial Loans to be made hereunder) is subject to the
satisfaction of the following conditions precedent on the date of making
such Extension of Credit:
(a) Representations and Warranties. Except as modified
pursuant to Section 6.16, the representations and warranties made by
the Borrower and the other Credit Parties herein, in the Security
Agreement or which are contained in any certificate furnished at any
time under or in connection herewith shall be true and correct on and
as of the date of such Extension of Credit as if made on and as of
such date.
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after
giving effect to the Extension of Credit to be made on such date
unless such Default or Event of Default shall have been waived in
accordance with this Credit Agreement.
(c) Additional Conditions to Revolving Loans. If such Loan is
made pursuant to subsection 2.1, all conditions set forth in such
subsection shall have been satisfied.
(d) Additional Conditions to Term Loan. If such Loan is made
pursuant to subsection 2.2 all conditions set forth in such
subsection shall have been satisfied.
(e) Additional Conditions to Letters of Credit. If such
Extension of Credit is made pursuant to subsection 2.3 all conditions
set forth in such subsection shall have been satisfied.
Each request for Extension of Credit and each acceptance by the
Borrower of an Extension of Credit shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such
Extension of Credit that the applicable conditions in paragraphs (a) and
(b), and in (c), (d) or (e) of this subsection have been satisfied.
SECTION 6
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Credit Agreement and to make
the Extensions of Credit herein provided for, each of the Credit Parties
hereby represents and warrants to the Agent and to each Lender that:
6.1 Financial Statements. The Borrower has furnished to the Lenders
(a) the audited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of September 30, 1995, and related audited
statements of income, shareholders' equity and cash flows for the year
ended on that date, together with an unqualified opinion thereon by Ernst
& Young, and (b) the unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as of June 30, 1996 and related
statements of income, shareholders' equity and cash flows for the period
ended on such date, prepared by the Borrower, and (c) (i) the audited
consolidated balance sheet of Pierce and its Subsidiaries as of October
31, 1995, and related audited statements of income, shareholders' equity
and cash flows for the year ended on that date, together with an
unqualified opinion thereon by Arthur Andersen LLP; and (ii) the unaudited
consolidated balance sheet of Pierce and its Subsidiaries as of July 31,
1996 and related statements of income, shareholders' equity and cash flows
for the period ended on such date, prepared by Pierce. 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 Borrower 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 the absence of footnotes, audit and normal year-end
adjustments. Since June 30, 1996 there has been no development or event
which has had a Material Adverse Effect, except the verdict and possible
judgment entered against the Borrower in the Super Steel litigation
described on Schedule 6.6.
6.2 Ownership of Properties; Liens and Encumbrances. Each of the
Borrower and its Subsidiaries has good and marketable title to all
property, real and personal, reflected on the most recent financial
statement of the Borrower furnished to the Lenders, 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 except Permitted Liens. All owned and leased buildings and
equipment of the Borrower used in the Borrower's business are in good
operating condition, repair and working order and, to the Borrower's
knowledge, conform to all applicable laws, ordinances and regulations the
violation of which would have a Material Adverse Effect. The Borrower
possesses adequate trademarks, trade names, copyrights, patents, 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 would result in a Material
Adverse Effect.
6.3 Corporate Existence; Compliance with Law. Each of the Borrower
and its Subsidiaries (a) is duly organized, validly existing and in good
standing (or similar concept under applicable law, including, without
limitation, the concept of active status under the laws of the State of
Wisconsin) under the laws of the jurisdiction of its organization, (b) has
the corporate or partnership power and authority and the legal right to
own and operate all its material property, to lease the material property
it operates as lessee and to conduct the business in which it is currently
engaged, (c) is duly qualified as a foreign corporation or partnership and
in good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires
such qualification except to the extent that the failure to so qualify or
be in good standing would not, in the aggregate, have a Material Adverse
Effect and (d) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
6.4 Corporate Power; Authorization; Enforceable Obligations. Each
of the Borrower and the other Credit Parties has full power and authority
and the legal right to make, deliver and perform the Credit Documents to
which it is party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the Credit
Documents to which it is party. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the
borrowings hereunder or with the execution, delivery or performance of any
Credit Document by the Borrower or the other Credit Parties (other than
those which have been obtained or in connection with the perfection of
Liens in favor of the Agent and Lenders hereunder) or with the validity or
enforceability of any Credit Document against the Borrower or the
Guarantors (except such filings as are necessary in connection with the
perfection of the Liens created by such Credit Documents). Each Credit
Document to which it is a party has been duly executed and delivered on
behalf of the Borrower or the other Credit Parties, as the case may be.
Each Credit Document to which it is a party constitutes a legal, valid and
binding obligation of the Borrower or the Guarantors, as the case may be,
enforceable against the Borrower or the other Credit Parties, as the case
may be, in accordance with its terms.
6.5 No Legal Bar; No Default. The execution, delivery and
performance of the Credit Documents, the borrowings thereunder and the use
of the proceeds of Extensions of Credit will not violate any Requirement
of Law the violation of which would reasonably be expected to have a
Material Adverse Effect or any Contractual Obligation of the Borrower or
its Subsidiaries the violation of which would reasonably be expected to
have a Material Adverse Effect (except those as to which waivers or
consents have been obtained), and will not result in, or require, the
creation or imposition of any Lien on any of its or their respective
properties or revenues pursuant to any Requirement of Law or Contractual
Obligation other than the Liens arising under or contemplated in
connection with the Credit Documents. Neither the Borrower nor any of its
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which would reasonably be expected to have a
Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
6.6 No Material Litigation. Except as set forth in Schedule 6.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the best knowledge of the
Borrower and the other Credit Parties, threatened by or against the
Borrower or any of its Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to the Credit Documents
or any Loan or any of the transactions contemplated hereby, or (b) which,
if adversely determined, would reasonably be expected to have a Material
Adverse Effect.
6.7 Investment Company Act. Neither the Borrower nor any of the
other Credit Parties is an "investment company", or a company "controlled"
by an "investment company," within the meaning of the Investment Company
Act of 1940, as amended.
6.8 Federal Regulations. No part of the proceeds of any Loan
hereunder will be used directly or indirectly for any purpose which
violates, or which would be inconsistent with, the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. The Borrower and
its Subsidiaries taken as a group do not own "margin stock" except
(a) margin stock which is a Permitted Investment, and (b) capital stock of
the Borrower held by the Borrower as treasury stock, but only to the
extent otherwise permitted by this Agreement.
6.9 ERISA. Neither a Reportable Event nor an "accumulated funding
deficiency" within the meaning of Section 412 of the Code (or Section 302
of ERISA) has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan,
and each Plan has complied in all material respects with the applicable
provisions of ERISA and the Code, except to the extent that any such
occurrence or failure to comply would not reasonably be expected to have a
Material Adverse Effect. No termination of a Single Employer Plan has
occurred resulting in any liability that has remained underfunded, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year
period which would reasonably be expected to have a Material Adverse
Effect. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits by an amount which, as
determined in accordance with GAAP, would reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any Commonly Controlled
Entity is currently subject to any liability for a complete or partial
withdrawal from a Multiemployer Plan which would reasonably be expected to
have a Material Adverse Effect. For purposes of this Section 6.9 only,
the parties hereto agree that "Material Adverse Effect" shall include any
event referred to in this Section 6.9 which would (or could be reasonably
expected to) cause a reduction in Consolidated Net Worth of ten percent
(10%) or more.
6.10 Environmental Matters. Except as set forth on Schedule 6.10 and
except to the extent that all of the following, in the aggregate, would
not reasonably be expected to have a Material Adverse Effect:
(a) To the best knowledge of the Borrower and the other Credit
Parties, the facilities and properties owned, leased or operated by
the Borrower or any of its Subsidiaries (the "Properties") do not
contain any Materials of Environmental Concern in amounts or
concentrations which (i) constitute a violation of, or (ii) could
give rise to liability under, any Environmental Law.
(b) To the best knowledge of the Borrower and the other Credit
Parties, the Properties and all operations at the Properties are in
compliance, and have in the last five years been in compliance, in
all material respects with all applicable Environmental Laws, and
there is no contamination at, under or about the Properties or
violation of any Environmental Law with respect to the Properties or
the business operated by the Borrower or any of its Subsidiaries (the
"Business").
(c) Neither the Borrower nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to any of the
Properties or the Business, nor do the Borrower nor the other Credit
Parties have knowledge or reason to believe that any such notice will
be received or is being threatened.
(d) To the best knowledge of the Borrower and the other Credit
Parties, Materials of Environmental Concern have not been transported
or disposed of from the Properties in violation of, or in a manner or
to a location which could give rise to liability under any
Environmental Law, nor have any Materials of Environmental Concern
been generated, treated, stored or disposed of at, on or under any of
the Properties in violation of, or in a manner that could give rise
to liability under, any applicable Environmental Law.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower and the other
Credit Parties, threatened, under any Environmental Law to which the
Borrower or any Subsidiary is or will be named as a party with
respect to the Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or
other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the
Properties or the Business.
(f) To the best knowledge of the Borrower and the other Credit
Parties, there has been no unremediated release or threat of release
of Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of the Borrower or any
Subsidiary in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws.
6.11 Use of Proceeds. Extensions of Credit hereunder may be used to
(i) finance a portion of the acquisition contemplated pursuant to the
Purchase Agreement, (ii) pay fees and expenses incurred in connection with
such acquisition, and (iii) provide for working capital and other general
corporate purposes not prohibited by this Credit Agreement.
6.12 Subsidiaries. Set forth on Schedule 6.12 is a complete and
accurate list of all Subsidiaries of the Borrower. The outstanding
capital stock and other equity interests of all such Subsidiaries is
validly issued, fully paid and nonassessable and is owned, free and clear
of all Liens (other than those arising under or contemplated in connection
with the Credit Documents).
6.13 Taxes. To the best knowledge of the Borrower and the other
Credit Parties, each of the Borrower and its Subsidiaries has filed, or
caused to be filed, all material tax returns (federal, state, local and
foreign) required to be filed and paid all taxes shown thereon to be due
(including interest and penalties) and has paid all other taxes, fees,
assessments and other governmental charges (including mortgage recording
taxes, documentary stamp taxes and intangibles taxes) owing or necessary
to preserve any Liens in favor of the Lenders by them, except for such
taxes (i) which are not yet delinquent or (ii) as are being contested in
good faith and by proper proceedings, and against which adequate reserves
are being maintained in accordance with GAAP. The Borrower is not aware
of any proposed material tax assessments against it or any of its
Subsidiaries. The most recent completed audit of the Borrower's federal
income tax returns was for the Borrower's income tax year ending September
30, 1988, and all taxes shown by such returns (together with any
adjustments arising out of such audit, if any) have been paid. The most
recent completed audit of Pierce's federal income tax returns was for
Pierce's income tax year year ending October 31, 1993, and all taxes shown
by such returns (together with any adjustments arising out of such audit,
if any) have been paid.
6.14 Solvency. The Borrower and Pierce, individually, and the
Borrower and its Subsidiaries, collectively, are and, after execution of
this Credit Agreement and after giving effect to the Indebtedness and
Guarantee Obligations incurred hereunder, will be Solvent.
6.15 Accuracy of Information. All information furnished by the
Borrower to the Lenders 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.
6.16 Amendments to Schedule 6.12. To the extent otherwise permitted
by this Agreement, the Borrower may, from time to time, amend Schedule
6.12 by delivering (effective upon receipt) to the Agent and each Lender a
copy of such amended Schedule 6.12 which shall (i) be dated the date of
delivery, (ii) be certified by a duly authorized officer of the Borrower
as true, complete and correct as of such date as delivered in replacement
for the Schedule 6.12 previously in effect, and (iii) show in reasonable
detail (by blacklining or other appropriate graphic means) the changes
from the predecessor Schedule 6.12.
SECTION 7
AFFIRMATIVE COVENANTS
Each of the Credit Parties hereby covenants and agrees that on the
Closing Date, and thereafter for so long as this Credit Agreement is in
effect and until the Commitments have terminated, no Note or Letter of
Credit remains outstanding and unpaid and the Obligations, together with
interest, Fees and all other amounts owing to the Agent or any Lender
hereunder, are paid in full, the Borrower shall, and in the case of
subsections 7.3, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.10 shall cause each of its
Subsidiaries, to:
7.1 Annual Financial Statement. Furnish to the Agent within 90 days
after the end of each fiscal year of the Borrower a copy for each Lender
of a balance sheet of the Borrower 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 Borrower, 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 Borrower 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 Borrower is in compliance with the financial covenants contained
in Sections 7.9 and 7.10 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 Borrower containing the
calculations demonstrating the Borrower's compliance or noncompliance with
the financial covenants contained in Sections 7.9 and 7.10 hereof. The
Borrower will furnish to the Agent within 90 days after the end of each
fiscal year of the Borrower a copy for each Lender of a statement of
income, including statements of revenues and expenses for each of the
Borrower's business segments and corporate charges. All such financial
statements, and the financial statements referred to in Section 7.2
hereof, except as provided herein, shall be furnished in consolidated form
for the Borrower and all Consolidated Subsidiaries which it may at the
time have.
7.2 Interim Financial Statements.
(a) Furnish to the Agent within 45 days after the end of each
of the first three quarters of each fiscal year of the Borrower, and
within 30 days after the end of each month, a copy for each Lender of
a balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of each such period and related statements of income
(including a statement of revenues and expenses for each of the
Borrower's business segments and corporate charges), shareholders'
equity and cash flows for the period from the beginning of the fiscal
year to the end of such quarter and month, prepared in the manner set
forth in Section 7.1 hereof for the annual statements, certified to
be accurate and complete by an authorized financial officer of the
Borrower, subject to audit, footnotes 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 Borrower
proposes to take with respect thereto, and (ii) containing the
calculations demonstrating the Borrower's compliance or noncompliance
with the financial covenants contained in Sections 7.9 and 7.10
hereof.
(b) Furnish to the Agent, (i) contemporaneously with the filing
or mailing thereof, copies for each Lender of all material of a
financial nature filed with the Securities Exchange Commission or
sent to the shareholders of the Borrower, (ii) prior to the end of
the first fiscal quarter of each fiscal year of the Borrower, budgets
prepared by the Borrower for such fiscal year, and (iii) such other
financial information as any Lender may from time to time reasonably
request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be,
in accordance with industry practice (subject, where applicable, to
specified grace periods) all its material obligations of whatever nature
and any additional costs that are imposed as a result of any failure to so
pay, discharge or otherwise satisfy such obligations (including, without
limitation, obligations to pay taxes), except when the amount or validity
of such obligations and costs is currently being contested in good faith
by appropriate proceedings and reserves, if applicable, in conformity with
GAAP with respect thereto have been provided on the books of the Borrower
or its Subsidiaries, as the case may be.
7.4 Conduct of Business and Maintenance of Existence. Except as
otherwise permitted by Section 8.4, continue to engage in business of the
same general type as now conducted by it on the date hereof and preserve,
renew and keep in full force and effect its corporate existence and take
all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business; comply with
all Contractual Obligations and Requirements of Law applicable to it
except to the extent that failure to comply therewith would not, in the
aggregate, have a Material Adverse Effect.
7.5 Maintenance of Property; Insurance. Keep all material property
useful and necessary in its business in good working order and condition
(ordinary wear and tear excepted); maintain with financially sound and
reputable insurance companies insurance on all its material property in at
least such amounts and against at least such risks as are usually insured
against in the same general area by companies engaged in the same or a
similar business; and furnish to the Agent, upon written request, full
information as to the insurance carried.
7.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Requirements of Law shall be made
of all dealings and transactions in relation to its businesses and
activities; and permit, during regular business hours and upon reasonable
notice by the Agent, the Agent and, after the occurrence and during the
continuance of a Default or an Event of Default, any of the Lenders to
visit and inspect any of its properties and examine and make abstracts
from any of its books and records (other than materials protected by the
attorney-client privilege and materials which the Borrower may not
disclose without violation of a confidentiality obligation binding upon
it) at any reasonable time and as often as may reasonably be desired, and
to discuss the business, operations, properties and financial and other
condition of the Borrower and its Subsidiaries with officers and employees
of the Borrower and its Subsidiaries and with its independent certified
public accountants.
7.7 Notices. Give notice to the Agent (which shall promptly
transmit such notice to each Lender) of:
(a) immediately (and in any event within two (2) Business Days)
after the Borrower knows or has reason to know thereof, the
occurrence of any Default or Event of Default;
(b) promptly, any default or event of default under any
Contractual Obligation of the Borrower or any of its Subsidiaries or
the Borrower which would reasonably be expected to have a Material
Adverse Effect;
(c) promptly, any litigation, or any investigation or
proceeding (including, without limitation, any environmental
proceeding) known to the Borrower, affecting the Borrower or any of
its Subsidiaries or the Borrower which, if adversely determined,
would reasonably be expected to have a Material Adverse Effect;
(d) as soon as possible and in any event within 30 days after
the Borrower knows or has reason to know thereof: (i) the occurrence
or expected occurrence of any Reportable Event with respect to any
Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal
from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the
taking of any other action by the PBGC or the Borrower or any
Commonly Controlled Entity or any Multiemployer Plan with respect to
the withdrawal from, or the terminating, Reorganization or Insolvency
of, any Plan; and
(e) promptly, any other development or event which would
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this subsection shall be accompanied by a
statement of a responsible officer setting forth details of the occurrence
referred to therein and stating what action the Borrower proposes to take
with respect thereto.
7.8 Environmental Laws.
(a) Comply in all material respects with, and ensure compliance
in all material respects by all tenants and subtenants, if any, with,
all applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and ensure that all tenants and
subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws
except to the extent that, with respect to all of the above, failure
to do so would not reasonably be expected to have a Material Adverse
Effect;
(b) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required
under Environmental Laws and promptly comply in all material respects
with all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings and the
pendency of such proceedings would not reasonably be expected to have
a Material Adverse Effect; and
(c) Defend, indemnify and hold harmless the Agent and the
Lenders, and their respective employees, agents, officers and
directors, from and against any and all claims, demands, penalties,
fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise,
arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower, any of its Subsidiaries
or the Properties, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without
limitation, reasonable attorneys' fees and consultant's fees,
investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing
arise out of the gross negligence or willful misconduct of the party
seeking indemnification therefor. The agreements in this paragraph
shall survive repayment of the Notes and all other amounts payable
hereunder.
7.9 Financial Covenants.
(a) Consolidated Funded Debt Ratio. There shall be maintained
as of the end of each fiscal quarter to occur during the periods
shown below a Consolidated Funded Debt Ratio of not greater than:
Period
From the Closing Date through
September 26, 1997 4.00:1.0
September 27, 1997 through
September 25, 1998 3.25:1.0
September 26, 1998 through
September 24, 1999 3.00:1.0
September 25, 1999 though
September 29, 2000 2.50:1.0
September 30, 2000 through
September 28, 2001 2.25:1.0
September 29, 2001 through
September 27, 2002 2.00:1.0
September 28, 2002 and thereafter 1.75:1.0
(b) Current Ratio. There shall be maintained at all times a
Current Ratio of not less than 1.40 to 1.00.
(c) Interest Coverage Ratio. There shall be maintained as of
the end of each fiscal quarter to occur during the periods shown
below an Interest Coverage Ratio of at least:
Period
From Closing Date through
June 27, 1997 1.50:1.0
June 28, 1997 through
December 26, 1997 1.75:1.0
December 27, 1997 through
March 27, 1998 2.00:1.0
March 28, 1998 through
September 25, 1998 2.25:1.0
September 26, 1998 through
September 29, 2000 2.50:1.0
September 30, 2000 and thereafter 3.00:1.0
7.10 Capital Expenditures. The Borrower and the other Credit Parties
shall not, as a group, make or incur Capital Expenditures of more than
$15,000,000 in any fiscal year.
7.11 Additional Subsidiary Guarantors.
(a) If a Domestic Subsidiary of the Borrower which is not a
Guarantor hereunder (a "Non-Guarantor Domestic Subsidiary") shall at
any time constitute more than either
(i) one and one-half percent (1.5%) of Consolidated Total
Assets, or
(ii) one and one-half percent (1.5%) of Consolidated
EBITDA,
then the Borrower will promptly notify the Agent thereof, and promptly
cause such Non-Guarantor Domestic Subsidiary to become a Guarantor
hereunder by way of execution of a Joinder Agreement. The Guarantee
Obligations of any such Additional Credit Party shall be secured by, among
other things, the assets of such Additional Credit Party. As used herein,
"Domestic Subsidiary" means a Subsidiary which is organized and existing
under the laws of the United States or any state or commonwealth thereof.
(b) In addition to the requirements set forth in the foregoing
clause (a), if the Non-Guarantor Domestic Subsidiaries shall, as a
group, at any time constitute in the aggregate more than either
(i) five percent (5%) of Consolidated Total Assets, or
(ii) five percent (5%) of Consolidated EBITDA,
(collectively, the "Threshold Requirement"), then the Borrower will
promptly notify the Agent thereof, and promptly cause one or more of the
Non-Guarantor Domestic Subsidiaries to become a Guarantor hereunder by way
of execution of a Joinder Agreement, such that immediately after the
joinder of such Subsidiaries as Guarantors hereunder, the remaining Non-
Guarantor Domestic Subsidiaries shall not, as a group, exceed the
Threshold Requirement. The Guarantee Obligations of any such Additional
Credit Party shall be secured by, among other things, the assets of such
Additional Credit Party.
SECTION 8
NEGATIVE COVENANTS
Each of the Credit Parties hereby covenants and agrees that on the
Closing Date, and thereafter for so long as this Credit Agreement is in
effect and until the Commitments have terminated, no Note or Letter of
Credit remains outstanding and unpaid and the Obligations, together with
interest, Fees and all other amounts owing to the Agent or any Lender
hereunder, are paid in full, the Borrower shall, and shall cause each of
its Subsidiaries and the Borrower, to:
8.1 Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, contract, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness arising or existing under this Agreement and
the other Credit Documents;
(b) Indebtedness existing as of the Closing Date and set out in
Schedule 8.1(b) and renewals, refinancings or extensions thereof in a
principal amount not in excess of that outstanding as of the date of
such renewal, refinancing or extension;
(c) Indebtedness incurred after the Closing Date consisting of
Capital Leases or Indebtedness incurred to provide all or a portion
of the purchase price or cost of construction of an asset provided
that (i) such Indebtedness when incurred shall not exceed the
purchase price or cost of construction of such asset; (ii) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing; and (iii) the total aggregate principal amount of all
such Indebtedness of the Borrower and its Subsidiaries, as a group,
shall not exceed $5,000,000 at any time outstanding;
(d) Unsecured intercompany Indebtedness between a Credit Party
and another Credit Party or between a Credit Party and another
Subsidiary;
(e) Indebtedness and obligations relating to currency
protection agreements and commodity purchase or option agreements
entered into with a Lender in order to manage existing or anticipated
interest rate, exchange rate or commodity price risks and not for
speculative purposes;
(f) Subordinated Debt of the Borrower or other Credit Party the
terms of subordination and other terms and provisions of which are
acceptable to the Required Lenders in their reasonable discretion;
(g) Permitted Guarantee Obligations;
(h) Indebtedness incurred by a Credit Party in connection with
a Permitted Sale-Leaseback Transaction, provided that the aggregate
amount of such Indebtedness shall not exceed $2,000,000 at any time
outstanding;
(i) Indebtedness permitted under Section 3.11;
(j) Indebtedness secured by Permitted Liens, except as
otherwise limited by this Section; and
(j) other Indebtedness of the Borrower and its Subsidiaries, as
a group, which does not exceed $2,500,000 in the aggregate at any
time outstanding.
8.2 Liens. The Borrower will not, nor will it permit any Subsidiary
to, contract, create, incur, assume or permit to exist any Lien with
respect to any of its property or assets of any kind (whether real or
personal, tangible or intangible), whether now owned or hereafter
acquired, except for Permitted Liens.
8.3 Nature of Business. Except as otherwise permitted by Section
8.4, the Borrower will not, nor will it permit any Subsidiary to, alter
the character of its business in any material respect from that conducted
as of the Closing Date.
8.4 Consolidation, Merger, Sale or Purchase of Assets, etc. The
Borrower will not, nor will it permit any Subsidiary to,
(a) dissolve, liquidate or wind up its affairs, sell, transfer,
lease or otherwise dispose of any substantial part of its property or
assets outside of the ordinary course of business or agree to do so
at a future time except the following, without duplication, shall be
expressly permitted:
(i) Specified Sales;
(ii) the sale, transfer, lease or other disposition of
property or assets not in the ordinary course of business (other
than Specified Sales), where and to the extent that such
transaction is the result of a Recovery Event and the Net
Proceeds therefrom are used to repair or replace damaged
property or to purchase or otherwise acquire new assets or
property provided that such purchase or acquisition is committed
to within 120 days of receipt of the Net Proceeds from the
Recovery Event and such purchase or acquisition is consummated
within 180 days of such receipt; and
(iii) the sale, lease or transfer of property or assets
by a Credit Party other than the Borrower to a domestic Credit
Party.
As used herein, "substantial part" shall mean property and assets, the
book value of which, when added to the book value of all other assets
sold, leased or otherwise disposed of by the Borrower and its Subsidiaries
(other than in the ordinary course of business), shall in any fiscal year
exceed 5% of Consolidated Net Worth, in each case determined as of the end
of the immediately preceding fiscal year; or
(b) purchase, lease or otherwise acquire (in a single
transaction or a series of related transactions) all or any
substantial part of the property or assets of any Person other than
purchases or other acquisitions of inventory, leases, materials,
property and equipment in the ordinary course of business, (except as
otherwise limited or prohibited herein), or enter into any
transaction of merger or consolidation, except for (i) investments or
acquisitions permitted pursuant to Section 8.5, (ii) the merger or
consolidation of the Borrower with or into another Credit Party,
provided that in any such case the Borrower shall be the surviving
entity, and (iii) the merger or consolidation of any wholly-owned
Subsidiary with or into any other wholly-owned Subsidiary.
8.5 Advances Investments and Loans. The Borrower will not, nor will
it permit any Subsidiary to, lend money or extend credit or make advances
to any Person, or purchase or acquire any stock, obligations or securities
of, or any other interest in, or make any capital contribution to, any
Person except for Permitted Investments.
8.6 Guarantee Obligations. The Borrower will not, nor will it
permit any Subsidiary to, contract, create, incur, assume or permit to
exist any Guarantee Obligations, except Permitted Guarantee Obligations.
8.7 Transactions with Affiliates. Except as permitted in subsection
(iv) of the definition of Permitted Investments, the Borrower will not,
nor will it permit any Subsidiary to, enter into any transaction or series
of transactions, whether or not in the ordinary course of business, with
any officer, director, shareholder or Affiliate (other than a Credit
Party) other than on terms and conditions substantially as favorable as
would be obtainable in a comparable arm's-length transaction with a Person
other than an officer, director, shareholder or Affiliate.
8.8 Ownership of Subsidiaries. The Borrower will not, nor will it
permit any Subsidiary to, create, form or acquire a Subsidiary, unless any
such Domestic Subsidiary shall become an Additional Credit Party, if
required, in accordance with the provisions of Section 7.11.
8.9 Fiscal Year. The fiscal year of Pierce and its Subsidiaries
shall be changed to conform to the Borrower's fiscal year. Except for the
foregoing, the Borrower will not, nor will it permit any Subsidiary to,
change its fiscal year, except with the prior written consent of the
Required Lenders.
8.10 Prepayments of Indebtedness, etc. The Borrower will not, nor
will it permit any Subsidiary to,
(a) after the issuance thereof, amend or modify, or permit the
amendment or modification of, any of the terms of subordination or
other terms or provisions relating to any Subordinated Debt;
(b) make (or give notice with respect thereto) any voluntary or
optional payment or prepayment or redemption or acquisition for value
including, without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the
purpose of paying when due) or exchange of any Subordinated Debt
permitted pursuant to Section 8.1; or
(c) make any prepayment, redemption, acquisition for value of
(including, without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for the
purpose of paying when due) refund, refinance or exchange of any
Subordinated Debt.
As used herein, "Subordinated Debt" means any indebtedness for borrowed
money which by its terms is, or upon the happening of certain events may
become, subordinated in right of payment to the Obligations hereunder and
other amounts owing hereunder or in connection herewith.
8.11 Dividends. The Borrower will not, nor will it permit any non-
wholly-owned Subsidiaries to, make any payment, distribution or dividend
(other than a dividend or distribution payable solely in stock or equity
interest of the Person making the dividend or distribution) on or any
payment on account of the purchase, redemption or retirement of, or any
other distribution on, any partnership interest, share of any class of
stock or other ownership interest in such Person, in an amount in excess
of: (i) from the Closing Date until the Obligations are paid in full,
$5,000,000 plus (ii) during each fiscal year of the Borrower ending after
the Closing Date, 40% of Consolidated Net Income; provided, that for
purposes of this Section 8.11, the definition of Consolidated Net Income
shall be deemed to include extraordinary gains and losses.
SECTION 9
EVENTS OF DEFAULT
Upon the occurrence of any of the following events (each an "Event of
Default"):
(a) The Borrower shall fail to pay any principal on any Note
when due in accordance with the terms thereof or hereof; or the
Borrower shall fail to reimburse the Issuing Lender for any LOC
Obligations when due in accordance with the terms hereof; or the
Borrower shall fail to pay any interest on any Note or any Fee or
other amount payable hereunder when due in accordance with the terms
thereof or hereof and such failure shall continue unremedied for five
(5) Business Days or any Guarantor shall fail to pay on the Guaranty
in respect of any of the foregoing or in respect of any other
Guarantee Obligations thereunder; or
(b) Any representation or warranty made or deemed made by the
Borrower or other Credit Party herein, in the Security Agreement or
in any of the other Credit Documents or which is contained in any
certificate, document or financial or other statement furnished by
the Borrower or other Credit Party at any time under or in connection
with this Agreement shall prove to have been incorrect, false or
misleading in any material respect on or as of the date made or
deemed made; or
(c) The Borrower shall (i) default in the due performance or
observance of Section 7.1, 7.2, 7.9, 7.10, 8.4 or 8.10, or (ii)
default in the observance or performance of any other term, covenant
or agreement contained in this Agreement (other than as described in
subsections 9(a), 9(b) or 9(c)(i) above), and such default shall
continue unremedied for a period of 30 days or more after written
notice thereof from the Agent or the Required Lenders; or
(d) The Borrower or any of its Subsidiaries shall (i) default
in any payment of principal of or interest on any Indebtedness (other
than the Notes) in a principal amount outstanding of at least
$1,000,000 in the aggregate for the Borrower and its Subsidiaries or
in the payment of any matured Guarantee Obligation in a principal
amount outstanding of at least $1,000,000 in the aggregate for the
Borrower and its Subsidiaries beyond the period of grace (not to
exceed 30 days), if any, provided in the instrument or agreement
under which such Indebtedness or Guarantee Obligation was created and
such Indebtedness or Guarantee Obligation has matured by its terms or
is accelerated or is overtly threatened to be accelerated (except any
such matured Guarantee Obligations which the Borrower and its
Subsidiaries are disputing in good faith and for which they have
established adequate reserves); or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness in a principal amount outstanding of at least $1,000,000
in the aggregate for the Borrower and its Subsidiaries or Guarantee
Obligation in a principal amount outstanding of at least $1,000,000
in the aggregate for the Borrower and its Subsidiaries or contained
in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or
the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries
shall cause or overtly threaten to cause, with the giving of notice
if required, such Indebtedness to become due prior to its stated
maturity or such Guarantee Obligation to become payable; or
(e) (i) The Borrower or any other Credit Party shall commence
any case, proceeding or other action (A) under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its
assets, or the Borrower or any other Credit Party shall make a
general assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Borrower or any other Credit Party any
case, proceeding or other action of a nature referred to in clause
(i) above which (X) results in the entry of an order for relief or
any such adjudication or appointment or (Y) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against the Borrower or any other Credit Party any
case, proceeding other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or
any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from
the entry thereof; or (iv) the Borrower or any other Credit Party
shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) the Borrower or any other
Credit Party shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due;
or
(f) One or more judgments or decrees shall be entered against
the Borrower or any other Credit Party and such judgments or decrees
shall not have been paid and satisfied, vacated, discharged, stayed
or bonded pending appeal within 60 days from the entry thereof and
involve in the aggregate a liability (to the extent not paid when due
or covered by insurance) of $1,000,000 or more; or
(g) (i) Any Person shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code)
involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single
Employer Plan, which Reportable Event or commencement of proceedings
or appointment of a trustee is, in the reasonable opinion of the
Required Lenders, likely to result in the termination of such Plan
for purposes of Title IV of ERISA, (iv) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, (v) the Borrower,
any of its Subsidiaries or any Commonly Controlled Entity shall, or
in the reasonable opinion of the Required Lenders is likely to, incur
any liability in connection with a withdrawal from, or the Insolvency
or Reorganization of, any Multiemployer Plan or (vi) any other
similar event or condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if
any, could reasonably be expected to have a Material Adverse Effect;
or
(h) Either (i) a "person" or a "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934
other than members of management of the Borrower as of the Closing
Date) becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934) of more than 50% of the then
outstanding voting stock of the Borrower or (ii) a majority of the
Board of Directors of the Borrower shall consist of individuals who
are not Continuing Directors ("Continuing Director" means, as of any
date of determination, (A) an individual who on the date two years
prior to such determination date was a member of the Borrower's Board
of Directors or (B) any new Director whose nomination for election by
the Borrower's shareholders was approved by a vote of at least 75% of
the Directors then still in office who either were Directors on the
date two years prior to such determination date or whose nomination
for election was previously so approved); or
(i) The Guaranty or any provision thereof shall cease to be in
full force and effect or any Credit Party or any Person acting by or
on behalf of any Credit Party shall deny or disaffirm any Credit
Party's obligations under the Guaranty; or
(j) Any other Credit Document shall fail to be in full force
and effect or to give the Agent and/or the Lenders the security
interests, liens, rights, powers and privileges reasonably purported
to be created thereby;
then, and in any such event, (A) if such event is an Event of Default
specified in paragraph (e) above, automatically the Commitments shall
immediately terminate and the Loans (with accrued interest thereon),
and all other amounts under the Credit Documents (including, without
limitation, the maximum amount of all contingent liabilities under
Letters of Credit which amount shall be paid to the Agent and held as
cash collateral therefor) shall immediately become due and payable,
and (B) if such event is any other Event of Default, either or both
of the following actions may be taken: (i) with the written consent
of the Required Lenders, the Agent may, or upon the written request
of the Required Lenders, the Agent shall, by notice to the Borrower
declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the written
consent of the Required Lenders the Agent may, or upon the written
request of the Required Lenders, the Agent shall, by notice of
default to the Borrower, declare the Loans (with accrued interest
thereon) and all other amounts owing under this Agreement and the
Credit Documents to be due and payable forthwith and direct the
Borrower to pay to the Agent cash collateral as security for the LOC
Obligations for subsequent drawings under then outstanding Letters of
Credit an amount equal to the maximum amount which may be drawn under
Letters of Credit then outstanding, whereupon the same shall
immediately become due and payable. Except as expressly provided
above in this Section 9, presentment, demand, protest and all other
notices of any kind are hereby expressly waived.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment. Each Lender hereby designates and appoints Firstar
Bank Milwaukee, N.A. as Agent hereunder of such Lender to act as specified
herein and in the other Credit Documents, and each such Lender hereby
authorizes the Agent as the agent for such Lender, to take such action on
its behalf under the provisions of this Credit Agreement and the other
Credit Documents and to exercise such powers and perform such duties as
are expressly delegated by the terms hereof and of the other Credit
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere herein
and in the other Credit Documents, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or
any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Credit Agreement or any of the other Credit Documents, or
shall otherwise exist against the Agent. The provisions of this Section
are solely for the benefit of the Agent and the Lenders and none of the
Credit Parties shall have any rights as a third party beneficiary of the
provisions hereof. In performing its functions and duties under this
Credit Agreement and the other Credit Documents, the Agent shall act
solely as agent of the Lenders and does not assume and shall not be deemed
to have assumed any obligation or relationship of agency or trust with or
for the Borrower or any other Credit Party. The title of Co-Agent is
bestowed in recognition of the participation of Bank One, Milwaukee, NA,
NationsBank, N.A. and Harris Trust and Savings Bank in this credit, and
such title shall not impose or imply any duties or responsibilities
hereunder of a fiduciary nature or otherwise, in their capacity as such.
10.2 Delegation of Duties. The Agent may execute any of its duties
hereunder or under the other Credit Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning
all matters pertaining to such duties. The Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
10.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken
by it or such Person under or in connection herewith or in connection with
any of the other Credit Documents except for its or such Person's own
gross negligence or willful misconduct, or (ii) responsible in any manner
to any of the Lenders for any recitals, statements, representations or
warranties made by any of the Credit Parties contained herein or in any of
the other Credit Documents or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agent
under or in connection herewith or in connection with the other Credit
Documents, or enforceability or sufficiency herefor of any of the other
Credit Documents, or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be responsible
to any Lender for the effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Credit Agreement, or
any of the other Credit Documents or for any representations, warranties,
recitals or statements made herein or therein or made by the Borrower or
any Credit Party in any written or oral statement or in any financial or
other statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made by the
Agent to the Lenders or by or on behalf of the Credit Parties to the Agent
or any Lender or be required to ascertain or inquire as to the performance
or observance of any of the terms, conditions, provisions, covenants or
agreements contained herein or therein or as to the use of the proceeds of
the Loans or of the existence or possible existence of any Default or
Event of Default or to inspect the properties, books or records of the
Credit Parties.
10.4 Reliance on Communications. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon
advice and statements of legal counsel (including, without limitation,
counsel to the Agent and any of the Lenders, independent accountants and
other experts selected by the Agent with reasonable care). The Agent may
deem and treat the Lenders as the owner of their respective interests
hereunder for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent in
accordance with Section 11.6(d). The Agent shall be fully justified in
failing or refusing to take any action under this Credit Agreement or
under any of the other Credit Documents unless it shall first receive such
advice or concurrence of the Required Lenders, or all Lenders, as the case
may be, as it deems appropriate. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder or under any
of the other Credit Documents in accordance with a request of the Required
Lenders (or to the extent specifically provided in Section 11.1, all the
Lenders) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders (including their successors
and assigns).
10.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder (other than the failure by the Borrower to pay any principal or
interest on any Note when due in accordance with the terms thereof or
hereof) unless the Agent has received notice from a Lender or a Credit
Party referring to the Credit Document, stating that a Default or Event of
Default exists, and specifying the particulars thereof. In the event that
the Agent receives such a notice or the Borrower fails to pay any
principal or interest on any Note when due, the Agent shall give prompt
notice thereof to the Lenders. The Agent shall take such action with
respect to such Default or Event of Default as shall be directed by the
Required Lenders, otherwise than an action that the Agent reasonably
believes would be a violation of law or otherwise prohibited by the Credit
Documents.
10.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent or any
affiliate thereof hereinafter taken, including any review of the affairs
of the Borrower, shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Each Lender represents to the Agent
that it has, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, assets, operations, property, financial and other conditions,
prospects and creditworthiness of the Borrower and made its own decision
to make its Loans hereunder and enter into this Credit Agreement. Each
Lender also represents that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking
action under this Credit Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness
of the Borrower. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder,
the Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
assets, property, financial or other conditions, prospects or
creditworthiness of the Borrower which may come into the possession of the
Agent or any of its officers, directors, employees, agents, attorneys-in-
fact or affiliates.
10.7 Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably
according to their respective Commitment Percentages (or if the
Commitments have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and Participation
Interests of the Lenders), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the termination of
this Credit Agreement) be imposed on, incurred by or asserted against the
Agent in its capacity as such in any way relating to or arising out of
this Credit Agreement or the other Credit Documents or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Lender
shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent. If any indemnity furnished to the Agent for any
purpose shall, in the reasonable opinion of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional
indemnity is furnished.
10.8 Agent in its Individual Capacity. The Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind
of business with the Borrower or any other Credit Party as though the
Agent were not Agent hereunder. With respect to its Loans and
Participation Interests, the Agent shall have the same rights, obligations
and powers under this Credit Agreement as any Lender and may exercise the
same as though they were not Agent, and the terms "Lender" and "Lenders"
shall include the Agent in its individual capacity.
10.9 Successor Agent. The Agent may, at any time, resign upon 20
days' written notice to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders shall have the right to appoint a
successor Agent (which shall be a Lender) with the prior written consent
of the Borrower, which consent shall not be unreasonably withheld. If no
successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the notice of
resignation, as appropriate, then the retiring Agent shall select a
successor Agent provided such successor is a Lender hereunder or a
commercial bank organized under the laws of the United States of America
or of any State thereof and has a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations as Agent, as appropriate, under this Credit Agreement and the
other Credit Documents and the provisions of this Section 10.9 shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 Amendments, Waivers and Release of Collateral. Neither this
Credit Agreement, nor any of the Notes, nor any of the other Credit
Documents, nor any terms hereof or thereof may be amended, supplemented,
waived or modified except in accordance with the provisions of this
subsection nor may collateral be released except as specifically provided
herein or in the Security Agreement or in accordance with the provisions
of this subsection. The Required Lenders may, or, with the written
consent of the Required Lenders, the Agent may, from time to time, (a)
enter into with the Borrower written amendments, supplements or
modifications hereto and to the other Credit Documents for the purpose of
adding, amending or deleting any provisions of this Credit Agreement or
the other Credit Documents or (b) waive, on such terms and conditions as
the Required Lenders may specify in such instrument, any of the
requirements of this Credit Agreement or the other Credit Documents or any
Default or Event of Default and its consequences or (c) release collateral
in accordance with the terms hereof or of the Security Agreement or on
such other terms and conditions as the Required Lenders may agree;
provided, however, that no such waiver and no such amendment, waiver,
supplement, modification or release shall (i) reduce the amount or extend
the scheduled date of maturity of any Loan or Note or any installment
thereon, or reduce the stated rate of any interest or fee payable
hereunder (other than interest at the increased post-default rate) or
extend the scheduled date of any payment thereof or increase the amount or
extend the expiration date of any Lender's Commitment, in each case
without the written consent of each Lender directly affected thereby, or
(ii) amend, modify or waive any provision of this Section 11.1 or reduce
the percentage specified in the definition of Required Lenders, or consent
to the assignment or transfer by the Borrower of any of its rights and
obligations under this Credit Agreement, in each case without the written
consent of all the Lenders, or (iii) amend, modify or waive any provision
of Section 10 without the written consent of the then Agent, (iv) release
all or substantially all of the Guarantors or all or substantially all of
the Collateral without the written consent of all of the Lenders, or
(v) amend Section 3.12 without the written consent of all Lenders. Any
such waiver, any such amendment, supplement or modification and any such
release shall apply equally to each of the Lenders and shall be binding
upon the Borrower, the Lenders, the Agent and all future holders of the
Notes. In the case of any waiver, the Borrower, the Lenders and the Agent
shall be restored to their former position and rights hereunder and under
the outstanding Loans and Notes and other Credit Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
11.2 Notices. Except as otherwise provided in Section 2, all
notices, requests and demands to or upon the respective parties hereto to
be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly
given or made (i) when delivered by hand, (ii) when transmitted via
telecopy (or other facsimile device) on a Business Day between the hours
of 8:30 A.M. and 5:00 P.M. (Milwaukee, Wisconsin time) or on the following
Business Day (if sent after 5:00 P.M. Milwaukee, Wisconsin time) to the
number set out herein, (iii) the day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (iv) the third Business Day following the day on which the
same is sent by certified or registered mail, postage prepaid, in each
case, addressed as follows in the case of the Borrower and the Agent, and
as set forth on Schedule 11.2 in the case of the Lenders, or to such other
address as may be hereafter notified by the respective parties hereto and
any future holders of the Notes:
The Credit Parties: c/o Oshkosh Truck Corporation
2307 Oregon Street
P. O. Box 2566
Oshkosh, Wisconsin 54903-2566
Attn: Chief Financial Officer
and General Counsel
Phone: (414) 235-9150
Fax: (414) 233-9459
with a copy to:
Foley & Lardner
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Emory Ireland
Phone: (414) 297-5624
Fax: (414) 297-4900
The Agent: Firstar Bank Milwaukee, N.A.
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Stephen E. Carlton
Phone: (414) 765-4244
Fax: (414) 765-4430
with a copy to:
Quarles & Brady
411 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202-4497
Attn: Andrew M. Barnes
Phone: (414) 277-5105
Fax: (414) 271-3552
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Credit Agreement
and the Notes and the making of the Loans, provided that all such
representations and warranties shall terminate on the date upon which the
Commitments have been terminated and all amounts owing hereunder and under
any Notes have been paid in full.
11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay
or reimburse the Agent for all its reasonable out-of-pocket costs and
expenses incurred in connection with the preparation and execution of, and
any amendment, supplement or modification to, the Credit Documents and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, together
with the reasonable fees and disbursements of counsel to the Agent, (b) to
pay out-of-pocket expenses, including attorneys' fees, incurred by a
Lender in connection with the negotiation, preparation and execution of
the Credit Documents, not to exceed $10,000 for each Lender, and
reasonable expenses, including reasonable attorneys' fees, in connection
with any future amendments or modifications hereto, (c) to pay or
reimburse each Lender and the Agent for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights
under this Credit Agreement and any other Credit Documents, including,
without limitation, the reasonable fees and disbursements of counsel to
the Agent and to the Lenders (including reasonable allocated costs of in-
house legal counsel), (d) on demand, to pay, indemnify, and hold each
Lender and the Agent harmless from, any and all recording and filing fees
and any and all liabilities with respect to, or resulting from any delay
in paying, stamp, excise and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, the Credit Documents and any
such other documents, and (e) to pay, indemnify, and hold each Lender and
the Agent and their Affiliates, officers, directors, shareholders,
employees and agents harmless from and against, any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
with respect to the execution, delivery, enforcement, performance and
administration of the Credit Documents and any such other documents and
the use, or proposed use, of proceeds of the Loans (all the foregoing,
collectively, the "Indemnified Liabilities"); provided, however, that the
Borrower shall not have any obligation hereunder to the Agent or any
Lender with respect to Indemnified Liabilities arising from (i) the gross
negligence or willful misconduct of the Agent or any such Lender,
(ii) legal proceedings commenced against or disputes among the Agent or
any Lender by any other Lender or its participants or the Agent, or
(iii) the violation by the Agent or any such Lender of an express
provision of the Credit Documents, if so determined by a final judgment of
a court of competent jurisdiction. The agreements in this Section 11.5
shall survive repayment of the Loans, Notes and all other amounts payable
hereunder.
11.6 Successors and Assigns; Participations; Purchasing Lenders.
(a) This Credit Agreement shall be binding upon and inure to the
benefit of the Borrower, the Lenders, the Agent, all future holders
of the Notes and their respective successors and assigns, except that
the Borrower may not assign or transfer any of its rights or
obligations under this Credit Agreement or the other Credit Documents
without the prior written consent of each Lender and no Lender may
assign or transfer any of its rights or obligations under this Credit
Agreement or the other Credit Documents without the prior written
consent of the Borrower, except as otherwise permitted by this
Section 11.6.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participant" or
"Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender,
or any other interest of such Lender hereunder, provided, however,
that at all times such Lender shall retain for its own account
interests in Loans owing to such Lender in an aggregate outstanding
principal amount which, when added to the aggregate outstanding
principal amount of any interests in Loans sold by such Lender to
Participants who are Affiliates of such Lender, equals not less than
fifty percent (50%) of the aggregate principal amount of all such
Lender's outstanding Loans. In the event of any such sale by a
Lender of participating interests to a Participant, such Lender's
obligations under this Credit Agreement to the other parties to this
Credit Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall
remain the holder of any such Note for all purposes under this Credit
Agreement, and the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's
rights and obligations under this Credit Agreement. No Lender shall
transfer or grant any participation under which the Participant shall
have rights to approve any amendment to or waiver of this Credit
Agreement or any other Credit Document except to the extent such
amendment or waiver would (i) extend the scheduled maturity of any
Loan or Note or any installment thereon in which such Participant is
participating, or reduce the stated rate or extend the time of
payment of interest or Fees thereon except in connection with a
waiver of interest at the increased post-default rate) or reduce the
principal amount thereof, or increase the amount of the Participant's
participation over the amount thereof then in effect it being
understood that a waiver of any Default or Event of Default shall not
constitute a change in the terms of such participation, and that an
increase in any Commitment or Loan shall be permitted without consent
of any Participant if the Participant's participation is not
increased as a result thereof, (ii) release all or substantially all
of the collateral, or (iii) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Credit
Agreement. In the case of any such participation, the Participant
shall not have any rights under this Credit Agreement or any of the
other Credit Documents (the Participant's rights against such Lender
in respect of such participation to be those set forth in the
agreement executed by such Lender in favor of the Participant
relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Lender had not sold such
participation, provided that each Participant shall be entitled to
the benefits of Sections 3.6, 3.7, 3.8, 3.9 and 11.5 with respect to
its participation in the Commitments and the Loans outstanding from
time to time; provided, that no Participant shall be entitled to
receive any greater amount pursuant to such Sections than the
transferor Lender would have been entitled to receive in respect of
the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time
sell or assign to any Lender or any Affiliate thereof and with the
consent of the Agent and, so long as no Event of Default has occurred
and is continuing, the consent of the Borrower (which consent shall
not be unreasonably withheld), to one or more additional banks or
financial institutions ("Purchasing Lenders"), all or any part of its
rights and obligations under this Credit Agreement and the Notes in
minimum amounts of $10,000,000 (or, if less, the entire amount of
such Lender's obligations) if the Purchasing Lender is not a Lender
hereunder, or with no minimum amount if the Purchasing Lender is a
Lender hereunder, pursuant to a Commitment Transfer Supplement,
executed by such Purchasing Lender, such transferor Lender (and, in
the case of a Purchasing Lender that is not then a Lender or an
affiliate thereof so long as no Event of Default has occurred and is
continuing, by the Borrower and the Agent), and delivered to the
Agent for its acceptance and recording in the Register. Upon such
execution, delivery, acceptance and recording, from and after the
Transfer Effective Date specified in such Commitment Transfer
Supplement, (x) the Purchasing Lender thereunder shall be a party
hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender hereunder
with a Commitment as set forth therein, and (y) the transferor Lender
thereunder shall, to the extent provided in such Commitment Transfer
Supplement, be released from its obligations under this Credit
Agreement (and, in the case of a Commitment Transfer Supplement
covering all or the remaining portion of a transferor Lender's rights
and obligations under this Credit Agreement, such transferor Lender
shall cease to be a party hereto). Such Commitment Transfer
Supplement shall be deemed to amend this Credit Agreement to the
extent, and only to the extent, necessary to reflect the addition of
such Purchasing Lender and the resulting adjustment of Commitment
Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor
Lender under this Credit Agreement and the Notes. On or prior to the
Transfer Effective Date specified in such Commitment Transfer
Supplement, the Borrower, at its own expense, shall execute and
deliver to the Agent in exchange for the Note delivered to the Agent
pursuant to such Commitment Transfer Supplement a new Note to the
order of such Purchasing Lender in an amount equal to the Commitment
assumed by it pursuant to such Commitment Transfer Supplement and,
unless the transferor Lender has not retained a Commitment hereunder,
a new Note to the order of the transferor Lender in an amount equal
to the Commitment retained by it hereunder. Except for the expense
of executing and delivering such new Note to the Agent pursuant to
this Section, the Borrower shall not be obligated to pay any transfer
fees, costs or expenses to the Agent or any Lender in connection with
any such transfer. Such new Note shall be dated the Closing Date and
shall otherwise be in the form of the Note replaced thereby. The
Note surrendered by the transferor Lender shall be returned by the
Agent to the Borrower marked "canceled."
(d) The Agent shall maintain at its address referred to in
Section 11.2 a copy of each Commitment Transfer supplement delivered
to it and a register (the "Register") for the recordation of the
names and addresses of the Lenders and the Commitment of, and
principal amount of the Loans owing to, each Lender from time to
time. The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register
as the owner of the Loan recorded therein for all purposes of this
Credit Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement
executed by a transferor Lender and a Purchasing Lender and, in the
case of a Purchasing Lender that is not then a Lender (or an
affiliate thereof, by the Borrower and the Agent) together with
payment to the Agent by the transferor Lender or the Purchasing
Lender, (as agreed between them) of a registration and processing fee
of $2,500 for each Purchasing Lender listed in such Commitment
Transfer Supplement, and the Notes subject to such Commitment
Transfer Supplement, the Agent shall (i) accept such Commitment
Transfer Supplement, (ii) record the information contained therein in
the Register and (iii) give prompt notice of such acceptance and
recordation to the Lenders and the Borrower.
(f) The Borrower authorizes each Lender to disclose to any
Participant or Purchasing Lender each, (a "Transferee") and any
permitted prospective Transferee any and all financial information in
such Lender's possession concerning the Borrower and its Affiliates
which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Credit Agreement or which has been
delivered to such Lender by or on behalf of the Borrower in
connection with such Lender's credit evaluation of the Borrower and
its Affiliates prior to becoming a party to this Credit Agreement.
(g) At the time of each assignment pursuant to this Section
11.6 to a Person which is not already a Lender hereunder and which is
not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Lender shall provide to the Borrower and the
Agent the appropriate Internal Revenue Service Forms (and, if
applicable, a U.S. Tax Compliance Certificate) described in Section
3.9.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning any of its rights under this Credit Agreement (including,
without limitation, any right to payment of principal and interest
under any Note) to any Federal Reserve Bank in accordance with
applicable laws.
11.7 Set-off. In addition to any rights and remedies of the Lenders
provided by law (including, without limitation, other rights of set-off),
each Lender shall have the right, without prior notice to the Borrower,
any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon the occurrence and during the
continuance of any Event of Default, to setoff and appropriate and apply
any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender
or any Affiliate, branch or agency thereof to or for the credit or the
account of the Borrower, or any part thereof in such amounts as such
Lender may elect, against and on account of the obligations and
liabilities of the Borrower to such Lender hereunder and claims of every
nature and description of such Lender against the Borrower, in any
currency, whether arising hereunder, under the Notes or under any
documents contemplated by or referred to herein or therein, as such Lender
may elect, whether or not such Lender has made any demand for payment.
The aforesaid right of set-off may be exercised by such Lender against the
Borrower or against any trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, receiver or execution, judgment or
attachment creditor of the Borrower, or against anyone else claiming
through or against the Borrower or any such trustee in bankruptcy, debtor
in possession, assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor, notwithstanding the fact that
such right of set-off shall not have been exercised by such Lender prior
to the occurrence of any Event of Default. Each Lender agrees promptly to
notify the Borrower and the Agent after any such set-off and application
made by such Lender; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application.
11.8 Confidentiality. The Agent and each Lender shall hold in
confidence any material nonpublic information delivered or made available
to them by the Borrower. Notwithstanding the foregoing, nothing herein
shall prevent the Agent or any Lender from disclosing any information
delivered or made available to it by the Borrower (a) to such Lender's
Affiliates, the Agent or any Lender, (b) upon the order of any court or
administrative agency, (c) upon the request or demand of any regulatory
agency or authority, (d) which has been publicly disclosed other than as a
result of a disclosure by the Agent or any Lender which is not permitted
by this Agreement, (e) to the extent reasonably required in connection
with any litigation to which the Agent, any Lender, or any of their
respective affiliates may be a party, along with the Borrower, any
Subsidiary or any of their respective Affiliates, (f) to the extent
reasonably required in connection with the exercise of any right or remedy
under this Agreement, (g) to such Agent's or Lender's legal counsel and
financial consultants and independent auditors, and (h) to any Transferee
or permitted prospective Transferee and such Transferee or permitted
prospective Transferee agrees in writing to be bound by the duty of
confidentiality under this Section to the same extent as if it were a
Lender hereunder.
11.9 Table of Contents and Section Headings. The table of contents
and the Section and subsection headings herein are intended for
convenience only and shall be ignored in construing this Credit Agreement.
11.10 Counterparts. This Credit Agreement may be executed by one or
more of the parties to this Credit Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument. A set of the copies of this
Credit Agreement signed by all the parties shall be lodged with the
Borrower and the Agent.
11.11 Severability. Any provision of this Credit Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
11.12 Integration. This Credit Agreement, the Notes and the other
Credit Documents represent the agreement of the Borrower, the Agent and
the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Agent, the
Borrower or any Lender relative to the subject matter hereof not expressly
set forth or referred to herein or in the Notes.
11.13 Governing Law. This Credit Agreement and the Notes and the
rights and obligations of the parties under this Credit Agreement and the
Notes shall be governed by, and construed and interpreted in accordance
with, the internal laws of the State of Wisconsin without giving effect to
its conflicts of law provisions.
11.14 Consent to Jurisdiction and Venue. All judicial proceedings
brought against the Borrower or any other Credit Party with respect to
this Credit Agreement, any Note or any of the other Credit Documents shall
be brought in any state or federal court of competent jurisdiction in the
State of Wisconsin, and, by execution and delivery of this Credit
Agreement, the Borrower and each of the other Credit Parties accepts, for
itself and in connection with its properties, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts and
irrevocably agrees to be bound by any final judgment rendered thereby in
connection with this Credit Agreement from which no appeal has been taken
or is available. The Borrower, each of the other Credit Parties, the
Agent and the Lenders irrevocably waive any objection, including, without
limitation, any objection to the laying of venue or based on the grounds
of forum non conveniens which it may now or hereafter have to the bringing
of any such action or proceeding in any such jurisdiction. Nothing herein
shall limit the right of any Lender to bring proceedings against the
Borrower and each of the other Credit Parties in the court of any other
jurisdiction.
11.15 Acknowledgements. Each of the Credit Parties hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of each Credit Document;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Credit Parties arising out of or in
connection with this Credit Agreement and the relationship between
Agent and Lenders, on one hand, and the Credit Parties, on the other
hand, in connection herewith is solely that of debtor and creditor;
and
(c) no joint venture exists among the Lenders or among the
Credit Parties and the Lenders.
11.16 Waivers of Jury Trial. THE CREDIT PARTIES, THE AGENT AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
11.17 Limitation of Liability. THE CREDIT PARTIES, THE AGENT AND
THE LENDERS 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.
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Credit Agreement to be duly executed and delivered as
of the date first above written.
BORROWER: OSHKOSH TRUCK CORPORATION,
a Wisconsin corporation
By:________________________________
Title:_____________________________
GUARANTORS: PIERCE MANUFACTURING INC.,
a Wisconsin corporation
By:________________________________
Title:_____________________________
SUMMIT PERFORMANCE SYSTEMS, INC.,
a Wisconsin corporation
By:________________________________
Title:_____________________________
LENDERS: FIRSTAR BANK MILWAUKEE, N.A.,
in its capacity as Agent and as
a Lender
By:________________________________
Title:_____________________________
BANK ONE, MILWAUKEE, NA,
in its capacity as a Co-Agent and
as a Lender
By:________________________________
Title:_____________________________
NATIONSBANK, N.A.,
in its capacity as a Co-Agent and
as a Lender
By:________________________________
Title:_____________________________
HARRIS TRUST AND SAVINGS BANK,
in its capacity as a Co-Agent and
as a Lender
By:________________________________
Title:_____________________________
BANK OF AMERICA ILLINOIS, as Lender
By:________________________________
Title:_____________________________
LASALLE NATIONAL BANK, as Lender
By:________________________________
Title:_____________________________
FIRST BANK (N.A.), as Lender
By:________________________________
Title:_____________________________
THE NORTHERN TRUST COMPANY, as Lender
By:________________________________
Title:_____________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Lender
By:________________________________
Title:_____________________________
COMERICA BANK, as Lender
By:________________________________
Title:_____________________________
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated December 8, 1996 on the financial statements of Pierce
Manufacturing, Inc. and Subsidiaries included in this Form 8-K. It should
be noted that we have not audited any financial statements of Pierce
Manufacturing Inc. and Subsidiaries subsequent to October 31, 1995 or
performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
October 1, 1996
